Local Commentary

Delegate Jim Scott’s Richmond Report

The House Appropriations Committee met Monday to review the Governor’s revenue forecast for August.

Secretary of Finance Brown said that national indicators suggested that the recession was coming to an end. However, he pointed out that the recovery is likely to be slower than in the past:

“Total general fund revenue collections fell 6.6 percent in August compared with August 2008….On a year-to-year basis, total revenues fell 7.3 percent, trailing the revised annual forecast of a 1.6 percent decline.”

Secretary Brown also pointed out that inflation is very low: only 1.3 percent above last July.

On the other hand, Virginia’s employment fell by 2.9 percent in July, the largest monthly drop since 1954, and net income tax revenues fell by 7 percent in the last two months (July and August).

Two conclusions seem clear from Secretary Brown’s review and analysis: Virginia has fared better than many states, and, without Northern Virginia, the recession’s impact would be considerably more severe throughout the Commonwealth.

Transportation vs. Education

With the background of a continuing recession, and severely limited transportation and education funds, it seems to me that the most important discussion in the race for governor is how each candidate would fund both key elements of Virginia’s success in drawing new economic development: education and transportation.

My view, and the view of the overwhelming majority of delegates and senators, is that the recession has helped to underscore the need for robust funding for both. If they compete for the same existing revenue sources, we will fall further behind in reducing congestion and in funding K-12 and higher education. Clearly the Governor’s Opportunity Fund, originally introduced as legislation by Senator Deeds, has been a success in bringing new businesses to Virginia.  But new or expanded businesses cannot by themselves generate the funding needed to keep pace with inflation and growth.

Without increased revenues, Virginia’s colleges and universities will not be able to serve Virginia’s high school graduates. Our highly regarded community colleges may have to turn away more and more Virginia high school graduates.  Without increased revenues, our colleges and universities will not be able to finance the cutting-edge research that is increasingly driving economic development.

And without new revenues sources, congestion will become an even greater inhibitor of business growth. Since the last increase, the gas tax has lost more than $300 million dollars to inflation.

In the late 1990s our communities’ leaders developed a 2020 Plan for Transportation. Virginia’s failure to act on new revenues has forced us to change it to our 2030 Plan.

Creigh Deeds has addressed our transportation needs directly, both as a legislator, and as a candidate for Governor. Last year he voted for a plan proposed by the Governor that would have funded more than half our shortfall. As he outlined in the Washington Post on Wednesday, Deeds has a plan based on new revenues, not cuts in education or public safety or Medicaid.

Bob McDonnell’s flat rejection of any future tax increase suggests he might again promote clever, but unsustainable, revenue increases like those in the bill he promoted as Attorney General in 2007 – and the Virginia Supreme rejected. Now he to wants fund transportation with the General Fund. More than 70 percent of the Commonwealth’s General Fund goes for education and public safety and Medicaid. The general consensus is that we need at least $1 billion for transportation. McDonnell has not told us how he would fund transportation without cutting resources for our schools and colleges.