Virginia’s projected budget surplus totals $860 million; A1
(Daily Staff Writer)
If current projections hold true, Virginia will end the current fiscal year on June 30 with a healthy chunk of money left over — $860 million.
What should be done with that money, or even what to call it, is a matter of debate among local legislators, who say that’s a preview of what’s coming in Richmond.
A healthy housing market and supercharged federal procurement in Northern Virginia have the general fund riding high, according to staffers at the Senate Finance Committee.
Surpluses in fiscal 2003, 2004 and 2005 are all part of the rebound the state economy has experienced since the downturn of 2001 and 2002.
“Surprise, surprise,” said Del. Clay Athey, R-Front Royal. “[Republicans in the House of Delegates] predicted that two years ago, and it’s come to fruition.”
Three years of surplus makes the need for the $1.5 billion tax hike in 2004 questionable, Athey said, but Republicans aren’t likely to try to roll them back.
Polls taken during the gubernatorial race found that the budget deal had the support of a majority of voters.
“That’s behind us now, and obviously we have $2 billion in additional funds that we can spend,” Athey said.
Senate staffers and some senators have suggested that the 2006-08 biennial budget should be constructed without adding much at all to the “base budget” — the amount of money needed to fund ongoing programs.
Surplus revenue has so far come from places that could turn south in a hurry, such as corporate taxes and fees charged for recording deeds and wills.
House Republicans would like to see something other than new programs created with the money.
“My thoughts are that we should either return that money to the people who paid it, and or invest that in new transportation spending,” Athey said.
“It would surprise me greatly if the Senate would ever support any kind of tax decrease,” he said.
But there are calls for “fiscal responsibility” other than tax hikes coming from the upper house these days.
Proposals for one-time spending on transportation, capital facility maintenance or funding for better wastewater treatment along Chesapeake Bay have been suggested as ways to spend such “one time” funds.
Even one of the main drivers behind the 2004 tax hike, Sen. John Chichester, R-Fredericksburg, told his colleagues at a retreat earlier this month that Virginia has to take a hard look at the spending side of the equation.
“Typically, we ‘clean house’ about once a decade — when we experience a recession and have to cut budgets,” he said.
“That’s not often enough. We must continually evaluate our operations and services, and prioritize programs, assessing their impact and value,” he said. “Before we take on new spending obligations, we must look for opportunities to shed outdated services or programs.”
Cleaning house is a great idea, added state Sen. H. Russell Potts Jr., R-Winchester. The former independent gubernatorial candidate said he’d even support “zero-based budgeting” for government agencies.
Zero-base budgeting doesn’t automatically assume that departments need the same amount of money they got last year plus a little more. Instead, it requires them to justify their total budgets every year.
“I think that’s a very noble and a very good suggestion,” Potts said. “I said numerous times on the campaign trail that I believe in zero [based] budgeting.”
That being said, though, Virginia doesn’t have a surplus, he said. It has cash in hand and “bills in the drawer.”
“You never have a surplus when you have obligations,” he said, pointing to needs in K-12 education, colleges and universities, Medicaid and the Chesapeake Bay cleanup.
“Our obligations and our expense sheet is out of balance with what our income is,” Potts said. “It’s an illegitimate claim that we” have a surplus.