Stark differences on state finances

In his last budget and last speech to Virginia lawmakers, Gov. Timothy M. Kaine did the best he could with dwindling revenues produced by an ailing economy.

In the end, even with massive cuts to public education, law enforcement and health programs, he had to draw the line by proposing a 1 percent income tax increase that would sustain revenues in the coming years.

It would be the first income tax increase in nearly four decades.

But that will not work, and Kaine undoubtedly knew it would not work. It will never pass muster in the tax-averse House of Delegates or in the office of Gov.-elect Bob McDonnell. Both the Republican House leadership and McDonnell condemned the proposal in harsh terms, saying they wished he had gone further with cuts.

There could not be a starker contrast between the outgoing Democratic governor and the incoming Republican.

Referring to the potential $4.2 billion shortfall in the coming two years, Kaine said, “More cuts to education, public safety, health care, state employees and other core services would be directly contrary to the current and future needs of the Commonwealth. They would squander our leadership position and make it more difficult to achieve our goals as we climb out of the national recession.”

Responding to the proposed income tax increase, McDonnell said in a statement, “It is bad economic policy to increase taxes on Virginians, especially as they continue to struggle with the worst economy in generations. Families and businesses are making strategic reforms and deep cuts, and government must do the same. I do not support any measures that could dissuade investment in Virginia or put the state at a competitive disadvantage with our neighbors.”

Given that McDonnell was elected by a substantial number of Virginians in November, he’s right to stick by his vow not to raise any taxes. At the same time, he will have to identify another $1.6 billion in cuts to the budget that Kaine presented to the General Assembly’s financial committees last week.

McDonnell will also have to find millions of additional dollars if he expects to honor his campaign promise to reopen the 18 closed rest stops on interstate highways at a cost of nearly $10 million and double the funds used to attract businesses to the state at a cost of $12 million annually.

Talk of the income tax increase has overshadowed the significant cuts that Kaine had to apply to state spending to bring the budget into balance.

Localities will feel the brunt of the cuts in public education and law enforcement under the Kaine budget. Public school districts would see deeper cuts in state support for positions such as secretaries and teacher aides. Sheriffs and other local constitutional officers would lose about $270 million over the two years and local police departments could lose as much as $73 million.

The budget cuts change the ratio for the number of deputies per population from 1 per 1,500 to 1 per 2,000. That will hurt local sheriff’s departments, as they will point out in the days ahead.

Some Democrats welcomed Kaine’s talk of increasing revenues instead of balancing the budget solely through additional cuts.

With the number of cuts that dig into almost every aspect of life in the Commonwealth, debate over the budget will certainly dominate legislative activity at the new Assembly session beginning in January. Representatives from the localities, educators, transportation officials, law enforcement and health officials will all be there lobbying for their share of the shrinking budget, a budget that the new governor has the unenviable task of cutting even further.