Guest Column

John H. Chichester





Editor's Note: John Chichester, president pro tem of the Virginia senate, delivered this speech Aug. 5 to the Virginia Foundation for Research and Economic Education. Bacon's Rebellion publishes the speech with his permission.


It’s a pleasure to be with you today. I consider this a real opportunity. The collective brainpower in this room knows no bounds, and it’s a privilege to stand before you to offer my thoughts about Virginia’s future.


I plan to be very candid in my assessment of where we are, and hope that you will likewise be forthcoming with your views about how business leaders can help forge the direction for our future.


There has never been a time when Virginia was more in need of active participation from its business leaders in the governing process.


Why is that the case?  Because the business community understands the need to look down the road – to make strategic decisions today that will deliver tomorrow’s goals.


You know that at key points in the business cycle, investments have to be made in order to produce the results that your stockholders will demand in the future.


Unfortunately, the political environment is not conducive to that type of thinking. Those of us in the political world want immediate gratification – that usually means re-election.


With a very short election cycle, it’s hard to find the courage that’s needed for long-term thinking.


That’s why we need help from the business community in setting the direction.  There’s no group that carries more weight than proven business leaders.


And, in my view, the time to make strategic decisions is when you’re coming out of an economic downturn.


As you well know, when the economy tanks, priorities rise to the surface. Businessmen look to the bottom line and make the hard choices. The public sector follows a similar process, weighing what it can and cannot live without.


And, as would be expected, the end result is a de facto statement of our highest priorities. Having dealt with a $6.0 billion budget problem over a three-year period, suffice it to say that the Commonwealth has “prioritized away” all but the core functions. In addition, we have used some one-time measures to weather the economic storm.


As a result, the Commonwealth stands leaner and with less flexibility than it has enjoyed in the past. Why less flexibility? Because much of the extra revenue that was collected during the “bubble years” went for things that can’t easily be retracted.


Much of the money was spent to regain ground lost during the last recession and to achieve goals that we thought were important, such as lowering class size in our public schools, reducing the cost of a college education, and providing about $1.5 billion in tax relief to our citizens, with the largest single measure being car tax relief.


And so, when the economy started to slide, we “paid” for those decisions by having to look elsewhere in the budget. It goes without saying that no one wants to cut public education. No one wants to take back tax relief. No one wanted to return to rising college tuition, but in fact, that is one of the areas where we had to backslide.


The recession left us with no choice. And now we stand as a leaner organization – poised for the future, with a budget that is highly concentrated in core functions. Three quarters of our general fund budget rests in education, Medicaid (which provides health and nursing home care to the poor and elderly), and public safety. The remaining quarter of our budget is spread across a host of services – from a court system to environmental protection to economic development.


As we move forward, the first thing we have to do is make certain future revenue growth is channeled into our highest priorities – those basic core services, rather than being diverted into “sideshows.”


I’m hopeful that this effort will be aided by work of the Council on Virginia’s Future, which I am privileged to sit on with business leaders like Dubby Wynne, Heywood Fralin, and others. Part of our effort will be to look at where service demands will come from in the future and make certain we have a way to measure the success of our response to those demands.


That is an essential component of our long-range planning. But, it is not the only component. Just as we have an obligation to make sure every dollar that comes into the state treasury goes for essential services, we also have an obligation to weigh expected demands against expected capacity.


The people elected us to make informed judgments on their behalf. It’s easy to tell people what they want to hear – it’s sometimes difficult to tell people what they need to know.


Everything revolves around choices. If the questions are framed properly and choices flow from those questions, we get direction. If the questions aren’t properly framed, we don’t. It’s that simple.


Perhaps that’s why I get so frustrated when I hear my colleagues say:


“No one is coming up to me on the street and saying they’re under taxed!”

Of course they’re not.


No one in Stafford County is telling me that we need to renovate a dilapidated fire hazard in Capitol Square – but we do.


No one is telling me we should replace our antiquated, inadequate telecommunications system for our State Police but we should.


No one is telling me that our courts are overcrowded and understaffed – but they are.


I dare say the president of Ford Motor Company also doesn’t have customers coming up to him on the street saying Crown Victorias are too cheap and the price should be raised.


Let’s get real –


If we notice a crack in the dike, we don’t cop-out by studying how high the water might get if it breaks.  We don’t form a commission to ascertain whose property downstream will get damaged if it breaks.  Instead, we spend the dollars to fix the dike!


