Bacon's Rebellion

THE TRANSPORT PROBLEM IS NOT WHAT THE POLITICAL CLANS WOULD LIKE VOTERS TO THINK IT IS

The Commonwealth’s quadrennial political football classic is ratcheting up to peak frenzy. Many agree that the number one ‘PROBLEM’ in the state’s most populous New Urban Region is “The Transport Problem”

In the words of WaPo columnist Robert McCartney: “If you’re a candidate for governor coming to debate in Northern Virginia, you’d better be able to say simply and plainly how you’d raise money to repair and improve the roads.” (WaPo B-1 18 Sept 09)

That spin on the “The Transport Problem” (aka, the Mobility and Access Crisis) is in complete harmony with conventional wisdom and spawns questions such as:

“Where will the money come from to fix up and expand the roadway system?”

“What are we going to do to help commuters trapped in congestion?”

As pointed out in “Transport Strategy Disaster” (Bacon’s Rebellion Blog. 1 Sept 2009) both political Clans have been trying to avoid addressing the fundamental realities underlying “The Transport Problem.” Since that essay was completed, the picture has changed but it has not improved in any significant way.

THE ELEPHANT CLAN ANTIPLAN AND THE DONKEY CLAN SOUND BITES PLUS PROCESS.

Jim Bacon’s perspective in “McDonnell’s Transportation Plan: Disaster on Wheels” (Bacon’s Rebellion Blog, 19 Sept 09) are RIGHT ON. The Elephant Clan has NO Mobility and Access strategy beyond – “vote for me. You know you can trust me to find money to fix the transportation problem from sources that are not called a ‘tax’ – really!! You can trust me, I believe the same things you do.”

* This is the second of two Fall 2009 essays on the politics of transport in the Commonwealth of Virginia. “Transport Strategy Disaster” was published 1 September 2009.

WaPo tends to agree on the transparency of the Elephant Clan ploy. See editorial “Drinking Games: Robert F. McDonnell’s transportation plans rest heavily on privatizing hard-liquor sales in Virginia. It is sober?” 26 Sept 09.

The Business-As-Usual interests, including MainStream Media is frustrated that the Elephant Clan is not committed to a new source of revenue to throw at “The Transportation Problem.”

Until very recently the Donkey Clan also had no strategy to solve “The Transport Problem.” As WaPo put it editorially on 20 September: “Mr. Deeds’s Dilemma: It’s Political Suicide To Urge Higher Taxes, and Folly Not To.”

As of 23 September, the Donkey Clan HAS a ‘plan.’ (“My Transportation Plan” Creigh Deeds, (WaPo Page A-29, 23 Sept 09). The plan consists of nine popular transportation sound bites and a ‘bipartisan’ process. The process is based on the program employed by Gov. Gerald Baliles in 1985 / 86. Business-As-Usual interests like to point out that this was the last substantial increase in transportation funding in the Commonwealth. The mid 80s were also the point at which it became very obvious that more money was not ‘the answer’ to the Mobility and Access Crisis.

This has resulted in the evolution of The Three Legged Stalemate. On the one hand are those who want to find money to throw at the problem. On the other hand there are those who, for a variety of reasons – “do not raise taxes,” “let someone else pay” and “starve the beast of government” among them – do not want to spend money. A third perspective is that spending money is needed but spending it on the same things that have not worked in the past will only make things worse. This is the Three Legged Stalemate.

In addition, the climate for bipartisan compromises has changed since the mid 80s as noted below. Before getting to that reality, what about the Donkey Clan transport sound bites?

THE LIMITED VALUE OF SOUND BITES

Every one of the nine Donkey Clan sound bites requires a set of detailed, specific conditions and caveats. The devil is in the details and without the specifics every sound bite could be ‘accomplished’ in a way that makes Mobility and Access worse, NOT better. At first blush, most of the ideas sound ‘good’ but are detrimental unless there is a clear definition of what exactly the sound bites mean.

For example the first Donkey Clan sound bite is “Bring high-speed rail to Virginia.” Here the parameters of success are very clear:

Unless there are supportive land uses in the station areas of a high-speed rail system (including across-the-platform connections to SubRegion-serving shared-vehicle systems) building high-speed rail lines will NOT improve Mobility and Access in the Commonwealth’s three New Urban Regions.

These three New Urban Regions are where over 85 percent of the economic activity is concentrated and nearly that percentage of the population of the Commonwealth lives and works.
Every one of the sound bites requires similar specific caveats.

“SPECIFICS” BEHIND THE GENERALITIES?

