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Key Objectives Stressed in Budget Plan

Warner relying on tax reform package.

Virginia Governor Mark R. Warner presented his 2004-06 budget to the joint money committees of the state legislature on Dec. 17, and it relies heavily on his tax reform package that has not yet been introduced.

The governor referred to the budget as the Commonwealth of Opportunity Budget and Tax Reform plan, which will be introduced when the General Assembly convenes in January as House and Senate Bill 30.

"That is what raised the most questions," said Delegate Marian Van Landingham (D-45). "The Republicans raised questions about whether this had ever been done, the introduction of a budget that is contingent on legislation that is yet to be passed. It has, but not perhaps to this extent."

The governor's proposed budget achieves four key objectives. It continues Virginia's long tradition of fiscal responsibility and restores structural balance to the budget. It maintains core services in the areas of public education, higher education, law enforcement and corrections, social safety net programs, and transportation.

It begins to replenish the rainy day revenue stabilization fund, which Wall Street bond rating agencies monitor as a sign of stability. Finally, it keeps statutory commitments in the areas of food tax relief, car tax relief, and the dedication of a portion of revenues from insurance premiums to transportation.

"We have grappled with more than $6 billion in shortfalls, and worked hard to streamline government and change the ways it does business," Warner said. "Now we have come to a place where state government must begin to meet its commitments fully. Every child's success depends on quality schools and our Commonwealth's success depends on a well-trained work force and the intellectual capital developed at our colleges and universities.

"Today, we embark on a course to meet Virginia's needs for years to come."

THE BUDGET provides $761.5 million in new funding for elementary and secondary education. This funding updates the Standards of Quality funding; funds the pooled retirement rate for the Virginia Retirement system; funds the final phase of the cost of competing differential for northern Virginia [$7.1 million]; provides $118.1 million in technology funding; allows localities to deduct a portion of Title I funds being used to support programs for at-risk four-year-olds; meets federal reporting requirements for the No Child Left Behind Act and provides an additional $50.9 million in central appropriations as the stateís share of a three percent salary increase for public school employees.

"I am very pleased with the increased funding for public education," said Delegate Kris Amundson (D-44). "The $7.1 million that will fund the last phase of the competing cost differential is very important to us in Fairfax County and the rest of Northern Virginia. The governor has kept his commitment to see that our public schools and public school children are given the best opportunity for success that we can provide."

Virginia Senator Patricia S. "Patsy" Ticer (D-30) was pleased that the budget deals with the use of federal Title I funds. "This money that the schools have been using for programs for four-year-old at-risk students will now not be deducted from the state contribution," she said.

THE $144 MILLION for higher education included funds for the operation and maintenance of new buildings. "This will allow us to finally operate the Northern Virginia Medical Education campus," Amundson said. "It is absurd that we have this wonderful facility that is already built but can't be used because we don't have the funds to operate it."

Ticer agreed. "There is a three to four-year waiting list for students to enroll in the medical education programs that will be taught on this campus," she said. "The job market for nurses as well as for medical technicians is tremendous. We need to get this facility operational so that we can train these young people who wish to have careers in the medical field."

The budget also provides $179.1 million in new funding for public safety/law enforcement. This addresses adult prison capacity issues through a variety of approaches; funds the state agency radio system; funds additional law enforcement deputies, providing matching funds for the federal SAFER program and strengthens training for Commonwealthís Attorneys.

"The radio system is key to our being able to communicate in cases of emergencies," Ticer said. "It is ridiculous that we aren't able to communicate with each other when we need to. This funding will upgrade the radio system and allow agencies to talk to each other when emergencies like Hurricane Isabel occur."

THE GOVERNOR also protected the safety net programs with $942.4 million in new funding. This includes $707.8 million for medicaid utilization and inflation; $46.8 million for the Comprehensive Services Act; $29.6 million to address the shortfalls in revenues at mental health facilities and others.

"The money for the Comprehensive Services Act is particularly important to Alexandria," Van Landingham said. "The city helps to support these programs and this should help."

Transportation programs got a $391 million boost. There is money for the priority transportation fund from the insurance license tax; $65.8 million for Federal Highway Reimbursement Anticipation Note bonds and others.

"We must begin to pay back the money we borrowed from the transportation trust fund," Amundson said. "We have borrowed a good deal of our federal highway money and now we are paying the price."

The budget relied heavily on the $500 million that will be generated by the governor's tax reform measures. The measure that is likely to be the most controversial, but which will raise the most funds, is the one cent increase in the sales tax.

"You can expect to see a lot of debate about this," Van Landingham said. "Also, there will be a lot of discussion about increasing the cigarette tax. Those two measures will provide the most revenue so anyone who doesn't want to support them is going to have to find cuts somewhere."

The governor has proposed increasing the cigarette tax from two and-a-half cents per pack to twenty-five cents per pack. "Localities who have higher taxes on cigarettes such as Alexandria, will be grandfathered but will be capped at fifty cents, which is where we are already," Van Landingham said.

LOCAL REACTION to the budget was positive. "The governor has done a good job at protecting the long term fiscal health of the Commonwealth," Amundson said. "He has protected our triple A bond rating by putting $200 million into the rainy day fund. That should allow us to keep that important rating. Once you lose it, it's very hard to get back."

Ticer agreed about the budget. "There are really no new initiatives," she said. "The governor has protected public education and funded the safety net responsibly as well as addressing some of our very complex transportation needs. He has done what he can in higher education, although we all know it isnít enough."

For those who want to see the impact on the governor's tax reform program on their own finances, the web site is www.taxreform.governor.virginia.gov.

The General Assembly will convene on January 20.