Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, July 13, 1993 TAG: 9307130192
SECTION: VIRGINIA PAGE: C-1 EDITION: METRO
SOURCE: BY BONNIE WINSTON STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium
"We're going to have a tough, tough choice," Paul Timmreck, Wilder's Cabinet secretary for finance, said Monday. "The wording [setting up the rainy day fund] is tighter than a tick. We can't look to it to solve those [budget shortfall] problems."
A $2.2 billion budget shortage in 1990 impelled the General Assembly to endorse the creation of a rainy day fund to hedge against times when the economy goes bad and shrivels the amount of money paid in taxes to the state.
In November 1992, Virginia's voters by a 3-1 margin approved a constitutional amendment creating the fund and detailing how and when deposits and withdrawals can be made from it.
The first deposit - $79.6 million - was announced by Wilder Monday in noting that the state collected $103 million more than anticipated in income and sales taxes for the fiscal year that ended June 30. The deposit will be part of the next two-year budget Wilder presents to the General Assembly on Dec. 20.
But Wilder noted last month that while increased tax collections are encouraging, the current 1994-96 budget will be hard hit by the rising costs of Medicaid, prisons and public education. He said the state may find itself spending $500 million to $700 million more on those mandated programs than has been budgeted.
But restrictive language will prevent the rainy day fund from being used to ease the shortfall, despite claims by lawmakers that the fund can address everything from federal pension lawsuit settlements to the effects of military base closures.
"The fund is to meet conditions of the economy and not the year-to-year interests of the governor and legislature for new programs and higher spending," said R. Kirk Jonas, deputy director of the state's Joint Legislative Audit and Review Commission (JLARC).
Early on, JLARC urged that a rainy day fund be set up in Virginia. Not only could such a fund cushion against unpredicted shifts in the economy, the cash reserve also could help assure Virginia's triple-A bond rating, Jonas said.
"When people and the governor are talking about a shortfall, they are talking about a shorfall not because we're taking in less money, but because we're spending more than budgeted," Jonas said. "Unless the constitutional conditions exist, the rainy day fund can't be touched."
Timmreck acknowledged that advocates for financially strapped state programs may be angered to see money sitting untouched in a rainy day fund.
"If they holler, we'll just have to holler back," Timmreck said.
"There will always be unmet needs," Jonas said. "And people will always differ on what's an overcast day, what's a rainy one and what's a hurricane. But this fund will truly address a rainy day and not a cloudy one."
by CNB