On 27 September, WaPo published responses from the Donkey Clan and Elephant Clan candidates titled “My (Specific) Promises to Northern Virginia.” We leave it to others to judge which Clan representative makes the most effective promises.

However, with respect to “The Transport Problem” each trots out a list – or by vague reference embraces – the Business-As-Usual wish list of ‘projects.’ The named projects are examples of just what one would hope were NOT the “content” behind the sound bites – if the objective is Mobility and Access for a majority of the citizens in the Commonwealth.

The Elephant Clan is STILL proud that they unveiled the AntiPlan overlooking I-66 instead of Columbia Pike. For the reasons spelled out in “Transport Strategy Disaster” that is NOT a good thing.

AND THE DONKEY CLAN PROCESS?

After carefully articulating the parameters of the sound bites and a full evaluation of all the projects on the Business-As-Usual wish list, the next hurtle is the probability of having a better outcome from a bipartisan process than was the case over that last four years – or the last two decades.

Based on the last decade of transport funding conflict in Virginia (and almost every other topic on state and national political agendas) signing a bipartisan bill to raise money for the nine sound bites is wildly optimistic – or a good excuse for nothing at all getting done.

There is no question that Business-As-Usual likes the Donkey Clan ‘plan’ better than the Elephant AntiPlan because it is presumed that it would entail spending more money. The 24 September WaPo editorial was titled “Honesty on Transportation: Mr. Deeds has leveled with Virginia voters, Will they listen?” WaPo has consistently confused solving “The Transport Problem” with spending money on what has not worked, is not working and will not work in the future.

The real question is: Will citizens vote for the nine sound bites and a bipartisan process or will they vote for another no tax promise?

BUT WAIT JUST A MINUTE!!

The PROBLEM IS that MONEY is NOT ‘THE PROBLEM’ with Mobility and Access.

Pretending that money is “The Problem” and pretending that building more of the same infrastructure is ‘The Solution” leads to repeating the wrong questions and perpetuating the myths outlined in “The Transport Strategy Disaster.”

The REAL questions are, will Commonwealth Agencies:

“Start to prepare citizens for the future now?, OR

“Will they allow the drivers of the Mobility and Access Crisis to fester for yet another election cycle?

It is just a matter of time – and time is running out – before the lack of Mobility and Access will explode with devastating impact on the economic, social and physical well being of every citizen in Virginia.

STOP LYING TO CITIZENS

The first step is to stop lying to citizens.

Traffic congestion is NOT the problem, and

More roadways for Large, Private vehicles to carry passengers, goods and services are not the ‘answer’ REGARDLESS of who pays or if it is called ‘tax’ or manna.

Of course there is a need to invest in infrastructure.

Of course it will take a lot of money to make up for past neglect of infrastructure.

Of course it would be nice to have a fair distribution of costs and a rational nexus between use of and payment for transport infrastructure. If that had been the strategy for providing Mobility and Access when the Commonwealth took responsibility for roadways 85 years ago there would not be a Mobility and Access Crisis now.

But we are where we are and it is time to come clean:

THE PROBLEM is almost exclusive reliance on Large, Private vehicles to provide citizens with Mobility and Access. It does not work.

Exclusive reliance on Large, Private vehicles did not work in times of cheap energy and it will be a disaster to pretend it is a viable option as the cost of energy goes up.

It turns out that Large, Private vehicles have NEVER been a good option to provide the majority of citizens with Mobility and Access.

Even in relatively Balanced Urban agglomerations – and in spite of massive subsidies, direct and indirect – more that half the citizens are too young, too old, or have other conditions that isolate them when the only source of Mobility and Access is Large, Private vehicles (aka Autonomobiles). It is clear that Autonomobiles have provided Mobility and Access for an even lower percentage of the citizens in intensively developed Urban areas (the ones with the lowest per-capita consumption of energy and resources) and in areas of intensive poverty.

LOOKING BACK

The peak economic and social efficiency for Large, Private vehicles came in the mid-fifties. At that time a junior in high school could earn enough money in one summer to buy a very serviceable Large, Private vehicle. If Junior paid attention in shop class and read the owner’s manual they could keep the vehicle running at an affordable cost. Society wide erosion of Mobility and Access has been caused by two forces over the past 50 years:

• Ever more complex and expensive Autonomobiles

• Ever more dysfunctional settlement patterns

As Urban agglomerations grew larger and higher percentages of Households which are forced to rely on Autonomobiles for their Mobility and Access, congestion, delays and deaths grew.

