Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, January 13, 1995 TAG: 9501130107
SECTION: VIRGINIA PAGE: A1 EDITION: METRO
SOURCE: DAVID M. POOLE STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium
Gov. George Allen peppered his televised tax-cut speech Wednesday with statistics to build a case that Virginians are among the most heavily taxed people in the nation and "big government" is spiraling out of control.
But statistics can be served any number of ways.
Here is a closer look at the two premises upon which Allen has based his agenda for cutting state income taxes, phasing out local business taxes and ratcheting back many state services:
Virginia is a high-tax state.
"Virginia's individual income tax burden, on a per-person basis, is among the top third in the country," Allen said in his speech.
The statistic is accurate, but only part of a picture. Independent analysts warn against singling out one type of tax when comparing tax burdens among states. For instance, Floridians pay no income tax, but get creamed when it comes to sales taxes.
"If you want to look at [a state's] overall tax burden, you have to look at more than the income tax," said Kathleen O'Leary Morgan, a Kansas-based consultant whose study Allen used to make his high-tax claim.
Analysts say the most widely accepted method of comparing state tax burdens is to take into account the entire mix of state and local taxes that residents pay.
Virginia ranks low - 46th out of 50 - in total tax revenue for every $1,000 in personal income, according to the Center for the Study of the States.
In fact, Virginia's tax burden relative to other states' has fallen in the past decade, in part because it was one of only two states that did not increase taxes to balance its budget during the 1990-92 recession.
State spending has spiraled out of control
In his speech, Allen argued that his three Democratic predecessors caved into the "national infatuation with big government" and spent money faster than the growth of personal income and the rate of inflation.
"It has grown even faster than federal government spending," he said. "In fact, over the last 10 years, state government spending in Virginia has increased at nearly twice the rate of federal spending."
Again, Allen is correct. The state budget doubled from 1985 to 1994, at the same time federal spending increased 55 percent.
But Virginia was not alone in outspending the feds.
The Federation of Tax Administrators has found that both state and local revenues outpaced federal spending over the past 30 years. The group cited growing demands on local services and the shift of some responsibilities from the federal to state level.
Medicaid has acted like yeast to bloat Virginia's budget. The federal-required medical program now costs the state more than $1 billion a year, a five-fold increase since 1980.
An Allen administration analysis shows that the two other factors driving the state budget are a dramatic increase in the number of inmates in state prisons and a rise in children entering public schools.
While Allen blames his Democratic predecessors for a 12-year "big government" spree, a state Senate Finance Committee study said the rate of general-fund spending actually slowed slightly in the 1980s and stalled in the first four years of the 1990s.
The average annual growth rate was 15.4 percent in the 1960s, 11.6 percent in the 1970s, 10.0 percent in the 1980s and 5.5 percent in the 1990s, that study shows.
Keywords:
GENERAL ASSEMBLY 1995
by CNB