The Incredible Expanding Budget Surplus Goads Kilgore into Attack Mode

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.

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  1. Ben Tribbett Avatar
    Ben Tribbett

    Jim, I predict the tax increase given these surpluses will be used soon to eliminate the car tax for good. In the end it will go down in history as a positive thing when the revenues are used to finally eliminate Virginia’s most hated tax. I think it will happen with whoever the next Governor is- and they will leave office very popular because of it.

  2. Barnie Day Avatar
    Barnie Day

    We’ve got $20 BILLION in documented transportation needs, we’re forcing local tax increases across the board while still sending our kids to school in trailers, our border county teachers can drive 10 miles into North Carolina and make $8000 more than they make here, there is a waiting list–a waiting list!–for mental health and substance abuse services in Virginia, our deputies have to moonlight in second jobs and some of our state troopers practically qualify for food stamps, fire marshalls monitor the over crowding in some of our university classrooms, overcrowding that now crams a four-year degree into five, we’re forcing double digit tuition increases every year, our hospitals are closing their obgyn and delivery clinics because of the reimbursement rates,we’ve got senior citizens who don’t own dogs buying dog food and we’re passing billions in government debt–local, state, and federal something in excess of $77,000 PER CAPITA in Virginia now!–to our children and grandchildren–and you think we’ve got a surplus? Let anyone who will run on that phantom reality.

  3. Anonymous Avatar

    A big surplus is a bad thing now huh? Taxes not only helped get us out of a deficit, it helped us fund dozens of programs and needs. Transportation, heatlhcare, education all need massive amounts of funding so quit your whining and pay a little more. We might have had a surplus but sooner or later we were going to raise taxes and you would have whined anyway.

  4. Jim Bacon Avatar
    Jim Bacon

    Barnie, Barnie, Barnie… Yes, the state and local governments have limitless needs. So do families. Everyone has to make tough choices. But let’s not talk philosophy, let’s talk facts….

    I can’t address every one of your points, but I’ll address one where the facts are readily available. You note that “Our border county teachers can drive 10 miles into North Carolina and make $8000 more than they make here.”

    The implication of that statement is that North Carolina is spending much more on education than Virginia. Let’s check the facts. These come from the National Center for Education Statistics, so I am not making them up. You can look them up yourself.

    The most recent year for which figures are reported is 2000/2001.

    Total North Carolina spending: $8.58 billion

    Total Virginia spending: $8.66 billion.

    Total N.C. enrollment: 1,293,638 K-12 students

    Total VA enrollment: 1,144,915 K-12 students.

    So, Virginia was spending more money on K-12 education in absolute dollars and on a per-student basis. Those numbers may look a little different now, but not significantly, especially with the tremendous education spending increases that Gov. Warner pushed through.

    If NC teachers are being paid $8,000 a year more than Virginia teachers, it’s not for a lack of a willingness to spend the money in Virginia. Frankly, I question the validity of your numbers. But if they are accurate, they are an indictment of the way Virginia spends its K-12 education dollars, not how much it spends.

  5. Ben: Thank you for your understanding and admission that we raised taxes in 2004 to cover the cost of the state paying the car tax (it wasn’t eliminated.) The legislature made the promise, promised to suspend the rollback in tight times, didn’t suspend in tight times after all, and had to raise taxes to balance the budget. End of story. Jim: Does North Carolina have any metropolitan areas with the living costs of Northern Virginia? That alone would explain most of that difference.

  6. Anonymous Avatar

    I would be VERY interested in knowing which counties in North Carolina bordering Virginia pay a substantially better salary than Virginia.

    I will be a new teacher in about one year.

    I’ve researched EVERY county and city salary in Virginia. I have perused the salaries in North Carolina. I don’t recall any being greater than Virginia, but if they are I’d love to know because I’ll be applying for jobs all over the state.

    As an example, Grayson County, Virginia pays a measly $29,000 for a starting teacher with a master’s degree. And the 3 North Carolina counties bordering that area of Virginia – Ashe, Alleghany and Surry County – also pay $29,000 for the same position.

  7. Becky Dale Avatar
    Becky Dale

    This report has some average salaries for 2003-04 for teachers in the South. Virginia is just ahead of North Carolina.

  8. Jim Bacon Avatar
    Jim Bacon

    Bless you for finding those numbers, Becky. One could argue, as Steve does, that Northern Virginia salaries pull the average Virginia numbers way up. That’s probably true, though it’s hard to say how much. On the other hand, it wouldn’t be fair to exclude Virginia’s highest-paying metropolitan region without excluding North Carolina’s highest-paying metropolitan region.