What I’m trying to say is that our obligation as policymakers is to see where there is a problem – to think beyond our current term of office – to look down the road and frame the questions in a way that our citizens know the real choices that we are weighing.  To do less is to deceive those who put their trust in us.


As I look at the landscape, I see several things – some that have already played out and others that will play out in the not so distant future.


I see a state that has promised car tax relief and food tax relief but has been unable to fully deliver on either because of the cost;


I see numerous reports that say our present tax system is outdated and full of inequities;


I see recommendations from a legislative watchdog agency and the Board of Education saying the state should be paying a larger part of the public education cost. Obviously, this would take pressure off local property taxes;


I see a legislative study that concluded higher education is being under funded by several hundred million dollars, and the logical conclusion is that access, quality, or affordability has to suffer;


I see and hear about a transportation system that is losing ground every year;


I see demographics that tell me our population 65 and older will grow 28 percent over this decade. Our public education enrollment will grow modestly, but the number of special education kids who cost twice as much to educate will grow faster. And college enrollment now seems to be on a steeper up-tick than previously thought.


These are all things that will require innovative thinking or extraordinary effort to confront.


I don’t want to paint a negative picture. Clearly, we are very fortunate in the Commonwealth. Virginia’s economy is diversified and vibrant. Once we fully emerge from the recession, we can expect revenue growth in the five to six percent range each year.


That will take care of commitments such as bringing public education SOQ costs up-to-date every two years, covering double-digit increases in Medicaid health care and nursing home costs, and keeping our growing prison population behind bars.


But, since these are areas that grow faster than the rate of inflation and faster than our overall revenue growth, we must continually allocate most of our new revenue to these areas, leaving other areas of responsibility to slowly starve over time.


For example, we never have sufficient revenue to work down the huge backlog of deferred maintenance at our colleges and other state-owned buildings.


Cases get stacked up in our court system because we can’t add staff to work down the caseload.


We often go for years without a solid pay raise for our state employees. We can’t deal with issues like retention of our state police.


We virtually never fund enrollment increases in higher education any more but require colleges to “eat the cost.”  That generally finds its way into higher tuition or fees.


I could go on ... but what I’m really saying is that I fear the stealth damage we're doing to our infrastructure by letting these things go dormant -- damage that we won't see today, or a year form now, but that we will see some five to 10 years down the road."


If we want to do more than “run in place”, if we want to address any of the extraordinary issues that I noted earlier, then we need to step up to the plate and explain to the people of Virginia just what the problems and choices are.


We had an open debate with the citizens of Virginia last fall, and the message was somewhat mixed. The overwhelming support enjoyed by the General Obligation Bonds tells me the people of Virginia do care about our Commonwealth, and they are willing to invest in its future.


But, the people also sent us back to the drawing board for a way to address our transportation needs.


Now, there are a myriad of possible meanings in what was said in two regions of our state regarding transportation. Some like to say the people were sending a simple message – “no new taxes.”


On the other hand, the message could have been, “I want a statewide solution rather than a regional solution, because I’m afraid my tax dollars will be used to fix problems in other areas of the state.”


It might have meant the citizens think we should try different approaches to solving the problem, like making new subdivision roads the responsibility of the county or neighborhood instead of taking them into the state system.


It isn’t clear what the citizens were saying, but I’m quite certain that two startling statistics have not registered with either our citizens or our policymakers.


The first is that 13 percent of our highway revenues are needed to service debt. That compares with the self-imposed limit of five percent that we feel is prudent on the general fund side.


Second, more and more money is being siphoned out of construction every year for road maintenance. In 1986, when the General Assembly last looked at transportation finance in a comprehensive fashion, more of our transportation dollars were being spent on construction than maintenance. Today, there is a stark reversal and $1.85 will be spent on maintenance for every $1 spent on construction. That means that over the next six years, more than $400 million will be diverted from construction to maintenance.


It means that in FY 2009, VDOT is projecting that $168 million less will be available for interstate, primary, secondary and urban construction than is available in the current fiscal year, because maintenance costs will continue to take a larger share of the pot.


And so, while signals from our citizens may be somewhat mixed on the transportation front, we can’t let that scare us away from asking the questions that need to be asked.


You tell me what is needed in the area of transportation . . . I think I know.


But, as legislators, we can’t divine the answers. The answers must come from our citizens, and it is only through those answers that we can develop a plan for meeting core services into the future.


