Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, January 9, 1992 TAG: 9201090631
SECTION: EDITORIAL PAGE: A-11 EDITION: METRO
SOURCE: RAY L. GARLAND
DATELINE: LENGTH: Long
'92 GENERAL ASSEMBLY
ALL GREAT truths begin as blasphemies, the philosopher said. If so, then Gov. Douglas Wilder is a leading blasphemer who may be uttering a great truth for our time. Wilder's blasphemy was to say two years ago that we could not sustain expectations for increases in state spending, and to keep on saying it.Leave aside for a moment that he resorted to all manner of gimmicks to avoid the full pain of the economic down-draft that started in Virginia almost three years ago. It would have taken $2 billion in new taxes in the 1990-92 budget now entering its final quarter to have minimally satisfied the demands that were being made. And it would take another $2 billion in additional taxes to do the same thing in the 1992-94 budget that will begin July 1. There's no way of knowing the impact that would have on the Virginia economy, but it would have placed the commonwealth close to a high-tax posture among the 50 states.
It is worth noting, perhaps, that with the exception of Colorado, the only states in the nation now experiencing job growth are those with a low-tax posture. And those experiencing the greatest contraction in jobs are generally those levying the highest state and local taxes. Last year, Virginia experienced a loss of some 30,000 jobs, or roughly the national average.
This is written before Wilder reveals his program to the 1992 General Assembly now convened, but preliminary leaks paint a bleak picture of new cuts. The administration has asked state agencies to make plans to reduce spending from current levels by 9 percent before July 1, 1993. Reductions for state colleges and universities are being pegged at 5 percent.
The Richmond Times-Dispatch published a large catalog of specific responses by various agencies and institutions. The University of Virginia, for example, will defer hiring 34 faculty. Other colleges will absorb the cuts through additional tuition charges. The Museum of Fine Arts will raise $75,000 by imposing an admissions charge, and will require all staff to take eight days of unpaid furlough . State aid to local libraries will be chopped by $930,000, etc.
On the spending-increase front, Medicaid will require another $300 million, and premiums for state employees' health insurance will go up by $50 million. What else is new? Medicaid spending will now claim approximately one-eighth of state general-fund appropriations compared with one-twentieth six years ago.
Wilder will also ask for $40 million to fund a new state program offering health care to some 200,000 children identified as lacking private insurance but not qualifying for Medicaid.
A small portion of the increase in state spending for health will be covered, under Wilder's proposals, by imposing a tax on bed rentals in hospitals and nursing homes. If passed by the legislature, the new bed tax will raise about $65 million in 1992-94.
It is becoming crystal clear that unless there are fundamental, structural changes in way health care in this country is provided and funded we will end by becoming the healthiest people in the poorhouse.
The scope of the problem was highlighted in a recent report by the state health department to the Commission on Health Care for All Virginians. The report dealt only with one small aspect of the cost explosion: the use of magnetic resonance imaging scanners, or MRI. But it showed clearly where we're heading.
The report told us that there are now 74 MRI scanners in Virginia compared with only 21 such units in all of Canada - which has a population four times larger! The units cost about $1 million each and scans are typically billed at about $750. The report went on to say that there were 3,900 scans done in Virginia in 1986 and 51,000 in 1989 - the last year for which complete data were available.
The difference between Canada and Virginia is elemental. Canadian health providers essentially work for the government, and the government is driven to hold costs down by rationing certain elective services and deferring capital investment in new facilities and equipment.
These are not issues, of course, that can be solved by a single state. The General Assembly is just like General Motors. Money saved by cuts will generally end up being diverted to health.
The main problem with what's going on in Richmond is there can be no confidence that adjustments in state spending are being made in harmony with real priorities. There is still a crying need for an assessment of all operations of state government by a team of outside management consultants under the supervision of a small panel of outstanding Virginia business people.
That assessment should have been started two years ago, but it's not too late. This thing - recession; whatever it is - doesn't look like it's going away any time soon. And even if things improve, a competent outside review of all operations will still provide a needed guide to where we're wasting money and where we ought to be spending more.
Overall state spending in the 1992-94 budget is likely to be close to levels achieved under the 1988-90 budget. With this profound and unsettling difference: Money cut from on-line state services will end up paying for large increases in Medicaid and employee-benefit costs.
While things are undoubtedly seriously amiss in Richmond, it can be said that state spending in the new budget will not be much below where it would have been under a normal and consistent rate of growth over the entire decade of 1984-94.
In plain English, the rapid escalation in state spending that took place in the six years before Wilder took office could not reasonably be expected to continue.
Ray L. Garland is a Roanoke Times & World-News columnist.