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Some thoughts on Virginia’s budget

My expectations for the Virginia General Assembly can at times be lofty. I have written about this in the past. My topics have included everything from transportation financing reform, to more support for open lands initiatives, more support for education and my long time favorite, establishing a redistricting commission. But this year, my expectation is simple. In the face of what has come to be called, “the great recession,” I just want to make sure they can balance the books.

That may sound trite. Of course the state should balance its books. But these days that’s gotten much harder to do. During 2010, 46 states, just about the whole country, faced major shortfalls in their budgets. The reason was simple. Their spending had gone up and up, and when their receipts suddenly dropped, they were in a financial pickle. While many of them managed to get through the year, often with painful and dramatic cuts, at least ten are still in some kind of budget crisis. California for example faces a staggering $29 billion budget gap.
By contrast, here in the Commonwealth, we ended the 2010 fiscal year with a surplus. Given the contraction in the economy and the drop in tax receipts that was no small achievement. This year this kind of frugal management is just as important. But there is more to it than just keeping spending down. The General Assembly and the Governor need to go deep in some departments and expenditures and start asking questions.
This is particularly true for one of the state government’s largest expenditures, transportation. The Virginia Department of Transportation, which has that Darth Vader sounding acronym of VDOT, has a long history of crying poverty. It’s a story, by the way, which I always believed. So imagine how I felt when a state audit completed in 2010 revealed that VDOT had $1.5 billion in unspent funds. What can I say? You can build a lot of roads with that kind of money and just what kind of accounting resulted in such a massive error still boggles the mind. Even the Federal Government doesn’t make mistakes that big. That’s why a bill to reform VDOT’s financial management system seems like a good idea.
While VDOT managed to misplace $1.5 billion last year, the Governor is nonetheless proposing to borrow up to $4 billion to cover transportation improvements. That’s a noble goal, but in a state with a long, pay as you go tradition, that’s a lot of debt. The state road system needs work, that’s hard to argue with, but that kind of expenditure, backed by debt, particularly in this economic climate, just doesn’t make sense.
Then there is the state university system. It’s expensive and getting more so each year. State contributions have grown and tuition increases far exceed the rate of inflation. In fact, Virginia public universities rank among some of the most expensive in the nation. The usual culprits, at least according to the universities, are growing expenses and an overly stingy state government. But, after awhile, that refrain gets a little tiresome. Somewhere, someone is spending too much money. Universities are notorious about adding programs and overhead that sometimes have relatively little to do with their primary mission. They do this because they know that they can keep raising tuition and keep asking the state for more money. The General Assembly should consider ways to force universities to better control costs, behave more like a business, which they are, and better manage their budgets.
Virginia has done an exceptional job of managing its spending without increasing taxes. We aren’t in the same fix as so many states that are going into this year looking at yet another budget crisis. And while this isn’t the time to take on any major new initiatives, in transportation or education, maybe it’s an ideal time to look at some areas of the state budget that often don’t get the detailed attention they should.
You may reach David Kerr at
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