In every large Urban area in the US of A traffic congestion has grown every year for over two decades in spite of billions is roadway construction. At the same time community and environmental destruction has escalated.

When viewed from a Regional perspective Autonomobiles are a splendid means of driving consumption but they are not an efficient means of Transport. The larger the Urban system (Region), the more inefficient Autonomobiles become. That was true with artificially cheap fuel. As energy cost rise, new technology cannot paper over the fundamental problem with reliance on Autonomobiles for Mobility and Access.

Scholars and independent researchers have been predicting citizens would reach the end of the road for reliance on Autonomobiles since the 1920s. The “non-polluting alternative to the horse” turns out to be no more efficient than its four legged predecessor due to the same reality of physics:

The space to drive and park the Autonomobile disaggregates Urban settlement patterns to the point of gross dysfunction for Urban economic and social activities. (See THE PROBLEM WITH CARS – PART IV of TRILO-G.)THE DEBT CHASM

There is a gaping hole in the road ahead for Large, Private vehicles: It is called debt. This debt chasm is made up of: The rising cost of energy, the rising cost of mitigating of environmental impacts, the growing balance of trade deficit, the growing military costs of energy security, the cost of past deficit spending (Household, Agency, Enterprise and Institution), the Wealth Gap and most of all the cost of evolving functional, sustainable human settlement patterns.

Citizens in Virginia, the US of A and in the First World have burned through Natural Capital in an attempt to cover the costs of patterns and practices of consumption that are unsustainable.

Now humans must learn to live on Natural Income.

Pay for past sins of Mass OverConsumption and debt and start living on income or bid goodby to democracies with market economies. Only brutal, totalitarian, dictatorships can maintain the vast disparities in wealth, happiness and safety that result from an inequitable allocation of resources.

With the rising cost of energy, a growing number of Households will not be able to afford Large, Private vehicles. They will also not be able to pay their fair share of the cost of dysfunctional, scattered settlement patterns. These dysfunctional patterns are dictated by the space needed to drive and park Large, Private vehicles. (See THE PROBLEM WITH CARS noted above.)

As outlined in “Transport Strategy Disaster” (Bacon’s Rebellion Blog, 1 Sept 09) after Agencies stop lying to citizens about the shape of a viable, sustainable future, the next step is to articulate human settlement patterns that are sustainable. A four step process to accomplish this is laid out in “Transport Strategy Disaster.” THEN Mobility and Access systems can be designed to serve these functional settlement patterns.

THE BASIC PARAMETERS

A sustainable future requires a Fundamental Transformation in human settlement patterns. Settlement patterns must accommodate a society in which 95 percent of the citizens rely on Urban activities to support their Households. The way to create places where citizens are happy and safe is to have:

Balanced Communities inside the Clear Edge around the Cores of New Urban Regions and Urban Support Regions, and

Balanced But Disaggregated Communities in the Countryside outside the Clear Edge around the Cores of New Urban Regions and Urban Support Regions.

Some would like to profit from creating more Urban places. There are already too many half-built ‘places’ with vacant and underutilized land. These dysfunctional places must evolve to
become Balanced Places by repairing the scattered and unconnected Urban fabric that now exists.

One of the most effective tools to create more functional settlement patterns is the creation of shared-vehicle systems serving functional and Balanced Urban activities in the station-areas.

Failure to understand this reality is why the Elephant Clan choose the wrong place to announce their AntiPlan as articulated in “Transport Strategy Disaster”

The future will not arrive over night but in the long term there must be:

• Fewer and fewer Large, Private vehicles

• More and more energy efficient shared-vehicle systems for passengers and freight

• Less reliance on vehicles of any kind

The decline in the overall use of vehicles will reflect the fact that vehicles – especially Large, Private vehicles – will become more and more expensive.

In addition, with functional settlement patterns, more and more citizens will already be where they want and need to be, or a short walk away. The human body requires exercise and walking, not vehicles, is the most efficient way to Access nearby destinations for most citizens.

With functional human settlement patterns, shared-vehicle systems can provide high value trips necessary to support quality of life but vehicles will NOT be needed for most trips now requiring Large, Private vehicles due to settlement pattern disaggregation.

A functional Balance of transportation system alternatives will often include:

• A Network of paths and roadways to provide Mobility and Access via walking / human powered vehicles / small self propelled vehicles

• Shared Vehicles – jitneys, short term rental vehicles, car pools / Personal Rapid Transit / street cars / light rial / heavy rail

• IntraRegional Rail (often mischaracterized as ‘commuter rail’)

• InterRegional Rail / High Speed Rail

• Boats

• Aircraft

When the total costs of location decisions are equitably allocated, a diverse, functional system of Mobility and Access options will facilitate the transport of goods, services and passengers by the most efficient and functional mode.

