Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, June 28, 1990 TAG: 9006280668
SECTION: EDITORIAL PAGE: A13 EDITION: EVENING
SOURCE: RAY L. GARLAND
DATELINE: LENGTH: Medium
Michael Dukakis - reeling from a Massachusetts budgetary debacle and a serious downgrading of his state's creditworthiness - has emitted a loud cackle. The governor of North Carolina recently went to Wall Street to assure the bankers that his state's budget problems would be solved in a responsible manner and no bond downgrading would be justified. California's lame-duck Republican governor and the Democrat-controlled legislature are at loggerheads over a $2.9 billion gap between anticipated expenditures and anticipated revenues. New Jersey has just raised its state income-tax. Both New York City and State are well along the path to significant increases in the tax burden of the nation's most taxed citizens.
All this occurs in a time of generally full employment and evident prosperity. But while the numbers continue to look good, as Federal Reserve Chairman Alan Greenspan said the other day, there's enough "anecdotal evidence" to suggest problems.
In a full-blown recession, tax revenues fall while government expenditures continue to rise. In trying to wring the last bit of personal advantage out of the strong economy of the past few years, we have left ourselves precious little wiggle room.
Some of the state's more liberal editorialists are urging Wilder to emulate Bush and opt for selective tax increases to stop further erosion in state and local budgets for critical services. There is scant evidence he will heed this advice. It would seriously undercut his national message of a socially liberal, fiscally conservative Democrat pointing the party in a fresh direction for 1992. Besides, he will argue, the vast increase in state spending under Govs. Robb and Baliles (for whom he has no great love) denotes ample fat to be worked off during lean times.
There can be no question of Virginia's financial strength - it is one of the few states with a solid AAA bond rating - or the ability of state taxpayers to bear a somewhat increased burden. But public spending in this state during the past 10 years has increased at a rate among the highest in the nation.
Even allowing for a slight decrease in the 1990-92 budget as adopted in March, state spending from 1982 to 1992 will still record an increase of some 120 percent. That is substantially higher than any combination of population growth and price inflation would suggest is reasonable.
Nor have Virginia local governments been bastions of fiscal restraint. The city of Roanoke, for example, has enjoyed little or no population growth, but the budget has increased from $90 million for 1981-82 to $152 million for 1990-91. That's a growth of 70 percent; the consumer price index rose approximately 40 percent.
Applying this same test to the state's budget shows a more alarming picture. Gov. John Dalton's last budget, for the 1982-84 biennium, set state spending at $12 billion. Allowing for a 14 percent pouplation growth and a 40 percent increase in prices would have given Virginia a "level-funding" budget for 1990-92 of only $19 billion.
Had we said, "OK, we're not doing enough and want to increase `real' spending by an additional 25 percent," it would have given us a 1990-92 budget of $24 billion instead of more than $26 billion. That $2 billion difference would have left $165 per capita per year in the pockets of Virginians.
But all that is not very helpful to those who are stuck in traffic jams or who must accommodate a rising tide of convicted felons. That's why I suggested, when Wilder took office amidst fiscal storm warnings, that he bring in an outside firm of management consultants to examine state government to see how the private sector might address the problem of increasing productivity while holding cost increases at least to inflationary norms.
When you see how corporate giants routinely decrease their employment rolls while increasing the amount of business handled by those left behind, you have to wonder why we can't do more of this in the public sector.
Politics and inattention to detail keep this from happening. Given only four years, there's little incentive for a governor of Virginia to invite the grief that would accompany all efforts to restructure the delivery of public services. And you might as well expect your pet gold fish to clean their own tank as to expect part-time and politically sensitive legislators to gore the sacred cows of the highway lobby, the education lobby, etc. In government, only a crisis will force change.
That there will be tax increases is a foregone conclusion. But the public must resist the trend, else the public be consumed in the end, and insist that increases in government spending be only marginally higher than the growth in population and prices.
by CNB