    Back to Barnie’s earlier assertion, the ideal comparison would be to compare teacher salaries in rural Virginia localities with those in rural North Carolina localities.

  9. Jim Bacon Avatar
    Jim Bacon

    Thank you Anonymous 7:56, I didn’t see your comment when I posted my own. You have done exactly what I suggested. Rural teacher salaries in VA and NC indeed are equivalent.

  10. Jim Bacon Avatar
    Jim Bacon

    Ben, As for your prediction regarding the surpluses and completing the phase-out of the car tax, you’re probably right.

    I’m all in favor of cutting taxes. But I think it matters profoundly which taxes are cut. Ideally, you cut taxes in such a way as to encourage productivity and enterprise so that you expand the tax base and help offset the revenues you lost from the tax cut. Unfortunately, cutting the car tax does nothing but ease the cost of car ownership. It rewards no positive economic behavior. Indeed, by reducing the cost of car ownership, it encourages people to drive more — thus placing even more strain on our stressed-out transportation system.

  11. Will Vehrs Avatar
    Will Vehrs

    I’d like to ask Anonymous 7:56 if salary is the major consideration for choosing a school system … if not, what other factors are important to you? How dependent on funding are those factors?

    BTW, best wishes in your job search! Any teaching candidate who reads issue-oriented blogs ought to get a signing bonus ….

  12. Terry M. Avatar
    Terry M.

    Barnie, overcrowding is most assuredly NOT what is causing students to take five years instead of four to complete a degree. The most severe case of overcrwoding occur at the VCCS, not the four-year schools.

    Longer times-to-degree are most easily and correctly explained by poor advising, the insane limitation by the Code of Va of a BA/BS degree to 120 credit hours, and the subsequent limits on the number of credits in the major. These limitations in face of the explosion of new knowledge requirements, force more and elective courses and general ed choices to be rigorously defined to the point where a change in major has untold consequences in terms of just a student’s elective studies.

    When 25% of students change majors at least once, that is a real impact. Further, the growth of study abroad programs tends to legthen time-to-degree.

    Few schools manage to meet and exceed SCHEV’s guidelines for space utilization…which simply are not high to begin with.

  13. Anonymous Avatar

    Terry M:

    Those are good points…but it’s still darn near impossible to find an open class in college.

  14. Terry M. Avatar
    Terry M.

    Anonymous 10:58 (sounds like a bible verse) – I suspect that has more to do with the number of sections offered between 9 and 1pm when students insist on taking them. Faculty can only be spread around so much. At some point, students will have to change their behavior…it is simply not economically feasible to build classrooms and faculty size to make everything available during those hours. If students refuse to enroll in mid- and late-afternoon classes, and there are no additional rooms available in the morning, then there will never be enough sections offered.

  15. Olivia Avatar

    Will (and I’ve included comments on college degree completion issue),

    I failed to put my name on my earlier post. For the record, I’m Olivia.

    For me, salary is not *the* defining criteria in choosing a school district for which to work. It has not been a criteria of the utmost signficance in any of my career choices thus far. It is, however, a significant consideration, as I expect that it is for most everyone. Since I don’t have teaching experience/experience with school districts under my belt yet, I can only use criteria similar to that which I have used in the past – employment atmosphere, trust, salary, community, administrative support, opportunity to use my gifts to their fullest, etc.

    Of course, salary must be a consideration. I’m not married, so I bear all household costs on my own. I’m weighing an area’s cost of living versus the salary. In my earlier Grayson County example, my master’s degree will get me $29000 per year to start – and a raise of only about $250 per year thereafter. Housing is pretty inexpensive in Grayson County, so unlike Northern Virginia, I can afford a place to live on 35% of the monthly salary. It’s the other living costs that make Grayson unaffordable for me – gas, bread, milk, a new car, etc. all cost the same whether one is in Hampton Roads or in the Blue Ridge Mountains. And the costs of many things are actually higher in rural areas because one has to go so far to get it, or if available locally there is little to no competition and prices reflect that. Also, in rural areas, the opportunity for me to earn some extra money, tutoring for example, during July and half of August, is also severly limited. So that’s an opportunity cost for me.

    I’m looking for a district that has a reasonable salary, a supportive environment for teachers, one that does not tolerate disciplinary issues in the classroom, and one that trusts my judgment and training to allow me to effectively teach each child.

