Monday, February 22, 2010

Common sense cut out of budget

It could have been worse.

Both houses of the General Assembly unveiled drafts of their budgets Sunday. They’re a little different, but probably not enough for anyone to go to war over. They each differ somewhat from Gov. Bob McDonnell’s belatedly revealed suggestions, but they each head in the same direction.

That’s because, like McDonnell, the legislators, Democrats and Republicans alike, are expert politicians. They know how to read election returns. Some of them don’t know much else.

And looking at last fall’s election returns, it’s pretty clear that Virginia voters are in no mood to be magnanimous. We aren’t interested in tax increases. We aren’t interested in what’s best for our state or our communities. We’re scared for our jobs, we’re worried about the economy and we want our leaders to pander to those fears.

There’s no question that cutting $400 million (the Senate), $600 million (the House) or $700 million (the governor) from K-12 public education while retaining the $950 million in car tax “relief”, which for the vast majority of people in Virginia amount to less than $1 per day, is shortsighted and selfish.

The governor and the legislators looked at the voters of Virginia and decided that yes, that’s just how shortsighted and selfish we are.

The money that the state sends to localities to pay their share of the car tax “cut” that got Jim Gilmore elected governor in 1997 could also have offset most of the large cuts in state funding for health care, including Medicaid reimbursements and the operation of free clinics.

Gilmore’s plan didn’t even make sense from a Republican standpoint, because no taxes were actually cut. The state just spends part of the income and sales tax money it collects to pay localities a portion of the car tax otherwise owed by individuals. It’s a spending program at the state level, and like all state spending programs, should have been examined for possible cuts in a bad budget year.

But it was not.

Instead, mental health funding and other health care needs will take hits along with public education. State employees will also feel the effects of belt tightening although the legislature treated them better than the governor had in his recommendations.

Former Gov. Tim Kaine had suggested eliminating the car tax reimbursement and replacing it with a 1% increase in the state’s income tax, which would have been dedicated to local governments.

That would not only have eliminated the need for some of the budget cuts, it would have made the state’s tax structure somewhat more progressive. Because the car tax reimbursements largely go to the wealthiest parts of the state, which had the most expensive cars and the highest personal property tax rates before Gilmore got elected by bribing voters with their own money.The car tax “cut” amounted to a redistribution of wealth to the state’s richest regions

. However, affluent taxpayers pay a larger proportional share of the income tax.

But Kaine’s idea, which was excellent public policy and should have been done back in 1998 if the state really needed to get rid of the personal property tax, had no shot this year. It flew in the face of the political climate. McDonnell and an expanded Republican majority in the House had just been elected by promising never, ever to raise taxes, under any circumstances. While there was some rhetoric about a recession being “the worse time to raise taxes,” that was eyewash. Good time, bad times, medium times, flood, fire, war or pestilence, Republicans say they won’t raise your axes.

And the voters had just said that’s what they wanted.

So Democrats, who still control the Senate, saw no reason to jump in front of the anti-tax train, especially when McDonnell’s veto power meant there was no way to win.

While it may have been a moment that “absolutely requires a really futile and stupid gesture be done on somebody's part.” Assembly Democrats decided they were not “just the guys to do it.”

They took a gut check and they didn’t find anything. So they put pragmatism over principle. They decided saving their seats was more important than standing for good government. And if they don’t stand for good government, what do they stand for?

Republicans didn’t face a similar challenge. They run for office telling voters they hate government. They wanted the same thing voters wanted, to balance the budget without increasing taxes.

School kids, sick people and state employees have to bear the brunt of that? Well, you can’t make an omelet without breaking eggs.

The more important principle apparently won out. Low taxes – and compared to other states Virginia already had low taxes – are more important than pubic education, than health care, than transportation – than all the things we do as a community. Meanwhile McDonnell and the legislator will find the money the governor wants for increased economic development spending. That’s money that will likely end up in the coffers of big corporations as job incentives. As often as not, those turn out to be expensive corporate welfare boondoggles. But, apparently that’s a more worthwhile investment than public school students and sick people.

As for raising taxes being “the worst thing the state could do during a recession,” that just isn’t true. The worst thing the state can do during a recession is cut spending and thus cut jobs. And we just did that. We’ll cut a few jobs at the state level and even more in school districts around the state. So, all else being equal, the budget the General Assembly will pass will make the recession worse. And Gov. “Bob for Jobs” McDonnell will start his term with negative job growth.

But, God forbid, he won’t raise your taxes.

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