I received the full text of Governor Kaine's budget speech this morning. It's very long, so for now, here are some highlights.*"In a tough time, with much bad economic news, it is easy to overlook the things that are going well and miss the story that Virginia is now uniquely positioned as a leader in virtually every area."
*"Now that we have achieved a role of such significant national leadership, we have to hold onto it. We can’t afford to mess it up...But, we will only enjoy the benefit of our position by making smart decisions, avoiding easy shortcuts, and rejecting the 'government by sound bite' that characterizes too much of our political dialogue."
*Kaine says he's "attempted to achieve three goals...First, we have to make significant and painful cuts, but we need to make them in a way that preserves the core services that Virginians depend on...Second, the budget I deliver to you will preserve our Triple A bond rating. It makes the hard decisions and avoids easy gimmicks that can paper over fiscal challenges...Third, the budget reflects the need to preserve Virginia’s status as an economic and educational leader while we climb out of this national recession."
*"Since 1970, there have been 29 years in which general fund revenue growth on a year over year basis met or exceeded six percent. In fully 17 of those years, growth met or exceeded 10 percent. In sharp contrast, the revenue forecast I present today projects a revenue decline of 2.7 percent in FY 2010. This would represent the first time in recorded budget history when the Commonwealth would have experienced revenue declines in two successive years."
*"With this revenue forecast, the budgetary challenge is daunting."
*"Virginia has benefited greatly from the American Recovery and Reinvestment Act of 2009 (ARRA) and will continue to feel the positive impact of stimulus dollars in the next biennium."
*"My budget makes a series of strategic, targeted cuts to K-12 that further focuses our limited resources on the classroom."
*"The budget reduces funding for administrative and support personnel in schools and central offices by applying a funding ratio for these positions."
*" For the first time, the total line item for SOQ funding will be lower in the upcoming biennial budget than it was in the last budget."
*"Virginia's colleges and universities have reduced expenditures and there will be more reductions under this budget. We have protected financial aid from all cuts and proposed that two-year schools received smaller reductions than our four year universities. But, we should not kid ourselves. Without some significant infusion of new revenue, tuition costs will likely rise in this biennium."
*"Some of the most difficult budget cuts come in public safety."
*"As Recovery Act dollars cease to be available beginning in early FY 2011, health care for low-income Virginians will necessarily be affected."
*"This budget calls for the temporary freezing of a number of waiver programs—Intellectual Disabilities, Developmental Disability, Day Support, Elderly and Disabled, and Alzheimer's waivers. The human consequence is that many people will remain on waiting lists until these programs can be reopened."
*"In addition, some Medicaid services have been reduced or eliminated in FY 2012, including physical, occupational, and speech therapy, as well as lower caps on the hours of respite care provided for the needy."
*"Meanwhile, many health care providers will see freezes—or even reductions—in state payments for providing services to Medicaid patients."
*"My budget includes no pay increase for state employees in either FY 2011 or FY 2012. I have not, however, proposed any additional furlough days beyond the single day previously announced for May 2010."
*"Currently, the Commonwealth pays both the employer share and the employee share of retirement contributions. Beginning in FY 2011, all state employees will be required to pay one percent of salary as their share of the total contributions required for membership in the Virginia Retirement System defined benefit retirement program."
*"...the retirement age for newly hired state and local employees will be increased from age 50 to age 55."
*"Given the Commonwealth's mandated prioritizing of maintenance of current infrastructure above other resource needs, there is very little revenue for new construction included in the CTB's current Six Year Plan. Thanks to the support of the President and Congress, we are undertaking a number of critical infrastructure projects through Recovery Act funding. But, those funds will dry up in 2011 and the ongoing road needs of Virginia face an uncertain future due to the unwillingness of state leadership, public and private, to support additional transportation investments."
*"Support for local governments is the biggest single spending item in the state budget and there is no way to make budget proposals of this magnitude without having a direct impact on localities."
*"My budget includes one additional reform in the area of local finance. Given that the Commissioners of Revenue and Treasurers have the primary function of working in the area of local tax administration, the budget proposes that funding responsibility for these offices—other than the salary of the Constitutional officer—should rest completely with local government. This change to the current structure will enable local governments to have sole responsibility for planning and funding the fiscal side of local government operations."
*"My budget continues to invest in economic development and job creation through the Governor's Opportunity Fund, the Virginia Investment Partnership program, and the Major Eligible Employers grant fund."
*"Without question, the cuts required in this budget and in previous rounds of balancing have been painful. Virginia has gone well beyond finding efficiencies and doing more with less—we have been forced to make cuts in programs that directly affect the lives of Virginians."
*"... in preparing this budget, I have carefully analyzed one expense line item that has been untouched until now--the $950 million annual payment we make to localities to offset some portion of local car tax bills for the first $20,000 in value of personal vehicles."
*"I propose ending this payment because maintaining it is contrary to Virginia’s best interests. The phrase “No Car Tax” fit on a bumper sticker, but it was poor state policy to use state tax dollars to pay down a local tax when local voters had the complete ability to influence local elected officials to reduce the tax if they saw fit. Taking $950 million in state funds off the top every year to subsidize local tax collections has hampered the state’s ability to invest in key priorities and weakened our ability to maintain structural balance in our budget. As one example, our funding to higher education—the single most important element in Virginia’s economic future—is in decline at the time when it is most needed. And, our higher education tuition is now more costly than national averages and is likely to climb even further. We should be using the $950 million annual car tax payment to advance our higher education investments and other core priorities."
*"While some of you might disagree with this proposal in your public statements, your actions have told the public that you do not place a high priority on the car tax payment either. The clear campaign promise of “No Car Tax” quickly became a byzantine phase-in of partial car tax relief as soon as the campaign was over. By 2004, you basically decided to stop at a decidedly reduced program whereby the state pays a smaller and smaller percentage of personal car tax bills on the first $20,000 of the value of each automobile. In the nearly 6 years since that accord was reached, not a single legislator of either party has ever come to me to say that we need to move forward and completely get rid of the car tax. Your unanimous decision to abandon the concept of full car tax relief speaks volumes."
*"...in a time when tough choices have to be made to keep Virginia in a strong leadership position, political expedience is not a sufficient rationale for continuing this $950 million folly. My budget does not make the payment and, by foregoing it, Virginians are spared even more draconian cuts to the services that they need."
*"...Let’s get rid of the car tax on personal vehicles completely, but do it the right way. The car tax is particularly objectionable because it requires citizens to write a large check once or twice a year. The right way to eliminate this tax is to give local governments a better revenue source in exchange. We should impose a 1% income tax surcharge in Virginia and give 100% of the revenue to local governments in exchange for their agreement to completely eliminate the property tax on all personal cars, trucks and motorcycles."
*"As proposed in the last biennium, this budget incorporates a $120 million savings by eliminating the “dealer discount” for retailers. While it once made sense to compensate merchants for the labor costs of collecting sales tax on behalf of the Commonwealth, the digital era has rendered this discount both unnecessary and archaic."
*"In a time of unprecedented challenge, Virginia has reestablished our status as a national leader both economically and educationally. We have kept the Commonwealth at the leading edge of American states, so that when we come out of the recession Virginia will be positioned at the front of the pack."