The questions are simple:


As a Commonwealth, are we making progress?


Are we standing still?


Are we losing ground?


We can’t set the bar on the service side going forward without an honest answer to these questions.


Once the bar is set, we can measure our performance against it.  And once we begin to measure, we have to acknowledge that fiscal responsibility runs in two directions.


Fiscal responsibility includes cutting taxes. ... It also includes adequately funding those things that we collectively agree are our basic core obligations.


Please don’t misunderstand me – my focus is on securing adequate resources to meet our basic needs and our core responsibilities. I do not seek to advance popular initiatives that stray from our core duties.


I have no illusions about our inability to be all things to all people. While striving to excel in each and every program is a laudable goal, it also is a sure-fire prescription for mediocrity.


But, there are things that we should consider. We should consider whether revenues can be restructured in a way to make them fairer and more dynamic in terms of reflecting the modern economy.


We should consider whether our relationship with localities needs to be changed. Are there things the state demands of them, yet does not support? Are there activities they provide that have outlived their usefulness?


Most agree that we need to eliminate the car tax once and for all and then provide equivalent dollars to localities through a change in the state and local tax structure. In that way, we get the car tax a local tax out of the state budget and out of our budget debates so it does not compete with our core obligations.


We should look at other taxes, too the sales tax on food, the estate tax. We need to reexamine our tax preferences and exemptions.


And while we’re at it, we should consider all revenue sources. Are there opportunities to rely more on user fees and less on general funds? If we charge for more services, will we get a better sense of what the people are willing to buy?


Realistically, we can’t address these issues overnight.  But, we recently initiated the third tax restructuring panel in four years. If we don’t take any meaningful action, we will lose credibility with the people of Virginia. I do think you will see some recommendations from this year’s tax commission – even if they have to emerge in the form of a minority report.


Complacency should no longer be an option. Being a steward of the public trust involves thinking ahead – it involves formulating difficult questions that need to be asked. It involves asking the citizens of Virginia what they want their government to be.


But that input from the people must be balanced with our duties as elected officials. If we listen to only the squeaky wheels, we’re not doing right by each and every one of the seven million citizens of Virginia who look to us for leadership.


Our task, with the input of our citizens, is to design a package that will withstand the test of time and carry us over future economic hills and valleys without great disruption. We make major structural decisions infrequently; we need to get it right.


If we’re not willing to make the effort, if we’re going to concede defeat before we’ve floated the first proposal, then we need to be honest with ourselves.


If we’re content to be a grade “C” state, then we plug along as we are now.


If we are content to be “middle of the road”, then we build our resource structure accordingly.


Alternatively, if we feel we should provide “A+ “services in a given area, then we need to provide the resources for it.


Let’s not kid ourselves we can’t sustain quality without continual reinvestment and renewal.  You know it, and I know it. Before too long, the industries we try to court and the rating agencies we attempt to impress will see through our facade.


We know resources will never be limitless; we will always need to set priorities and make choices. But we are way overdue to begin the conversation about what we want Virginia to look like 10 or 15 years from now.


If not, my fear is that one day we will wake and find that our foundations have been attacked by the dry rot of inertia, denial, and lack of courage.  


* * * * *


I was reminded recently of the motto for one of Virginia’s founding families. It says:


“Not unmindful of the future.

This struck me as especially appropriate for Virginia at this crossroads.


It tells me that we should respect our past, and nurture what we currently do well. But it cautions us to keep a vigilant eye on how our actions today impact our tomorrows. Our choices today have consequences for the future - some intended, some unintended.


As leaders in our communities, I ask for your help in continuing this dialog about where we’re going.


Specifically, if you have a view, please sit down with the delegate and senator in your district and share it.  As I said earlier, proven business leaders can get the ear of legislators.


Also, I ask that you engage your colleagues in the business community back home and members of your civic groups and other clubs. Talk to your neighbors.  Do anything that you can to help carry the message that we are looking for a signal from Virginians about what they want their Virginia to be ten to fifteen years from now. It is up to the elected officials to chart the course once we know the direction.


We must ask the question. We owe it to our children.  We owe it to the growing elderly population, many of whom will have to turn to the state in the years ahead.


And we owe it to ourselves as thoughtful and compassionate citizens of the greatest state in this nation.


Thank you for your time and interest.


-- August 11, 2003



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