The
Time is Now
Virginia's
recent financial crisis brought only a modicum of
reform to state spending and budgeting. Maybe a
$918 million surplus will give lawmakers the breathing
room they need.
With
the General Assembly back in Richmond, there is hope for serious government reform that
will keep the Commonwealth from facing budget
shortfalls in the future.
While transportation issues will likely
dominate the legislative session, budget
amendments, education issues and financing of
infrastructure improvements will be hotly debated
as well. The
landscape is much different this year than it was
the same time last year.
The
talk of deficits is gone, as legislators face
a surplus of at least least $918-million.
It
is critical that the General Assembly seize this
opportunity to bring fundamental change not only
to how the Commonwealth spends money but to how it
budgets for it.
The
rapid growth of Virginia’s budget is well documented—in just 10 years
it has increased more than 75 percent—averaging
16 percent each biennium between 1996 and this
budget cycle. When
looked at on an annual basis, the budget has more
than doubled! The
Commonwealth enjoyed a surplus at the end of the
last fiscal year of $324 million.
While a portion of the surplus was, by law,
channeled into the rainy day fund, most of the
rest was quickly gobbled up by additional state
spending. Now
the Commonwealth is faced with a surplus—$918
million—and additional spending may swallow the
surplus whole.
To
put it simply, this kind of spending is not
sustainable. Spending
must be more carefully analyzed and controlled.
If not, more and larger tax increases will
be needed to continue to “feed the beast” of
state government.
Government
should not and cannot, over an extended period of
time, grow faster than the families and the
communities that support them.
Savings need to be found in some areas and
spending must be restrained in others.
There is hope.
The
bipartisan Cost Cutting Caucus headed by Del.
Chris Saxman, R-Staunton, has submitted several
bills aimed at reforming how the Commonwealth goes
about its business.
Perhaps
one of the most promising is the HB 2441, known as
the Performance Review Act which would require a
top-to-bottom review of state agencies and
programs in the first year of each new
gubernatorial administration.
Among other things, the review will focus
on effective program management, performance-based
budgeting and on the prioritization of resources
and programs.
A
similar review ordered by California Gov. Arnold
Schwarzenegger resulted in a reorganization plan
and 1,200 recommendations that projected savings
of as much as $32 billion over five years.
In addition, the state of Texas
has used a biannual review of that government, and
implemented many of the recommendations to
strategically realign its government and save more
than $3.6 billion.
Building
on last year's broad support for Saxman’s
Competitive Government Act, which requires
agencies to find opportunities for public-private
competitions, the Cost Cutting Caucus is seeking
additional public-private competition
opportunities within state agencies.
According to a 1999 review of state
activities, there were 37,555 specific job
positions that could be subjected to competition.
If all of these jobs competed with the
private sector, and if each job cost the state
$50,000 in salary and benefits; and if the state
realized a savings of 15 to 30 percent (a
reasonable savings according to many analyses),
the state could save between $281 and $563 million
in one year alone.
These
are but two government reform initiatives that
will be debated in Richmond
over the next 45 days—and by no means do they
run the gamut of options.
One thing is clear, however: serious reform
is needed. The
recent growth of the Commonwealth’s budget is
not sustainable in the long run.
The time for action is now, with a surplus
in hand before we’re faced with another deficit.
--
January 17, 2005
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