Bacon's Rebellion

With the revelation that Virginia is running another gigantic surplus, the debate over the budget and taxes is heating up again. The terms of debate, as I argue in this week’s Bacon’s Rebellion, have shifted decisively in favor of the low-tax advocates.

Last week, Jerry Kilgore argued that the surplus proves that last year’s tax increase was not needed. Now the House of Delegates is in an uproar. As Michael Hardy sums up yesterday’s developments in the Richmond Times-Dispatch: “Some House Republicans, still smarting over [Mark Warner’s] success in winning passage of a record $1.4 billion in tax increases last year, renewed cries that the package was unnecessary because of substantially higher-than-predicted rates of state tax collections.”

House Appropriations Chair Vincent F. Callahan, R-Fairfax, estimated that the state will have an extra $500 million at the end of the fiscal year — presumably over and above the $900 million or so surplus that the Warner administration had anticipated back in December/January and the General Assembly spent, mostly on transportation.

Del. R. Steven Landes, R-Augusta, was particularly harsh in his criticism of the Warner administration: “You all have the worst record of any administration,” he told Finance Secretary John Bennett at a House hearing. Del. Leo C. Waldrup Jr., R-Virginia Beach, characterized Warner as acting like “Chicken Little” about state finances.

Bennett conceded that the state needed to improve its forecasting ability. But the issue really isn’t the Warner administration’s forecasting record. Forecasting is inherently a hit or miss proposition; no one is very good at it. Warner’s mistake was justifying tax increases based on six-year projections that a long-term, structural budget deficit would leave Virginia unable to meet core obligations. Long-term forecasts are even more uncertain than short-term forecasts. Moral of the story: Don’t increase taxes on the basis of shortfalls that might materialize some hazy time in the future.

Virginia never needed the 2004 tax increase. It’s time to talk rollback.

Kilgore will, in fact, agree to debate Potts. He has no choice. If he doesn’t, his campaign is done, finished, and the tent is folded. He’s got some awfully bright folks advising him and I’d say they’re looking for the language that will allow the reconsideration of his earlier position–even as you read this. And then there are the investors, the campaign money bags. They will not sit on their hands while this campaign–and their money–goes down the drain on this debate issue. Get your popcorn ready, this debate will be on.

Despite the recent spate of Russ Potts commentary, Virginia’s favorite and longest-lived game remains, “What will Doug do?” Lee Hockstader of the Washington Post analyzes Tim Kaine’s need for Richmond Mayor Doug Wilder’s endorsement–the earlier the better.

Speaking of Russ Potts, though, Hockstader doesn’t mention Potts as a possible recipient of Wilder’s endorsement. I would suggest that Potts adds another level of intrigue to Wilder’s calculations. It’s hard to imagine Wilder being sympathetic to Potts’ tax-raising plans–Wilder could endorse Kaine and simultaneously criticize Potts. Or, Kilgore-like, he could ignore Potts. Wilder has lots of choices and lots of time.

Let the game begin.

Looks like the Blue Dog beat me to this story, but I’m going to post my version anyway….

Maverick gubernatorial candidate Russell Potts has won an endorsement from the Public Service Workers Union-UE Local 160, representing the employees of Virginia’s state mental hospitals. Given the nature of their job, the members of Local 160 clearly have developed a higher tolerance for bizarre rhetoric and crackpot logic than the rest of us.

The Daily News-Record reported:

On Monday, he (Russ Potts) went to Staunton to pick up the endorsement of UE Local 160 Virginia Public Service Workers.

“He knew a lot of the problems that we were going through,” said Allen Layman, president of the statewide organization and the Western State Hospital chapter. Layman said Potts voice would be important at the Virginia Bar Association’s gubernatorial debate next month
http://dnronline.com/local-story2.asp

The Augusta Free Press reported:

“We don’t like to be taken for granted,” union president Allen Layman said on Monday after announcing that the union had thrown its support to the independent gubernatorial candidacy of Winchester Sen. Russ Potts.

