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Del. Ken Plum: The ‘T’ Word

by Del. Ken Plum December 3, 2014 at 3:00 pm 12 Comments

Del. Ken Plum/File photoGov. Terry McAuliffe will address the House Appropriations and Senate Finance Committees on Dec. 17 in a statutorily required report on the state’s finances.

The news will not be good nor will it be surprising. For the last two years, the state has seen a steady erosion of its revenue base. Significant cuts have already been made in the budget, and the state has dipped into its rainy day fund.

The problem has not been significant new spending programs. To the contrary — the state has been reducing its spending over the last couple of years even though the state’s economy and employment levels have seen modest growth.

Representatives of local government and colleges and universities can attest to the budget reductions. A significant part of the revenue shortfall experienced in Virginia and in other states that have an income tax was the change in taxpayer behavior to accelerate gains into tax year 2012 in advance of federal rate increases on high-income taxpayers. Payments were high in the spring of 2013, but dropped dramatically in FY2014 because of the accelerated gains.

With adjustments that were made to the forecast by this and other factors there was a need to make up a $2.4 billion shortfall for the biennium. Most of the reductions have been made with about $272 million cuts still needed in FY2016. Clearly, there will not be any additional money under the current budget structure for higher education, preschool, mental health, or state employees who have had few raises in recent years.

The legislators on the money committees already know much of what the governor will say. Money is short for the state as it is for many individuals. We will need to tighten our belts even further.

According to press accounts, some members of the Senate Finance Committee even used the “T” word, suggesting that rather than further cut critically important programs, we consider raising revenue.

There is no way that a Tea Party-dominated House of Delegates would pass a tax bill, especially during 2015 when all 140 members of the General Assembly are up for election. The reported discussion was more about tax preferences or loop holes that might be changed to increase revenue.

Nearly $1 billion of the state’s $18 billion of general fund monies go to pay a portion of a taxpayer’s car tax obligation to local government. The campaign against the car tax once elected a governor to office and despite the fact that it only partially pays the local car tax is not likely to be revisited. Ironically, Fairfax County and Northern Virginia taxpayers make out well with the car tax program taking money that might otherwise go to poorer communities.

If the state expanded Medicaid, it could pick up over $200 million for the budget. Tax preferences related to the estate tax repeal, coal severance tax, and film production tax credits may be examined.

The 2015 session is not supposed to focus on the budget, but the topic is likely to dominate the term. Even the “T” word may be whispered — but not likely acted upon.

Ken Plum (D) represents Reston in Virginia’s House of Delegates. His opinions are not necessarily those of Reston Now’s.

  • Laura Calacci

    Typical lib. Raise taxes. Punish the rich, or those that you feel are rich. Thank God the House of Delegates is dominated by Tea Partiers. By the way, we really don’t need to hear you talk about expanding Medicaid any more. NEVER AGAIN. Its all you talk about.

  • Rational Reston

    It’s extremely hard to see how expanding Medicare is the panacea that Del. Plum appears to think it is.

    What we need is more representation and ideas to keep Northern Virginia tax dollars in Northern Virginia.

    • Mike M

      Roger that! Sending Ken Plum to Richmond is like sending a poodle to a pit bull party. Those rural good ole boys have been taking his (our) lunch money for years!

    • Richard

      For someone who calls yourself “rational”, it’s strange you find this so difficult to understand. Accepting Medicare funds (for which we are already paying taxes) would extend health care coverage to 400,000 Virginians and return an extra $2.8 billion to Virginia.

      • Rational Reston

        That’s very short sighted, and does little to nothing to address the problems.
        That funding from the Federal Government has a sunset date. If Virginia expands Medicare as proposed, it’s on the hook to continue that funding if/when the Federal funding goes away, meaning that Virginia would need to find additional funding (out of our pockets) or scale back to where it is now.
        That medicare funding also pays for that medicare expansion and does nothing for existing budget woes, unless you and Delegate Plum are suggesting raiding that funding for other uses.

        • Richard

          The funding for the Medicare expansion is already coming out of our pockets but Virginia’s not taking advantage of the enormous benefit in terms of new businesses, jobs, tax revenue and, oh yeah, health care for 400,000 citizens. If we are asked to redirect our tax dollars from the feds to the state to pay for the same benefits later (assuming a reduction in the federal contribution), then that would be fine with me. Or you can argue to pull the health care from all those people and pocket the tax money at that time, but right now we’re frittering away billions. It’s stupid policy, bad for Virginia, and is just meant to spite Obamacare which is proving to be far more successful than Republicans care to admit.

          • Rational Reston

            Yes, Virginia is putting money into the Federal bucket of money and not seeing it return. Yes, it’s great to supply benefits and (potential) jobs. But that promise of the return of that money is not indefinite. In fact, there is sunset date on it. While there could be benefits to just taking that money, if/when it goes away, Virginia would need to just need to make it up on its own. Not prudent financial planning or government, it’s just not a stable plan its a haphazard way to do things, especially in a state like Virginia where the budget is not set annually.

            As for the successes, it’s all about whatever metric you put on it and where you zero in to see those results. But for those of us who did the right thing and got jobs who took care of us are feeling the effects squarely in our wallets.

      • HP

        Ohhhh Richie, time to take those blinders off, mah flend!

  • east297

    Isn’t it amazing, the dems get in and the state is out of money! Wow, what happened to the surplus we had just a year ago. Guess we need higher taxes. Gotta keep those entitlements in place!

  • Dexter Scott

    The problem has not been significant new spending programs. To the contrary — the state has been reducing its spending over the last couple of years even though the state’s economy and employment levels have seen modest growth.

    http://jlarc.virginia.gov/reports/Rpt462.pdf

    A total lie. Spending has increased every year.

    • Mike M

      Demo math calls a decrease in the rate of increase a decrease. They presume increases ad infinitum.

  • HP

    GTFO Plummer!! Please retire already for crying out loud!

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