Bacon's Rebellion

Virginia Tax Debate Goes National

—

by

James A. Bacon
in

The Wall Street Journal has published side-by-side letters from state Sen. John H. Chichester, R-Northumberland, and Peter Ferrara, president of the Virginia Free Enterprise Fund and occasional Bacon’s Rebellion columnist.

Addressing the tax debate in Virginia, both make points to a national audience that they’ve made already to state audiences. I can’t link to the letters oneline, so I’ve typed them into the comments section of this post.

What’s noteworthy here is the level of national attention the tax debate is generating.

Share this article

ADVERTISEMENT

(comments below)

Comments

Comments

16 responses to “Virginia Tax Debate Goes National”

  1. Jim Bacon Avatar
    Jim Bacon

    The Chichester letter:

    In regard to your Feb. 23 editorial “How to Turn a Red State Blue”:

    Virginia consistently ranks as one of the lowest tax states in the nation relative to personal income. Projecting to 2008, our general fund budget still accounts for just over 4.5% of total Virginia personal income, about what it has been for 35 years, and that is after we account for the 2004 sales tax increase for educatoin. Our sons and daughters attend the best public colleges in the nation, we operate one of the most cost-effective Medicaid programs in the country, and we have Triple-A bond rating.

    But we are facing a wave of baby boomers who soon will be placing unprecedented service demands on our budget and we are facing the fact that our transportation system is collapsing under its own weight. We can’t offer the false promise that our general fund can both meet existing responsibilities, with what we know is on the horizon, and also take on a whole new responsibility – that of transportation. If there is anything that will turn a red state blue, it is the deception of that false promise. Virginians know the same dollar can’t be spent twice, and they do not want to pit education or health care or public safety against transportation.

    In the current economic expansion there are some general fund dollars that can be applied to specific, one-time transportation projects. These are dollars that accrue in a “hot” economy from corporate profits and investment returns of wealthier taxpayers. In the current expansion, they also have accrued from an exceptional housing market. But these dollars are the first to go when the economy turns south, as it does every 10 years.

    House members, Senate members, the governor, and numerous entities representing the state’s business communityi and economic interests all agree on one thing – that a minimum of a billion dollars a year in sustainable revenue is needed to cure Virginia’s 21-century transportation ills.

  2. Jim Bacon Avatar
    Jim Bacon

    The Ferrara letter:

    The problem of runaway taxes and spending in Virginia is even worse than suggested in your editorial. The state probably now suffers the most rapidly increasing tax and spending in the nation.

    In 2004, then-Gov. Mark Warner argued that the state faced an intractable budget deficit, and proposed to fix it with a record tax increase of $1.1 billion in the first two years alone. The Republican House of Delegates produced a balanced budget that increased state spending by over 10% without any tax increase.

    But the Senate Republican leadership responded with a bill to raise taxes by an extremist $3.9 billion in just the first two years, and insisted they would shut down the government unless their tax increase was passsed.

    This ultimately led the legislature to adopt a tax increase generating $1.4 billion in a two-year budget that increased state spending by 19 percent. Even with that increase, the state has since reported a surplus of $2 billion. This proves all the talk of a deficit was an egregious falsehood.

    Now Democrat Gov. Tim Kaine has proposed a new budget for the next two years that would raise staet spending another 16.6%, backed by a tax increase raising another billion a year. That would be a rise in state taxes and spending of 35.6 percent in four years. While the House of Delegates again opposes any tax increase, the badly confused Senate Republicans overwhelmingly support it.

  3. James Atticus Bowden Avatar
    James Atticus Bowden

    I find His Lordship Sir John Chichester’s logic amazing. It’s pure ‘statism’ big government view that the demands of government precede and must predominate over the needs of families and individuals.

    Instead of having government live within its means, The People must pay the Government – and make darn sure they keep paying through economic down times (like the government money comes from a different economy than the one Virginians have to pay taxes – LOL).

    The estimate of a $1b a year is if you do business as business as usual – which won’t solve the problems.

    How are Baby-boomers going to strain the economy? So many rich Yankee baby-boomers are moving here to retire – they bring money, don’t cost anything for schools – and eventually require an ambulance service. So what?

  4. kingfish Avatar
    kingfish

    JAB- You are kidding, right? As our population ages, whether by our own or by come-heres, the costs of medical care will go up and up. Demands on social servic officers will go up and up. Our roads will be more congested with older drivers who are unsure of their skills or their location and just tend to slow things down, sometimes dangerously so.
    The debate, now taken national, is between those who see tomorrow and would plan for it and those who do not.