When the total costs are fairly and equitably allocated to support CONSERVATION and NOT CONSUMPTION, Regional and Subregional import replacement will provide a more efficient way to supply many (but not all) Regional needs. This will reduce the total transport demand.

And what about those ‘commuters’ to whom both the Elephant Clan and Donkey Clan pander?

There is no way to ‘help’ those who now rely on Large, Private vehicles for long commutes except to help them become non-commuters by evolving Balanced Communities.

THE FUTURE OF DEMOCRACIES WITH MARKET ECONOMIES

What is the alternative to a fair allocation of resources, evolving more effective, democratic governance and creating better informed markets? Totalitarian dictatorships.

Dictatorships from the right or from the left are the only way to forcibly maintain gross disparity in wealth that has been derived from consumption of natural capital by using contemporary technology and abusing economies of scale. The Wealth Gap has been growing for two decades. The Wealth Gap will continue to grow at an accelerating rate due to settlement patterns that require costly and inefficient vehicles to secure Mobility and Access.

Unless there are functional human settlement patterns that facilitate Mobility and Access without resort to inefficient vehicles, only a few at the top of the Ziggurat will be able to rely on vehicles – the rest walk for ALL their trips. There are working models of the future under these conditions – it was formerly called The Third World.

When the majority at the bottom realize there is no way to work their way up, chaos will be the order of the day, of the year and of the decade.

The existence of large, complex Urban agglomerations is the only configuration of human settlement that has demonstrated the capacity to maintain a competitive, technologically driven “modern” society. Large New Urban Regions attract and support not just ‘workers’ but the Creative Class upon which positive evolution of civilization depends.

Evolution of governance cannot not stop with democratic Region structures to govern New Urban Regions and Urban Support Regions but must extend to the smaller scales of organic human settlement.

Governance Agencies close to the governed are an absolute necessity in a society of educated citizens. The most important Agency is at the smallest practical scale for direct democracy, the Cluster. Representative democracy at the Neighborhood, Village, Community, SubRegional and Regional scales are also critical.

Pretending to ‘solve’ The Transportation Problem’ by throwing money in the roadway will only prolong the lies and Myths, perhaps past the point of no return.

There must far more investment in infrastructure in the future. Collectively, citizens and their Organizations have been paying nowhere near the cost of the current trajectory.

A sustainable future will require money to be raised and spent but not for roadways for Large, Private vehicles.

In the short term the problem is how to stop lying to citizens without causing them to abandon all hope. It is unrealistic to assume either Clan will be able to make this change before election day.

However, the next day…

EMR

It’s not often that I find myself agreeing with op-eds in the Los Angeles Times, but a piece by Christopher Layne and Benjamin Schwarz, “The Twilight of Pax Americana” is must reading. In a nutshell: The United States is on a fiscally unsustainable path that will undermine its ability to continue playing the world’s policeman. We cannot long maintain our military commitment to allies, much less continue fighting endless wars overseas. As our power recedes, regional powers will fill the vacuum. The era of global U.S. dominance is coming to an end.

From time to time, one must admit he is wrong — or maybe not quite right.

Corporate income tax as a percentage of gross revenues reported to the IRS (2008):

United States: 12.9%
Virginia: 17.3%

Source: Internal Revenue Service Data Book (2008), Table 5.

Question: What does this tell us? How do we explain the fact that corporations account for a disproportionately large share of the federal income tax take in Virginia than in the United States as a whole? The same federal tax code applies across the country. Do Virginia certain industries disproportionately benefit from special tax breaks analogous to the oil depletion allowance? Alternatively, do Virginia businesses pay higher taxes because they are more profitable? Or, another theory: Do Virginia businesses pay higher taxes simply because we have more large tax-paying corporations domiciled in the state?

I’d like to see you braniacs out there weigh in on the issue. Perhaps you can bring some relevant data or analysis to bear.

For all the wailing one hears, especially in Virginia, about Barack Obama being some kind of radical with a socialist agenda, let’s take a reality check.

The Virginia Institute for Public Policy has published a must-read analysis of the impact of proposed health care reform on Virginia. Far from bringing the cost of health care under control, as its advocates assert it will, “reform” based on President Barack Obama’s principles will drive medical price inflation 5.2% above what it otherwise would be by 2019. Higher medical costs will run up both federal and state spending, costing every man, woman and child in Virginia $4,176 in net present value.

