Shortfall leaves General Assembly scrambling for answers

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House Republicans saw the economic downturn coming last year and in January asked Gov. Tim Kaine and his staff for an update to budget revenue projections. That update didn't come until this past week.

And the outlook wasn't good (a $1.4 billion shortfall) and the timing was late (just days before budget proposals were to be finalized).

Now significant changes must be made. And they won't be easy.

The governor's plan to help ease the shortfall is to raid the Rainy Day Fund to the tune of more than $400 million, to cut funding for K-12 education and to scale back help for higher education. At the same time, the governor seeks additional funding for new programs.

The question that must be considered, however, is how can the commonwealth afford new spending initiatives while failing to fund the programs already in place.

Last week's budget announcements led to an uncharacteristic vote along party lines in the Democratic-led Senate Finance Committee favoring Kaine's budget proposals with a counter vote in the Republican-led House Appropriations Committee to eliminate or scale back many of Kaine's new programs. As the House and Senate get together in the next several weeks to hash out the budget for the remainder of this fiscal year and the upcoming 2009-2010 budget, a partisan showdown can only be expected.

House leaders are right to fight to eliminate spending for new programs, including an expansion of the subsidized prekindergarten program. In tight times, new spending should be curtailed when possible ? not increased.

And what's worse, that new spending proposed by the governor came at the expense of more than $220 million dedicated in the general fund to support school divisions. As Del. Lacey E. Putney (I-Bedford) said last week: "?There is no doubt that Virginia?s current economic situation presents Governor Kaine and the legislature with difficult decisions on how best to allocate taxpayer funds. However, that is no excuse to decrease important funding for our local elementary and secondary schools. Should the Governor?s recommended education cuts be implemented, the negative impact will be felt on school children across the Commonwealth.?

Putney promised to scrutinize the governor's proposed reductions in local aid "at a time when local governments are struggling to balance their budgets with declining real estate values."

The House proposal also cuts in half the reliance on the Rainy Day Fund.

One item the House budget doesn't include, however, is a hike in the state gas tax. The Senate budget proposal seeks this.

In that proposal, the gas tax would increase one cent each of the next five years. This is a proposal that should be looked at closely when the two governing bodies get together to hammer out a compromise.

The General Assembly has wisely eliminated the ill-conceived abusive driver fees instituted last year. Funds from that were supposed to go towards helping fund transportation improvements.

But those improvements are still needed and hiking the gas tax by a penny could raise millions towards those much-needed improvements. The abusive driver fees were unfairly administered and ultimately could not be counted on to generate the funds for which it was intended. A one cent gas tax hike, however, would have little impact on the consumer while fairly covering those who use the roads, both from in Virginia and from those just passing through. The state's 17.5-cent-a-gallon gas tax hasn't been raised in more than two decades and this modest proposal could help make up for the $390 million shortfall in the budget needed for highway maintenance.

Compromises will have to be made as the General Assembly seeks a meeting of the two governing bodies. The finalized budget should put new programs on hold, but should include a modest gas tax hike.