  5. Jim Bacon Avatar
    Jim Bacon

    I was wondering about the Baby Boomer reference myself. I’m trying to figure out what kind of impact that will have on state finances. Medicaid perhaps? Lots of Boomers in nursing homes? Conversely, the aging of the population should ease the strain on school and college enrollments.

  6. kingfish Avatar
    kingfish

    Jim- There will not necessarily be a lessening of demand for schools and colleges. The population is aging and growing because people live longer ( and move here from elsewhere). People are still having children who will still need to be educated. I don’t see Virginia spending less on education in the future. In fact, before this trend began, Virginia paid for 70% of an instate students’ college education, and his tuition was the remaining 30%. ( For community colleges it was an 80/20 ratio). We invest far less, proportionally, in our young people today.

  7. Anonymous Avatar
    Anonymous

    Can someone provide the text of the original editorial?

  8. James Atticus Bowden Avatar
    James Atticus Bowden

    What medical cost does the Commonwealth bear – other than Medicaid? Medicaid is for poor citizens right?
    What social services do seniors demand?

  9. Ray Hyde Avatar
    Ray Hyde

    Probably the baby boomers will sell ff their homes at wildly inflated prices, partially thanks to growth management, and they will take their money and retire someplace else.

  10. James Atticus Bowden Avatar
    James Atticus Bowden

    Ray that doesn’t place a burden on state finances. A couple of weeks ago one of our city councilmen was crowing to me about how great the new multi-unit ‘senior’ housing was pouring money in taxes and taking so little (that occassional ambulance) out.

    Chichester must be confused – like he is about basic economics.

  11. NotGroverNorquist Avatar
    NotGroverNorquist

    Jim – When will you reign in the other JAB with his personal attacks? “Direct all the fire and fury you want at another person’s argument, but do not engage in ad hominem attacks”, you admonish. Twice yesterday from JAB it was that Marty Williams should stick to his profession of waste management. Today it is “His Lordship” amd “Chichester must be confused – like he is about basic economics.”

    I’m confused. How are these not ad hominem attacks? Is there a lower standard required of your contributors?

  12. Jim Bacon Avatar
    Jim Bacon

    Not Grover, my main concern regarding ad hominem attacks is that participants in the Bacon’s Rebellion blog treat each other with courtesy and respect. I have intervened on a number of occasions when things start getting nasty. I’m more tolerant when people aim their rhetoric against public figures. I don’t think most of JAB’s characterizations are out of bounds — I see worse on the editorial pages of the metro dailies almost every day. The one epithet you mention that pushes the boundaries is the reference to Chichester as “His Lordship”… But even that’s pretty mild.

    If JAB were calling the Senator “Chimpchester,” maligning his intelligence or insulting his manhood, I’d have more to say about it. But to call someone “confused”… I just don’t have a problem with that.

  13. Terry M. Avatar
    Terry M.

    Kingfish is correct in his numbers about higher ed spending. But to add to that, one must keep in mind that the state is trying to increase the numbers of high school graduates that go to college and further increase the numbers of those that complete.

    Currently about 4 out of 7 HS grads attempt college at the two or four-year level in Virginia. Only about 64% will complete a bachelor’s degree within six years and only about 15% will complete an associate’s degree within three years.

    Increasing participation will increase enrollment demand further. Increasing retention, particularly retention toward a degree will increase demand still further as demand is a funciton of continuing students plus new students – (dropouts and graduates).

    In other words, I would not count on higher ed enrollment costs to drop anytime soon. High schools grads are not projcted to top out until about 2011 and the decline after that is very slight. And that assumes current trends and does not take into a account the various efforts being made to increase high school graduation rates.

  14. Anonymous Avatar
    Anonymous

    Medicaid is, indeed, for poor people; however, it is also used by some seniors whom we would not consider to be poor in the classic sense for long term care, often for the last few months or years of life. True, they have to spend down their resources in order to qualify; but after they qualify, the costs are often quite high for the state. This is for people who do not require hospitalization per se but need some assisted care.

    I suspect that this is one of the reasons, though certainly not the only one, that state Medicaid costs are going up.

    Long-term health care insurance is at least a partial solution (I have it); but it is very expensive* and very selective in whom it accepts.

    *The later you start it, the more it costs; but if you start it early when it’s a lot cheaper, you are paying for many more years.

  15. Anonymous Avatar
    Anonymous

    I wonder if anyone paid Ferrara for his article. Does anyone recall his involvement with Abramoff?

    http://washingtontimes.com/national/20051217-123710-7853r.htm

  16. varepublitarian Avatar
    varepublitarian

    I guess taxes will never be too high for some. Also, anytime someone says “healthcare” or “educatiion” I know they really mean higher taxes because, Lord knows, we couldn’t possibly cut spending.

Leave a Reply

ADVERTISEMENT