Virginia Tech has a great football program this year, but the team that gets me stoked is the squad of architectural-engineering students competing in both the U.S. and European Energy Solar Decathlons, the only U.S. team to do so. The challenge: to build the most attractive energy-efficient house. The solution: The Lumenhaus.

I don’t know whether or not there’s a mass market for the 800-square-foot house, even one as cool as this — Americans love their square footage like they love their cars — but many of the concepts described in the video are bound to enter the marketplace. I’m especially intrigued by the notion of “responsive architecture,” made possible by new information technologies.

Go Hokies!

The contrast between Virginia’s two gubernatorial candidates could not be more stark: Elephant clan candidate Bob McDonnell has thought long and hard about Virginia’s transportation issues and provides a detailed blueprint for how he would raise more money and spend it. Donkey clan candidate Creigh Deeds has very little to say about transportation at all. He conspicuously ignores the topic on the issues page of his website. And he has said little in his public pronouncements other than concede that, to quote the Washington Post, he would be willing to “sign a transportation plan that identifies new revenue to fix roads.”

Bottom line: McDonnell tells us with great specificity how he would squander billions of dollars in new revenue on transportation projects while Deeds asks us to take it on faith that he would squander the billions.

It appears that Deeds has little useful to say on the subject of transportation. Therefore we are left with the impression that either (a) he would pursue Business As Usual, or (b) he entertains ideas so radical that he doesn’t dare express them publicly for fear of not getting elected. In the absence of evidence otherwise, I will assume that the first explanation applies. Frankly, there is little more that we can say about Deeds’ approach to transportation.

McDonnell is much more complicated. His transportation platform does have a few good ideas. But a McDonnell transportation administration would focus on finding new money to inject into the system, not changing the way the money is spent. The phrase “land use” appears only once in his entire transportation treatise, and not in a context suggesting that he would build on the incremental reforms of the Kaine administration.

First, let’s talk about the good things in the McDonnell plan.

Prioritize traffic congestion and economic development. First, McDonnell would adopt the principle of prioritizing transportation projects based on their ability to reduce traffic congestion or promote economic development, in contrast presumably to projects flogged by lobbyists and politicians to open up new land for exploitation. “Just like any capital intensive business, we should invest in projects that make economic sense and are driven by demand, not projects that simply make it more likely for a politician to get re-elected.” (While this principle is fine in theory, I question whether it will be honored in practice, as I explain below.)

More technology, less asphalt. Second, McDonnell acknowledges that there are ways to mitigate congestion that don’t entail laying asphalt. He specifically mentions investing in traffic signaling technology. “It makes little sense … to skimp on technology investments because they may not offer the same kind of ribbon cutting opportunities that a new road does.”

Integrate growth, transportation planning. “Localities and regional entities should be encouraged to consider the relationship between land use policies and transportation policy when developing and assessing the impact of transportation plans.” Yes, McDonnell is right, regions should be encouraged to consider land use. Unfortunately, he has nothing useful to contribute on how they should be encouraged. The utter lack of detail suggests that a McDonnell administration would give no more than lip service to land use reform.

Now, let’s talk about the bad things in the plan. McDonnell, or the authors of his policy platform, have applied the vast majority of their creative energies into identifying new mechanisms for funding transportation that can’t be tagged as a “tax hike.” McDonnell’s proposals, if adopted, would create a flood of new revenue for Virginia transportation, which he would plow into a wave of new mega-project construction like Rail-to-Dulles, Interstate 81, the Coalfield Expressway, Interstate 66, the Hampton Roads 3rd crossing, high-speed rail and a host of others.

Apparently, McDonnell deems all of these projects to be high priorities. There doesn’t seem to be a regional mega-project that he doesn’t like. Based on his rhetoric, we can only surmise that he has already concluded without benefit of comparative cost-benefit studies that all of these projects make “economic sense.” So much for his core principle that transportation projects should be driven by “demand” — unless by “demand” he means the clamouring of lobbyists and special interests.

Here is a partial list of how McDonnell proposes to raise new revenues for transportation:

• Expedite the issuance of $3 billion in bonds authorized by the General Assembly in 2007.
• Issue another $1 billion in bonds for projects in congested areas.
• In years when General Fund revenue growth exceeds 5%, dedicate the surplus to transportation.
• Dedicate 75% of annual budget surpluses to transportation.
• Privatize the Department of Alcohol Beverage Control and funnel the estimated $500 million into transportation projects.
• Open up offshore oil and gas drilling and steer 80% of the royalties to transportation.
• Dedicate 30% of state revenue attributed to the growth of the ports of Hampton Roads to transportation.
• Slap tolls on Interstates 95 and 85 at the North Carolina border.