    Many districts throughout the country force teachers to literally teach to a script. They are told EXACTLY what to teach, how to teach it and on what DAY to teach it. If children are struggling with a specific concept, too bad, time to move on, there is a schedule to be kept.

    I think MOST of the things that are important to me aren’t *specifically* funding related. But I have seen a correlation (though I won’t claim a causality) between those districts that are willing to pay teachers well and those that treat teachers with respect. Of course, I think the respect came first and then a recognition that teachers need to earn a living too, flowed from that.

    I did want to comment on the topic of a college degree taking 5 years. I have fast-tracked my education. I have limited funds on which to live and I’m going as quickly as I can through the process. I am on track to go from beginning college freshman to completion of my master’s degree, include my one semester of student teaching in 4 calendar years (that includes a full time schedule every summer). I was on track to complete this all in 3 1/2 years, but changes to courses beyond my control have derailed that. Consequently, I’ve had to tighten the budget even more.

    I began by taking courses at the local community college that applied directly to my course of study. I knew which 4 year college I would be transferring to and took only those courses that the university specifically said to take. In the interim, the college year and thus the college catalog advanced a year. And the university changed some of the requirements. By the time I transferred in to the 4 year university, 4 of the classes I had taken no longer counted toward my degree program. Essentially, they cost me an entire semester. Then the state passed a law requiring the addition of another class. So I was 5 classes off target date.

    And then there is the problem of scheduling of classes. My available choices of classes are very limited. The degree program is VERY specific on exactly which classes I must take. For example, fall semester I HAD to take biology so that I could take the 2nd required biology class in the spring. It was offered at only one time (for 400 students – a big class). So my entire schedule was built around that. Problem was, of the series of history courses I could take (3 different options), only ONE was offered that semester – and it was at the exact same time as my biology class. All I could do was pray that it was offered the next semester – and that I got registered in time before the 30 seats were taken by everyone else in my same program.

    And if you go in to college in this day and age without knowing positively what course of study you will follow, then a lot of your time will be “wasted.” Other than basic English, basic history, and algebra, there are few classes that one can take that will be applicable to every degree that you could possibly choose to pursue. The days of spending the first year or two of college finding your passion are over. One had better know exactly what they want when walking in the door, or be prepared to spend a lot of extra time and money in the pursuit of it.


  16. Jim Bacon Avatar
    Jim Bacon

    Olivia, Thank you for your illuminating response. After a lot of theoretical blather from us old and jaded wonks, it is refreshing to hear such an articulate voice of someone in the trenches, so to speak, living the things we pontificate about. If you teach as well as you write, you will be a credit to your profession. Best of luck to you.

  17. Anonymous Avatar

    You guys sure get down into the weeds faster than this poor soul can follow. I now know a lot more about teachers’ salaries along the VA/NC border than I did when I got up this morning. Forgive me if I go back to the more general topic: The tax increase and resulting surplus. Am I the only one who views this chain of events (you can go back as far as you want- I tend to think of this as an unbroken sequence that starts with the partial restructuring of the car tax under Gilmore)as indicative of poor forecasting, budgeting and scoring techniques, all of which are made worse by the short cycle budget mechanics that Virginia’s GA is saddled with? In other words, there is an almost 18th Century time lag between a perceived budgetary problem and the impact of the response. In the meantime external events (like general prosperity in the business sector) impact collections in ways not foreseen by the budget planners. It seems our planning processes are way out of synch with reality and that there are no easy ways to refine this on the run as more data come in. I am of the view this is a problem in which both parties are equally ensnared, that it does not have dependable partisan causes or solutions.

  18. Terry M:

    Are you kidding me? I’d never touch a class before noon with a 10 foot stick. Most people angle for the afternoon classes.

  19. criticallythinking Avatar

    After I read Barnie’s comment, I wondered why Governor Warner didn’t jump on the Senate’s 4 billion tax increase, so he could pay for all this unfunded stuff.

    But I remember Warner saying that we didn’t need that much, only a billion, and then everything would be funded appropriately.

    I guess he was lying to me? How could that be, a politician telling me things that aren’t true?

    Kaine says the 2004 budget agreement put us on sound footing. Now I’m reading that it was such a bad budget, that even with a huge billion+ surplus, we can’t come close to meeting our needs.

