Hang on to Your Wallets — The State Spending Machine is Just Getting Cranked Up

Delivering his mid-year report on the Commonwealth’s economic and financial performance, Gov. Mark R. Warner declared that Virginia “is truly on the right track.” Virginia may have run up a massive General Fund surplus (see Steve Haner’s post for details on the exact amount) in fiscal 2005, but it faces $2.8 billion in added needs in the next biennium — and that doesn’t even include perceived needs for transportation funding.

Here’s a list of “known budget requirements” taken from the governor’s speech:

  • Re-benchmarking of the State Standards of Quality for public schools – even without funding the new standards adopted by the Board of Education – will require about $1.2 billion;
  • Meeting the continuing cost of Medicaid – without assuming any federal cuts or policy changes – will exceed $500 million;
  • Providing $950 million a year in car tax payments will require an additional $415 million;
  • The cost of paying for higher prices on concrete and steel for capital projects already authorized, and providing equipment for buildings coming on line will exceed $250 million.
  • Health insurance, higher VRS contribution rates, and group life insurance costs will together require about $200 million;
  • Additional debt service costs for bonds already authorized but not yet issued will exceed $125 million;
  • Two new prisons and two expanded prisons coming on line will require about $90 million.

And that doesn’t include meeting Virginia’s commitment to higher education, funding the clean-up of the Chesapeake Bay… yadda, yadda, yadda.

Pardon me, but what the h-e-double hockey sticks is going on?

What is this “re-benchmarking of the Standards of Quality?” The last re-benchmarking cost us $700 million a year. Now another re-benchmarking will cost us a like amount? Educational spending in Virginia is on auto-pilot, with massive funding increases baked into the system. Doesn’t anyone see anything wrong with that?

Runaway education spending is just the first place to start asking questions. Medicaid is the next. We citizens need to start digging into every one of these items. How much is this spending legitimate, how much of it is puff, and how much spending could be cut elsewhere that the governor isn’t talking about? Maybe the Americans for Prosperity (See Will Vehr’s post below) can help provide some answers.


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Comments

  1. Will Vehrs Avatar
    Will Vehrs

    It’s time somebody besides Democratic candidates went around with PowerPoint presentations on state finances.

  2. Terry M. Avatar

    You have no idea how lonely it is to talk about actual cost-containment in higher education these days. Let me tell you, people just don’t want to hear it. They would rather continue blind commitment to a funding model and faculty salary goals that are based on what everyone else is spending, instead of trying to figure out what it actually should cost to deliver the required service.

    I finished reading the Richard Vedder book, “Going Broke by Degree: Why college costs too much” some time ago. There are some naive and ill-made analayses in it, but there are also some that are well-founded and meaningful.

    However, it is NOT a popular book in the administration which tells me that while the colleges may not get everything they want…tehy’ll get as much as can be provided.

    Whether or not it is needed, or the right thing to do.

  3. Anonymous Avatar
    Anonymous

    I find your depiction of VA spending on education being “on auto-pilot” quite appropriate, and by the way it’s not the only area that I would apply the word to.

    It’s interesting that people like John Chichester and Russ Potts are quick to label tax and expenditure limiting solutions such as TABOR as an “automatic” solution that they cannot support, but they certainly seem comfortable with leaving the spending side of the equation on auto-pilot.

  4. “They would rather continue blind commitment to a funding model and faculty salary goals that are based on what everyone else is spending, instead of trying to figure out what it actually should cost to deliver the required service.”

    That is not just higher education: local schools always look at what the other guy is paying instead of what they can get adequate personnel for.

    Good call.

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