Ay yi yi! What do these measures have in common? They all support the illusion that transportation is an amenity that somebody else pays for. They have nothing to do with market-based principles whatsoever. At least with the good ol’ gasoline tax, the more you drive and the more gasoline you consume, the more tax you pay. It’s not perfect but at least there is a rational nexus between the tax and the benefit you derive from it. The same holds with tolls. McDonnell does endorse HOT lanes, but there is precious little else in his plan that squares with the user-pays principle.

While McDonnell says he would like to keep politicians out of the transportation decision-making mix, his financing schemes would only elevate their power. Who else would decide how to allocate bond monies, surplus General Fund revenues and the rest of the loose cash generated by McDonnell’s schemes?

In a nutshell, McDonnell would indiscriminately raise new transportation revenues from a variety of sources, sever the connection between those who use a transportation asset and those who pay for it, increase state indebtedness, make the system even more political than it is now, and plow billions into mega-projects favored by regional elites.

The nation is careening toward fiscal insolvency, and rather than tightening criteria for taxing and spending, McDonnell would open the money sluices for transportation. The globe is transitioning to an energy-scarce era of peak oil, and McDonnell would dump billions into projects conceived during an era of energy abundance. This isn’t mere Business As Usual, as bad as that would be — this is Business As Usual on steroids.

Update. Deeds has released his transportation plan, which he has packaged as part of a larger plan to jumpstart Virginia’s economy. Deeds supports the usual list of bridge-and-highway mega-projects, plus unspecified light rail and mass transit projects, without regard to social Return on Investment. Unlike McDonnell, he doesn’t say how he will pay for his “billion dollar transportation proposal.” I guess the money will materialize by magic. On the positive side, Deeds says he will promote telecommuting, flextime and ride sharing, and he would “connect transportation planning with smart land use decisions” by prioritizing growth in corridors already served by transportation infrastructure.

Virginia’s two gubernatorial candidates, Creigh Deeds and Bob McDonnell, vow to get more bang for the taxpayers’ buck. Deeds touts his plan to promote “government efficiency and budget reform” while the McDonnell platform promises to root out “waste, fraud and abuse.”

Dig into the specifics and you’ll see some decent ideas. Both Deeds and McDonnell would institute regular performance audits of Virginia state agencies. (Deeds’ audits would cut across government functions, a nice touch.) Deeds also backs zero-based budgeting, energy efficiency in government buildings, steering more education dollars into the classroom and reforming VITA. McDonnell serves up an interesting idea on setting up a pay-for-performance pilot program for state managers.

There’s nothing to dislike here, and I hope the new governor, whomever he is, carries through. But we’ve been down this road before. Does anybody remember the “Warner commission”? Does anyone recall that Virginia, for all the flaws so manifest to us who live here, has been consistently rated either No. 1 or No. 2 as the best managed state in the country for years? By the (admittedly low) standards of state governments around the country, Virginia does not have a lot of waste, fraud and abuse. By the time Gov. Tim Kaine and the General Assembly finish whacking an estimated $1.3 billion out of next year’s budget, they’ll be scrounging nickels out of soft drink change dispensers.

It’s always a good idea to keep a close eye on payroll and process improvements, but let’s not deceived. We won’t find big money in cutting government administration. We need to dig a lot deeper. Here are the real drivers of the state budget (FY 2009 numbers):

Medicaid – $ 2,7 billion (General Fund only)
Corrections – $1.0 billion (General Fund)
Transportation – $4.6 billion (non-General Fund)
K-12 schools – $5.6 billion (General Fund, direct aid to localities)

We can’t bring these numbers under control by tinkering on the margins of expenses. We have to think through the programs from the ground up. In future posts, we’ll see how Deeds and McDonnell are doing in that regard.

Looks like the United States will have plenty of competitors in the race to fiscal insolvency. According to the European Commission’s May forecasts, public debt in the eurozone will soar to 77.7 per cent of GDP this year and 83.8 per cent in 2010, reports the Financial Times.

Against the backdrop of the federal march to insolvency, it is fearful to see that many states are following the same path. As Indiana Governor Mitch Daniels wrote in the Wall Street Journal yesterday, “State government finances are a wreck.”