    I’m guessing that we have crossed over into wants. I’m thinking we did that years ago. I’m sure there are needs that aren’t met — because politicians always fund the WANTS, then come tell us that they need more money to fund the NEEDS. That’s why we got a 1.4 billion dollar tax increase, and not a cent for roads, the number one “need” in virginia.

    Of course, we wouldn’t need so much road money if we channeled major employers into centers of population, rather than spending all our money trying to make it easier to move half the population of northern virginia like the tide, rolling in and out every day.

    So, in deference to Barnie who seems to say that I can’t trust the democrats because they tell me they have enough money and then the next year ask for billions more, I’ll re-phrase the argument for the “anti-tax” crowd (apologies to the anti-tax crowd for jumping into their corner):

    The Surplus over the past year is a clear indication that the 1.4 BILLION dollar tax increase of LAST YEAR was NOT NECESSARY to fund the functions of the government that were put in place last year, and for which the tax increase was deemed necessary to avoid a deficit.

    Does anybody on the pro-tax, or “government can’t possibly spend too much money” side have an argument with that?

    Charles R.

  20. Jerry Gray Avatar
    Jerry Gray

    My recollection is that when Warner took office, the Gilmore over-the-top spending spree came to a halt and $6 Billion was cut from the budget.

    Am I mistaken in this recollection?

    Jim, you have referenced the Wilder Commission’s recommendations, which would ostensibly save $2 Billion–Have you analyzed them? Are they politically feasible? Do you suport them?

  21. Jim Bacon Avatar
    Jim Bacon

    Jerry, In answer to your questions:

    (1) Yes, When Warner came into office, he moved decisively to cut the red ink he inherited from the Gilmore administration. I would argue that his handling of the budget crisis was his greatest accomplishment in office.

    (2) The Wilder Commission, as I recall, identified about $750 million a year in potential savings. Given the kind of productivity gains achieved by large organizations in the private sector, the Wilder Commission goals were entirely reasonable. For whatever reason, few of those savings have materialized. Former Secretary of Technology George Newstrom declared that VITA would generate $100 million a year in savings. Never happened. Never came close. I don’t know why. My hypothesis is that once the budget crisis passed and the pressure to cut costs abated, VITA started raising its quality expectations. Again, this is conjecture, but I’m speculating that Virginia is getting a higher quality, though considerably more expensive, IT and telecommunications system than we originally bargained for.

  22. Jim Bacon Avatar
    Jim Bacon

    Anonymous 10:21. Yes, I would argue that budget planning is inherently difficult, and governors of both parties have been caught by surprise. But Virginia governors are no different than their counterparts in other states and, indeed, the federal government or, for that matter, GM and IBM.

    My quarrel with the Warner administration is not that it failed to get its forecasts exactly right. No one ever does, except through pure luck. And I don’t fault Finance Secretary Bennett for erring on the side of caution. My gripe is Gov. Warner’s willingness to base tax increases on the basis of inherently fallible projections, not one year out but six or more years out.

  23. Anonymous Avatar

    From what I’ve seen of the VITA changes, it’s simply that it TAKES TIME to implement the sort of process improvement and streamlining changes that will generate the expected savings.

    You can’t make those sorts of changes rapidly – many of the affected programs are custom systems that don’t have COTS equivalents available, and require custom interfaces into the streamlined systems like EVA.

    IMHO the savings will materialize – over time.

    Same goes for the Wilder Commission suggestions. They’re good ones, and they’ll save money – but they’re hard changes. They’re organizational restructuring, process improvement, combining agencies. Those savings will occur OVER TIME, not overnight.

    Think of these as capital investments, not short term budget cuts. Savings will occur and be considerable, but you will have transition costs that can result in temporarily increased expenditures and that must occur before any savings accrue.

    Same thing is expected when you do quality improvement in private industry – how could government be any different?

    I’m not clear on what is meant by raising quality expectations – improved quality and security was a goal of the original VITA specs – want to elaborate on that one?

  24. Anonymous Avatar

    NOW is the time to hold legislators accountable for their budgets. If they say it takes $40 billion to run the state for two years and we collect $41 billion in revenues, THERE IS NO NEED to spend the extra $1 billion! Give it back to the taxpayers. After all, it IS our money…remember? The candidate who lifts THIS banner will win in November.

  25. Jim:

    Governor Warner’s communications people might have promised VITA savings. But no one who has a shred of commonsense could expect savings to occur in the first 3 years. They had to build that infrastructure and invest in the transformation of the system.

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