No one needs to be told how bleak the economy has been during the past year. At last, there seems to be light at the end of the tunnel - or, at least, "indications [are] that things are getting worse more slowly," as economist and New York Times columnist Paul Krugman wrote in August.
Unfortunately, the implications of a financial fallout can linger well past the actual recession itself. In the most recent issue of the Virginia News Letter, published by the University's Weldon Cooper Center for Public Service, James Regimbal, Jr. wrote that the Virginia state budget is a "train wreck waiting to happen." During lean times like these, it is grossly apparent why the University must continue to operate under the assumption that its state funding will remain in decline well into the future.
The state faces dire circumstances, and revenue projections continue to be uninspiring for the foreseeable future. Unlike the federal government, Virginia is legally required to balance its budget, so compiling debt to pay off later is not an option. Therefore, only two fundamental choices exist to confront such a shortfall: revenue can be increased through taxes (or perhaps the occasional sale of government property), or costs can be reduced. Regimbal sharply criticizes Virginia leaders for their heavy reliance on the state's general reserve fund to shore up the budget and argues that a reexamination of the tax code is sorely needed.
Neither option is an attractive one, but cutting expenses is the more often considered route. For one, revenues are more difficult to manage and predict than costs, as taxes create a web of incentives and disincentives for certain behavior. That is not to say that the revenue side of the equation should be neglected; it simply means that raising taxes is both practically and politically more challenging than cost cutting.
Virginia budget reductions have routine victims, such as transportation and higher education. Gov. Tim Kaine's latest round of cuts, for instance, recommended reductions of 13 to 15 percent for the state's public colleges and universities. That plan alone would remove roughly $19 million from the University's budget, and the worst could still be yet to come. "The reserves are gone," Regimbal said in an interview with The Cavalier Daily. "Even core programs are going to be reduced further."
In light of such circumstances, it is fortunate that President John T. Casteen, III and other University leaders have approached financial matters with the mentality of making the University an almost entirely privately funded institution. Although this is an ambitious goal that places high demand on the University's fundraising apparatus, any other mindset would clearly leave the University in dire fiscal straits. In short, times are tough, but they could be a lot tougher.
Only so much can be done about politics. Given the General Assembly's track record in funding Virginia's public colleges, the revenue lost to budget cuts should probably be considered lost indefinitely. And regardless of which party claims the governor's mansion next month, the University should be prepared for the budget ax to continue to fall.
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