Ekaineomics: The Poor, The Starving . . . The GovernmentJul 15, 2008
Jesus said the poor will always be with us. That's not good news for those who think the size of government is huge and would like to see much of it go away, because state government now considers itself among the poor. So says Governor Tim Kaine. According to his excellency, higher gas prices are causing people to buy less gas which means . . . (drum roll, please) . . . less gas tax revenue! But wait: Don't liberals want us to use less gas so we won't pollute and melt the polar ice caps? What are they going to do when we move to hydrogen powered cars? There will be no gas left to tax! Poor liberals.
Aside from that inconsistency, we hope Governor Kaine learns from this some basic economics: The more expensive a good or service, the less of it is purchased. So adding taxes to the plethora of items outlined in his recent tax scheme will make those items more expensive. How does he see this as good for Virginia?
"Obviously, we've been through two rounds of expense tightening," the governor said. "One in November, where I reduced the state budget by $300 million cutting expenses. And then in February I had to do a $1.4 billion reduction in the prospective two-year budget," he added.
"Obviously"? Who would have known, what with a budget of $78 billion, more than twice what it was 10 years ago, with new programs launched just this year, such as an expansion of a Pre-K program for which there was no demand. He gets around to admitting his "cuts" were really scale-backs of proposed increases, not actual reductions in programs, although he couched them as cuts.
Without doubt, higher gas prices have increased the cost of government, especially for necessary services such as state police and school bus transportation, as well as for operating state buildings — offices, prisons and colleges, for example.
"But we also have a revenue effect," said Kaine. "As gas prices go up, people drive fewer miles, and that reduces revenues to the state's transportation fund."
Kaine said he saw a recent statistic that showed Americans drove 11 billion fewer miles in the month of March than they did during March of last year. "So what we will see is increasing costs everywhere in state government and fewer transportation dollars," he added.
But it's not only the state. Localities are claiming the poor house blues, too. Several counties have refused to lower their real estate taxes, meaning higher revenues as the old rates are applied to properties with ever increasing assessments. In Richmond, Councilman Marty Jewell, Mayor Doug Wilder's one reliable ally, was the dissenter in an 8-1 vote to reduce the property tax by 3 cents to $1.20 of assessed value, from the current $1.23. (It should have rolled back to $1.18 to remain revenue neutral.) Despite campaign promises, the mayor was opposed to any tax reductions. According to the Times-Dispatch, Jewell, echoing the mayor, said it was too large a cut given the struggling economy because the city needs the money.
So the city and state need the money? What about the hard-working Virginians supplying the money?
But in the face of all this government poorness, some agencies are living large. As Robin Beres of the T-D discovered, two of Virginia's largest universities spent nearly $3 million in catering services just in the first three quarters of the 2008 fiscal year. (Read the article here, but note a typo: she means billions, not millions, in her state budget totals). In Fiscal Year 2007, various institutes of higher learning in the Commonwealth spent $250,000 alone at Richmond's grand hotel, The Jefferson. One college spent $30,000 at the Country Club of Virginia.
But that's just the fun stuff she found. It's well documented that the budget has grown from $15.5 billion in 1998 to $39 billion in the second year of Governor Kaine's two-year budget. But why? One reason she cites is payroll. U.S. Census statistics show Virginia as the 12 largest state with 7.7 million residents. North Carolina, the 10th largest state, has more than 9 million. However, Virginia has 122,000 full-time government employees to North Carolina's 93,000. Yet, we hear from the administration that Virginia government is strapped and we have to raise taxes. Wonder why.
Plainly put: If transportation, or any function government deems necessary, is in crisis, those in charge need to prioritize. Crisis situations get put to the top. Crises are solved with what you have at that moment because crises don't wait; by definition, if it could, it's not a crisis. So if Governor Kaine, Senate Majority Leader Dick Saslaw (D-35, Springfield) and the other liberals are sincere about solving the transportation crisis, they would stop trying to score political points, prioritize spending and cut just a little more than 1 percent of the $78 billion in the current two year budget and put that toward transportation (i.e., re-appropriate the last $1 billion in the budget).
It is disingenuous to say a budget that large cannot be cut. Not everything the government spends on is a priority, to say the least. Let there be no mistake: Funds are not lacking in Virginia. Perhaps truthfulness and leadership are.