Virginia House of Delegates member Christopher K. Peace (R-Mechanicsville) today issued the following statement regarding the reported anticipated budget shortfall – that has contributed to Governor Kaine suggesting a withdrawal from the Commonwealth’s Revenue Stabilization (or “Rainy Day”) Fund:
“Virginia faces a cumulative revenue shortfall of approximately $641 million for Fiscal Years 2007 and 2008. Continued surpluses are preferable and generally indicate a strong economy. But in this case 46% of this reported shortfall is not the result of an emerging economic crisis. In fact, as one indicator, unemployment continues to remain low. This potential shortfall is truthfully attributable to forecasting in accuracies by the Kaine Administration. While the Warner and Kaine administrations tout the recent rating that Virginia is the "best governed state in the nation," these Executives have set records for raising taxes and twice have made egregious accounting errors. The last example of "funny numbers" resulted in a temporary correction to anticipated K-12 funding.
This time inaccurate projections totaling $295 million are largely attributable to two sources: the Land Conservation Tax Credit ($175 million) and errors in calculating interest earning to the general fund ($120 million).
Unlike previous recessions, where the state actually collected less revenue, our legislative challenge will be to build a budget that assumes moderate revenue growth in the 2008-10 biennium and looks to limit or even cap increases in new spending on new programs. The Kaine administration is currently proposing mandatory pre-school estimated to cost the state upwards of $300 million dollars.
Moreover, to responsibly manage the anticipated $641 million budget shortfall, it is both premature and totally unnecessary to drawn down the state’s ‘Rainy Day’ Fund, which is currently fully funded at $1.3 billion. The General Assembly has spent the last four year replenishing this fund. We should only use it to respond to a severe crisis or economic downturn, as opposed to using it as a safety net catching errors in the Governor's revenue forecast. We should demand accountability in our Chief Executive.
Prior to even considering tapping into the state’s ‘Rainy Day’ Fund, sound management practices dictate that we scour the budget and make only necessary decisions what should be funded and what should not. Likewise, we should not further extend ourselves by commiting scarce taxpayer dollars to new and unproven programs. Rather, spending decisions ought to be aimed at maintaining a structurally balanced and fiscally responsible budget for the future.”