“The Democrats automatically assume that all union peoples are going to follow the Democratic ticket. But as I’ve told a number of people, in our membership we have Republicans, we have independents, we have moderates, and we have liberals and progressives. And all of us are tired of being taken for granted,” Layman told The Augusta Free Press.
http://www.augustafreepress.com/stories/storyReader$35157

Amazing! Tim Kaine’s faith-base campaign needs to wake up… before it’s too late.

~ the blue dog

Virginia’s bloggers have made Potts the CENTER of attention already–just like the Republican Party has done! If both keep this up, he’s in by a mile!

C’mon, people. The General Assembly goes to a lot of trouble to approve license plates. The least you can do is show your support. Free Tibet!

The latest edition of the Bacon’s Rebellion e-zine has been posted online. You can view it here.

Barnie Day debated Norm Leahy yesterday about the Russ Potts phenomenon over at One Man’s Trash. I jumped in, too, and today’s Bacon’s Rebellion e-zine has Barnie’s column that started it all and my commentary on it in “Virginia Pundit Watch.”

Comments are welcome here, too, on any or all of the issues: Does Russ Potts represent the center in Virginia politics? Is he a serious candidate? Is he getting a free ride in the media? Are polls showing scant support for him misleading? Most of all, can he win?

I’ve always been fascinated by the psychology and sociology of “slugging,” the practice of strangers forming ad hoc car pools on I-95 in Northern Virginia so drivers can utilize HOV lanes.

“Slugs” are worried about a new idea: allowing drivers to pay a toll to ride in HOV lanes. They fear it will end slugging. Rather than pick up a slug, drivers will just pay the toll. Slugs will be forced into their own cars, adding to the congestion. The Washington Post has the story.

Every transportation idea has its potential downside. For more learned commentary, see The Road to Ruin.

To all of our readers and my colleagues who are fathers, and to their fathers, I wish a Happy Father’s Day on this last day of spring.

My Dad worked very hard to provide for us and there weren’t a lot of extras until I was well into high school, but Dad believed passionately in being informed. He always asked his mother-in-law, my grandmother, to give him a Newsweek subscription for Christmas every year, and he always made sure we got home delivery of the Washington Post and Manassas Journal Messenger. With not a lot of diversions back in those simpler times, his choices led to the love of reading about current events becoming ingrained in me at a young age.

As I got older and started a family of my own, travelling to dinner at Dad’s on Saturday nights became a ritual. We would all sit in the living room and watch “Inside Washington” and the “McLaughlin Group.” My father would rail against the views of “that liberal, Carl Rowan” and my affinty for pundits and political discussion was cemented.

I miss him.

The Kilgore crew is finally talking tough on taxes. Citing this year’s Incredible Expanding Budget Surplus, now running 15.2 percent ahead of last year and 4.9 percent ahead of forecast, the Kilgore campaign criticized the 2004 tax increase, arguing that economic growth would have provided the state the money it needed for expanded services. Reported The Washington Post Friday:

“Jerry Kilgore was out front saying the economic growth that Virginia was experiencing would lead to greater revenue. The numbers we see certainly bear that out,” said Kilgore spokesman J. Tucker Martin. “Jerry Kilgore fully believes that the way you grow an economy is by letting people keep more of their hard-earned money. You don’t grow an economy by taking money from people’s wallets and putting it into state coffers.”

I don’t recall Kilgore being particularly “out front” in the fight against the tax increase a year and a half ago. But if he’s claiming he was, I’m happy to hear it. Let him pick up the low-tax banner. Meanwhile, Tim Kaine, who backed last year’s tax increase, finds himself on the defensive.

“If Jerry Kilgore has his way, we’d still be operating under deficit spending, we’d never have gotten our fiscal house back in order and we’d be struggling to fully fund” education, said Kaine’s director of communications, Mo Elleithee. “I’m not sure I want to take a lecture from Jerry Kilgore on fiscal responsibility.”

