In an otherwise predictable Washington Post editorial skewering of the Republican House of Delegates car tax proposal is this surprising line:
There’s a fair argument to be had about how much of this year’s unanticipated revenue to spend, return to taxpayers or put in reserve.
(comments below)
Will, it’s all a matter of perspective. In two paragraphs, the Post’s editorialists alternately label the elimination of Virginia’s unvaryingly hated car tax as a “gimmick,” “scheme,” and “folly.” Thus, I question the editorial board’s sincerity with respect to a willingness to engage in a “fair argument” about returning budget revenue surpluses to the taxpayers. The Post won’t even acknowledge the drumbeat of deceptive exhortations we heard during last year’s session regarding imminent budget shortfalls. As I recall, Governor Warner requested $1.4 billion in new taxes. Our current surplus approaches that amount. Go figure….
I’ll take any sop, however small, when it comes from the WP.
First of all, we need to stop the lies about the tax increase. Legislative services estimated that the tax bill would increase revenue by $350 million in FY 2005 and $581 million in FY2006. That doesn’t add up to $1.4 billion and never will. Check out the link if you doubt me:
http://leg1.state.va.us/cgi-bin/legp504.exe?042+oth+HB5018F161+PDF
The extra revenue this year is not from the tax increase but from unexpected growth (350 million from the tax increase and 850 million from growth). You can call the Governor a liar until your voice grows hoarse, but I’ll continue to believe (as speaker Howell does) that conservative revenue estimates beat overly the optimistic ones that Gilmore used.
I agree with the Governor that we need to return some of this revenue to the tax payers – but only in a temporary refund. Responsible governance means not making promises based on one year of extra revenue. If the surplus appears again next year, we can send more money back. But going crazy with tax cuts during good times will only lead to another fiscal disaster…
And, with the exception of higher education, a bay cleanup, and transportation, we need to stop this insane surplus spending spree. Most of this money needs to go to the rainy day fund, a modest tax refund, and the aforementioned causes.
I’d also take aim at the ascertion that the Virginia budget has grown wildly under Warner. Here are the General Fund numbers:
FY 2001: 12.2 billion
FY 2002: 12.0 billion
FY 2003: 12.1 billion
FY 2004: 12.3 billion
FY 2005: 13.3 billion
FY 2006: 13.8 billion (projected)
So…after the economy turns around, the General fund grows a bit. What’s the big deal here? Compare that to growth under Gilmore:
FY 1997: 8.1 billion
FY 1998: 8.7 billion
FY 1999: 10.0 billion
FY 2000: 11.1 billion
FY 2001: 12.2 billion
Wow! It turns out that Governor Warner isn’t a reckless liar, it’s actually Governor Gilmore!
For those of you who don’t know, General fund money is money that GA has direct discretion over.
Non-general fund revenue has grown a bit during Warner because of tuition increases at public colleges. You can blame him for that, definitely.
But let’s face it folks – the best government is a Democratic executive presiding over a Republican legislative body.
The myth of a Warner conspiracy to raise taxes for no reason is a fine thing for right-wingers to be pushing, but not you guys! You guys have sense!
Ha – one more long rant that I have to get off my chest, I promise!
As far as tax increases go, Warner’s increase last year was PATHETIC. In fact, I probably pay less in taxes this year than last year. As someone who works for a non-profit and doesn’t make much money, I’m glad the filing threshhold was moved up $2000 (tax cut!).
As someone who spend a great deal of my salary on food, I’m also glad that the grocery tax was cut (tax cut!).
I think it’s pathetic that the income tax wasn’t touched last year. I mean come on – the brackets for the Virginia income tax top out at $17K for individuals (below the poverty line). They look like they haven’t been adjusted since 1960.
The gas tax? Not touched last year.
The corporate income tax? Not touched last year.
These tax increases were PATHETIC. The utility industry bore the brunt…and they’ll probably pass some of that on to the consumers. But besides that, what are we whining about? .5% sales tax, sent directly to public schools?
If memory serves, Governor Warner’s budget originally called for raising taxes somewhere in the neighborhood of $1 billion. Following protracted negotiations and stalemates, the legislature approved more tax increases than Governor Warner requested. (I believe that’s where the $1.4 billion figure comes into play.)
Nevertheless, I’d take a simpler approach to this whole predicament. Leaving aside the amount the projected shortfalls were overstated–and they were grossly overstated–revenues now far exceed the projected shortfalls.
The bottom line is this: Shouldn’t the social contract with our state government presume the return of excess payment in taxes? Take, for example, the analogy of one’s annual individual income tax return. Where my employer–acting in its capacity as an agent of the Commonwealth of Virginia–withholds too much tax on an annualized basis, I’m entitled to a refund. If I’m entitled to such a refund, I don’t expect my government to hold back repayment in a “rainy day” account or spend it in some whimsical fashion a previously unannounced program it develops and which requires funding. No, I deserve a refund for overpayment. I think all Virginians deserve the same treatment in the case of the budget windfall, especially since the funds apparently were raised under the guise of an impending budget crisis.
I’m not sure where Paul get’s his figures from. And you can’t separate the General from the non-General fund when you analyze the budget.
It’s getting rather late so I don’t have the energy to get all the details. But generally, spending over the last four or five years has gronw by almost 50%!
And as to the “pathetic tax increase” that Paul alludes to, was the largest imposed tax increase in the history of our state. If that’s pathetic for you Paul, it’s pretty serious for the rest of us.
Here are the tables for the state budget:
http://www.dpb.state.va.us/budget/vabud/vabud.cfm?vBiennium=2004-2006&vTable=O
The 50% increase you speak of? Not there.
The biggest tax increase in the history of Virginia? Perhaps inflation has something to do with that…because personally, I think the biggest tax increase was probably when we adopted the personal income tax. Or perhaps when we adopted the corporate income tax. But a small increase in sales tax? Please. We’re still the 41st lowest tax state in the country.
On the social contract point – that’s correct when we have an excess of taxes, we need to send some back.
But we need to budget around the economic cycles! In the good times, we put some away and invest in the future. In the bad times, we borrow from the rainy day fund and make some cuts (thankfully, those cuts won’t hurt as much because we invested in the future during the bad times).
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