Jay's Letter to the Washington Post

Sunday, April 8, 2001

I have watched the budget spectacle in Richmond. I have seen Gov. James Gilmore's intransigence on the car-tax phaseout, even at the expense of good financial management and important programs. Locally, the impact will be felt soon; the consequences for Virginia will be long term.

First, let's be clear on the governor's "promise" to Virginians. In a May 14, 1997, letter to locally elected officials, then-candidate Gilmore wrote, "The plan would be phased in over approximately five years and would be paid for from new revenues received by the commonwealth, not from cuts from existing programs. . . . If there is a recession or revenue doesn't arrive as fast as expected, then the tax-cut phase-in would take additional time."

The plan approved by the 1998 General Assembly included revenue triggers that have not been met, yet the governor is pursuing the 70 percent repeal of the car tax this year. Whether you like the phaseout or not, the governor has broken his promise.

In the budget amendments Gilmore first submitted in December, he included borrowed money to meet the triggers. He included a proposal to sell a 20-year stream of funding (the tobacco settlement funds) and count all the money now. He proposed borrowing money set aside for school construction ($120 million). He proposed cuts in state and local programs, and he set aside no money for pay raises for teachers, sheriffs' deputies and other state employees.

His new budget proposal includes significant program cuts, including about $4 million statewide from local law enforcement this year -- about 100 police officers.

The governor says that no cuts will be made to K-12 schools or essential social services. What he doesn't say is that, with enrollment increases, probably not enough money is budgeted anyway. But this doesn't count as a "budget cut."

Gilmore's latest proposal, which was shot down Wednesday in the state Senate, is to add salary increases for state employees by retroactively reducing the rate paid by state and local governments to the state's retirement system. In February the Virginia Retirement System board's specifically declined to take this action.

In 1997 Gilmore predicted $1 billion in lost revenue in the first four years of the car-tax cut and $620 million per year thereafter. The latest estimate is double that -- $2 billion in the first four years and more than $1 billion annually thereafter. That's a big difference.

My concern is not that local governments lost their ability to levy the personal property tax -- that battle ended almost four years ago. I am concerned because this governor's single-purpose agenda to abolish the car tax has serious ramifications for Virginia's future.

In recent years, we have seen a pattern of underestimating costs and overprojecting revenues. Virginia treasures its AAA bond rating, which reflects a tradition of sound fiscal management. Proposed borrowing to balance the state's budget, the first legislative session to end without a budget and the general lack of investment in the state's infrastructure -- especially transportation -- may not be viewed favorably by bond-rating agencies.

I am also concerned because our options as local officials are being limited. Will citizens turn to us for salary increases for deputy sheriffs and teachers? For 100 police officers? For mental health services? And when will George Mason University's construction be allowed to proceed?

This may not be the end of civilization as we know it, but this governor is thinking only of today. And it is all too clear that the next Virginia governor is going to have a huge mess to clean up.

-- Jay Fisette