Mo, you’re dreaming. How big a surplus does it take for you to recognize that the tax increase was not necessary?

So, what is the spin coming out of the Warner administration these days? “I know there’s going to be a lot of second-guessing,” Secretary of Finance John Bennett said in a presentation to the Senate Finance Committee. “That just goes with the territory.”

Second guessing? Nice try. How about, “I told you so.” How about, “We predicted it, and you ignored us!” Some of us have argued all along that the tax increases were unnecessary, that expanded programs could be funded through economic growth, and that if revenue is at some point in the future inadequate, you raise taxes then, when you’re staring a deficit in the face, not now, based on the fear that deficits might occur one day. C’mon, suck it up and admit it. You blew it! Raising taxes was the biggest mistake of the Warner administration, and it’s going to come back to haunt you.

Gov. Mark Warner was interviewed this morning on NPR about Medicaid. As Chairman of the National Governors Association, he is the leading spokesperson for the states on this troubling issue.

Virginia has seen Medicaid spending go from $1 billion to $5 billion over the last 15 years. Warner identified three factors contributing to the rise: the Federal government push costs to the states, fewer employers offering insurance (in effect urging employees to go on Medicaid), and the “disinvestment” of senior citizen assets, making them eligible for Medicare funded long-term care because they are suddenly “poor.” As Medicaid spending surpasses education spending in states, Warner says a “grandma vs. grandkids” confrontation is being created.

The Governor sounded confident and in command of the issue. He deftly sidestepped a late question asking if the Medicare issue might make someone want to be president.

I’m not the only one to be fixated on the ever-growing state surplus, which the Associated Press now pegs at $1 billion this year. (I presume that’s over and above the surplus talked about in January, which the General Assembly largely funneled into road projects, though I’m not sure.) Arlingtonian Tim Wise over at the Growls blog quotes The Washington Post and Richmond Times-Dispatch:

According to the Post, the Secretary of Finance “told the Senate Finance Committee that tax collections have increased by 15.2% over the first 11 months of the last fiscal year . . . well ahead of the official forecast of 10.3% growth for fiscal 2005, which ends in two weeks. Revenue grew at an even higher rate in May, increasing by 23% over last year.” The AP story in today’s Newport News Daily Press points out, “Even without last year’s $1.4 billion tax increase, revenue would have been up 19.2% last month.” The bottom line, as usual, seems to be provided in a Richmond Times-Dispatch editorial: either Governor Warner’s fiscal analysts “are woefully off base in their revenue projections . . . or Warner and his staff continue lowballing estimates in order to increase support for the Governor’s political agenda.”

Everyone has their own idea of what to do with that money. My personal favorite is to give it back to the taxpayers. One place to start looking for ideas might be the Freedom & Prosperity Agenda unveiled by a coalition of Virginia conservaties in April. Just to get the conversation started, here are some of that group’s ideas:

• Eliminate the War of 1812 tax (BPOL)
• Pass a Taxpayer’s Bill of Rights (TABOR)
• Eliminate the Death tax
• Eliminate the prepayment of the Sales and Use tax
• Constitutional Amendment to base real estate taxes on the acquisition value of the property
• Proposals for new taxes must contain sunset provisions
• Eliminate the car tax

For details on the Freedom & Prosperity Agenda, click here.

Not Larry Sabato runs the Virginia House of Delegates 2005 Elections blog and he is the toast of the Commonwealth after a perfect record of predicting Tuesday’s elections (although Not Mark Rozell begs to differ).

Not content to rest on his laurels, Not Larry has announced a Friday “Celebrity Blogging” feature that debuts June 23d. Sen. Ken Cuccinelli, R-Fairfax, and David Englin, Democratic Delegate-elect from Arlington, will each discuss one candidate or issue each week.

Virginia Pundit Watch will be watching!