CAMPAIGN 2000 introduced the nation to "fuzzy math" when it came to national fiscal policy. Now the phenomenon has crept across the Potomac, down to the executive office of the Capital building in Richmond. Despite a statewide economic slowdown and state revenue shortfalls, Virginia Gov. James S. Gilmore III continues to sell out higher education needs and state employee welfare in exchange for gimmicky policy goals, all the while assuming that the numbers will eventually add up.
On Aug. 20, Gilmore announced to an incredulous General Assembly that the Commonwealth's government remains in sounds fiscal condition. However, he said Virginia's revenue grew last year by more than $260 million, $52.4 million less than projected. Legislators in both parties said a $52.4 million shortfall in Virginia revenues was an ominous sign that could mean another showdown with the executive branch over the implementation of car tax relief.
Almost four years ago, the Republican Party in Virginia swept the executive ticket - attorney general, lieutenant governor and governor - in no small part thanks to promises Gilmore made to slash the expensive annual tax on automobiles. At the time, the state enjoyed unusually high revenues from an economic boom and was soon to receive a nice fat check in the form of a settlement from a suit with Big Tobacco. Gilmore made good on his promise, even in the face of plummeting state revenue and an initiative to use the tobacco settlement for health care improvements. The governor had to make up the difference somewhere else. So last spring, Gilmore ordered $421 million in budget cuts and a freeze on capital construction on college campuses after the Republican-led Senate balked at his demand for a budget that advanced the car tax rollback to only 70 percent this year. Bickering among legislators over the car tax plan led to a budget impasse, which allowed the governor to impose his own spending plan.
Only recently has Gilmore released some funds for projects previously stalled by his budget cuts. On Tuesday, Gilmore spoke at George Mason University in Fairfax to announce a release of $15 million for a new building at the rapidly expanding university. A $40 million project at the Arlington campus and a $20 million project at the campus in Prince William County remain suspended indefinitely. Also affected are renovations to Fayerweather Hall and the proposed Arts Precinct here at the University.
Christine Chmura, a former Federal Reserve Bank economist and now head of a private bank firm in Richmond, claims the state's fiscal challenges "will get worse before [they] get better" ("Gilmore Returns Fire in Budget Clash," The Washingon Post, Aug. 22). She puts the chance of recession at 40 percent. Virginia's unemployment rate of 3.1 percent in June was better than the national rate of 4.7 percent. Economists say the state is benefiting from continued federal spending in Northern Virginia and the resilience of the high-tech economy in the Washington suburbs.
John M. Bennett, chief analyst for the Senate Finance Committee, asserts that even if Virginia's economy begins to recover early next year, as Gilmore's forecasters predict, the slowdown will have serious consequences for the state budget. Revenue would fall short by nearly $300 million. Higher projected costs for Medicaid, the car tax repeal and other programs could increase spending by at least $250 million. Add legislative priorities such as raises for state employees and teachers this year, and Bennett's projected budget gap reaches $775 million.
Gilmore defends his predictions by comparing the fiscal health of the Commonwealth to other states. He points out that four states have raised taxes and 10 have tapped their "rainy day" funds, while others have laid off government employees - three options that the Republican administration has managed to avoid. Supporting these claims, Del. Vince F. Callahan Jr., the House Appropriations co-chairman, states, "Compared to other states, Virginia is the oasis of fiscal stability" ("Gilmore: State Economy Remains Strong," The Washington Post, Aug. 20).
But Del. Marian A. Van Landingham, a senior member of the Appropriations Committee disagrees, "I've heard of rosy colored glasses - this is like a rosy colored fog that has been rolled out for us, telling us how lovely everything is ... we don't have any conception of what we're facing next year ... but glowing tales that we're doing better than other states."
Gilmore may be optimistic, but, as a student at a public University facing another three years of classes between the crumbling walls of New Cabell Hall, in a state with such pessimistic economic forecasts for the future, I have difficulty sharing the governor's rosy vision. It is time Gilmore faced the facts and redesigned his tax cut into a program that accurately reflects the Commonwealth's economy.
(Preston Lloyd is a Cavalier Daily columnist. He can be reached at plloyd@cavalierdaily.com.)
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