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“You
cannot keep out of trouble by spending more than
you earn." –Abraham Lincoln
With
the General Election in Virginia just around the
corner, the gubernatorial candidates should have
articulated by now some positions on how they
propose to bring under control the runaway
spending in Virginia. Alas, that’s not the case.
Both
Jerry Kilgore (R) and Tim Kaine (D) have made
promises to increase spending, but have shared few
details on how they intend to fund their spending
spree. That's too
bad, because Virginians need to have an honest
dialogue about our state's spending.
Kaine
is downright proud of the tax increase enacted in
2004—the largest in the history of Virginia. On
the other hand, Kilgore has spoken of his
opposition to the 2004 tax increase; however, he
is now proposing new regional bodies with their
own taxing authority subject to voter confirmation
via referenda.
Neither
candidate has spoken about the unprecedented
growth in spending, which has caused the state
budget to double in about a decade. As a matter of
fact, state spending has grown 7.3 percent
annually between 2000 and 2004—even faster if
you look back at the entire decade.
It
far outstrips any objective benchmark for how
quickly Virginia’s government spending should
reasonably increase. And given last year’s
unprecedented tax increase, the spending for the
2005-2006 budget years will mushroom even higher.
Contrast
this to an inflation rate that has averaged about
2.5 percent and Virginia's population growth,
which increased about one percent on average
annually over the same five-year period. If
spending had been held back to meet population
growth plus inflation, state spending would have
grown by less than half the growth it enjoyed.
This
gargantuan growth in state spending is still not
enough for the tax-and-spend contingent in
Richmond. We continually hear screams for the need
to increase spending and the state’s unmet
needs.
Which
begs the question, how much is enough? It seems no
matter that how fast we have turned on the
spending spigot, liberals such as state Sen. John
Chichester, R-Northumberland, continue their
mantra calling for increased spending.
Both
gubernatorial candidates have added their voices
to this choir, by proposing several new spending
programs, while at the same time being silent on
how they will finance them. Both have missed a
golden opportunity to have a truthful dialogue on
the out-of-control spending.
Instead
it is politics as usual, with each candidate
trying to outdo each other on promising a free
lunch to the voters. Both are trading barbs on
various campaign issues, but neither is engaging
the voters in a serious discussion about state
finances.
Virginia’s
budgeting process was set up in the early 1970s.
Contrary to Gov. Mark Warner’s (D) oxymoron
statements that last year's tax increase was a
budget reform exercise, state government continues
to use the same budgeting procedures that were in
effect long before the advent of modern computer
systems.
That
is why it is virtually impossible for most
legislators to make sense out of Virginia’s
arcane budget. Just like the Pharaohs of Egypt,
only a few key legislators are privy to the inner
workings of the process—they are the good old
boys and they are determined to keep it this way.
If
the current spending spree is allowed to continue
unabated, we can project a biennial budget in the 2012-2014 cycle of more than $110
billion—another 85 percent increase over the
next six years (i.e., three budget cycles).
Virginia
used to be a low tax state, but that is no longer
the case. Ten years ago, Virginia was ranked 42nd
when its tax burden was compared to other states
(50th being the lowest ranking). That low tax
burden fueled the unprecedented economic growth we
have witnessed since the early 1990s.
Today,
however, Virginia ranks 34th on the tax-burden
scale. That puts us closer to the middle of the
scale, which means that we are no longer
competitive when it comes to fueling new economic
growth.
If
runaway spending is allowed to continue, taxes
will have to be increased time and time again to
finance the continued spending spree. This will
result in an even higher tax ranking and will
spell our economic doom.
In
contrast to those who see only a deficit on the
spending side of the equation, others see gross
waste in the state expenditure of
our hard-earned tax dollars. Earlier this month,
the Virginia Institute for Public Policy in
collaboration with Citizens Against Government
Waste, issued a publication entitled: “2005
Virginia Piglet Book.”
This
study identified some $2.4 billion in wasteful or
duplicate programs. Additionally, the study
recommended that the State implement existing
recommendations, brought forth by the Wilder
commission in 2002; very few of these
recommendations have been implemented and they
could save an additional $1.5 billion each
biennial budget cycle.
The
report makes no recommendations on the budgeting
process, but it goes without saying that
Virginia’s budget must be reformed from the
ground up. In this day and age, there is simply no
excuse for not having instituted a performance-based
budgeting system.
At
the same time, our state government needs to
establish a State Inspector General, that has
independent oversight and audit responsibilities
over all functions of state government.
Unfortunately,
both campaigns have failed to bring the discussion
on state spending to the public forum. Instead we
get more promises for new spending programs, which,
if enacted, will add new obligations to an already
overextended budget. In the meantime, the spending
faucet is dripping out of control and just like in
real life, you can never find a plumber when you
need one.
--
October 31, 2005
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