Lieutenant Governor Bolling outlines Republican concerns about the Governor’s budget recommendations

 

Gov. Tim Kaine recently introduced his proposed amendments to the state budget for the current fiscal year, along with budget recommendations for the 2008-10 biennium.

Reviewing and revising the governor's budget will be the most important issue facing the General Assembly during its annual legislative session. 

While there are many things in the governor's budget that Republicans support, such as long-overdue investments in our state's mental-health system and higher education, the governor's recommendations suffer from several critical deficiencies that must be corrected.

In the current fiscal year the governor has proposed eliminating a budget shortfall of $618.3 million by withdrawing $261.1 million from the state's savings account, or rainy-day fund, and transferring $180 million previously earmarked for transportation construction to other programs. 

This budget shortfall has arisen because state revenues are less than anticipated in the current fiscal year. However, it is important to remember that while state revenues are not increasing as rapidly as had been expected, they are still increasing.

We should not withdraw money from the state's savings account to eliminate a budget shortfall while our economy is still growing. While it may be constitutionally permissible to do so, it does not represent sound policy. We should only withdraw money from our savings account to address serious financial challenges.

Likewise, we should not use money that has been earmarked for transportation construction to fund other government programs. This violates a trust we have tried to establish with the people of Virginia. We should use taxpayer funds only for the purposes for which they were intended.

 JUST LAST YEAR citizens in several parts of our state were asked to pay higher taxes and fees for transportation. To transfer money that was earmarked for transportation to other programs would be an affront to these taxpayers.

While the governor promises to repay this money in the 2010 fiscal year, he will be unable to do so unless the state's economy is growing considerably faster than it is today. The governor cannot be sure of that, so we cannot be sure that these funds will be repaid.

In the upcoming biennium the governor has proposed hundreds of millions of dollars in new state spending for expansive pre-K programs and other initiatives in health care, mental health care, child services programs, and higher education.

 
While many of these are worthwhile programs that Republicans support, we cannot move forward with all of them at the same time unless we know we can pay for them responsibly.

 
So, the question is, how does the governor propose to pay for these new programs? Based on his budget, the answer is twofold: by overly optimistic revenue projections and by significant amounts of new state debt.

 

In the first year of the 2008-10 biennium Gov. Kaine has projected economic growth of 3.3 percent. That is realistic based on current economic conditions. However, in the second year of the budget he has projected economic growth of 6.6 percent.

 
While I hope that economic conditions improve and our economy will grow at a rate of 6.6 percent in the 2010 fiscal year, we cannot be certain of that, and we should not base our budget on such an overly optimistic revenue forecast.

 
IF THE GOVERNOR'S revenue projections do not materialize we will be unable to afford the new programs he has proposed, and we will face massive budget shortfalls in the second year of the biennium. A wiser course is to wait and see how economic growth improves before embarking on so many costly new spending initiatives.

 
In addition, the governor's budget includes $3.2 billion in new state debt. Once again, many of the governor's recommendations are for very worthwhile initiatives, such as needed capital investments in our colleges and universities.

However, if all of the governor's debt recommendations are approved they will cost the commonwealth $300 million a year in additional debt service by the year 2014. This is another significant financial commitment that must be taken into consideration when determining our overall spending priorities.

 
Budgets are about priorities, and in challenging economic times we must determine what our most pressing needs are and focus our resources toward those needs. We must make certain that our budget actions are cautious, prudent, and reflective of the economic uncertainties we currently face.

 
Republicans look forward to working with Gov. Kaine to adopt budget revisions for the current fiscal year and a new budget for the upcoming biennium. We will also work with the governor to make investments in important state programs, like mental health care and higher education.

 
However, we cannot build our budget on a foundation that includes excessive spending, and seeks to pay for it by raiding the state's savings account and transportation funds, overly optimistic revenue projections, and the excessive use of debt. That is a formula for disaster.

Bill Bolling is Virginia's lieutenant governor.

 

Date Published: 2008-01-09 00:00:00

Section: Politics, Photos: Bill Bolling,