Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, February 9, 1995 TAG: 9502090072
SECTION: EDITORIAL PAGE: A-17 EDITION: METRO
SOURCE: RAY L. GARLAND
DATELINE: LENGTH: Long
Since Allen announced his budget amendments Dec. 19, an orchestrated campaign has depicted the grave injuries and dire hardships that would come from reducing state spending in order to cut taxes.
The county newspaper here takes a steadfastly conservative line. But it has treated Allen's cuts as if they were the end of the civilized world. My favorite was this headline: "Governor's cuts would take 900 books from the Bedford Public Library." My, my, nothing could go but the books, and local people who wanted a decent library couldn't possibly afford to buy them.
While the cuts were in some cases painful, their overall budgetary impact was small. Last year, the legislature authorized spending in the fiscal year beginning July 1 of almost $17 billion. While we heard little about it, Allen actually proposed increasing general-fund spending in numerous categories by $195 million. The personal and business tax reductions he wanted would have reduced revenues by $149 million. To pay for both the spending increases and tax cuts, he would have reduced appropriations already made by $403 million.
The net difference of $208 million between spending increases and spending cuts amounted to less than 3 percent of the general fund. When you included federal grants-in-aid and special funds, the cuts represented only 1.4 percent of total spending.
Of course, that makes the medicine seem milder than it was. Allen's tax cuts would have deprived the state of more than $2 billion in revenue over the next five years. While spending would continue to grow, it would do so at the slowest rate the state has known in many years.
At least on paper, it was a remarkable program. The governor would not only cut taxes, and do it in a way benefiting the lower end of the middle class the most, he would accommodate prison expansion, settle with federal retirees, absorb a substantial new tax break for senior citizens enacted last summer and build up needed reserves in the Virginia Retirement System.
Allen has proven himself a man of shrewd political judgment. Maybe he believed the assembly would tinker with his package but approve most of it. Or maybe he didn't care, thinking it was a winner either way. But there are certain risks too great to take, and this was one of them.
The Virginia tradition has been for the governor and the legislature to refrain from harsh words in public. Allen was needlessly confrontational, treating Democratic leaders in Richmond as if they were mad-dog liberals in Congress. But if you're going to treat your opponents as curs, you must be careful not to allow them access to your throat.
The scope of Allen's plan initially stunned assembly Democrats. I believe House Majority Leader Richard Cranwell when he says they came to Richmond with no plan of attack and didn't pretend to know how it would play out. But the governor had given too many hostages to fortune by cutting museum grants, public broadcasting, libraries, general relief, higher education, the extension service and state workers generally - all capable of mobilizing support and dramatizing the price the public would pay. In many cases, the dollars involved were simply too small to take the flak you had to know would rise to meet you.
On the tax-cut side of the ledger, Allen's proposed increase in personal and dependent exemptions, though it never resonated with the public, was soundly conceived. But he shouldn't have brought in the tax levied by many localities on the gross receipts of retailers, contractors, doctors, etc.
In the first place, more than 50 counties don't impose this tax. By promising state funds to replace all lost local revenue, there was legitimate complaint on the part of those that didn't levy the tax. Not only would they get nothing out of it, a small share of state taxes they pay would benefit those no longer paying or collecting.
Despite the rhetoric, the Business, Professional and Occupational License tax was not particularly onerous. Nor was it going to be easy to work up much public sympathy for most of those paying it. Even business leaders were divided on the subject of its removal. In the absence of a local income tax, it didn't seem terribly unfair for a retailer doing $5 million a year to pay a $10,000 license tax; nor a medical or legal practice with billings of $1 million to pay $5,800. While rates varied, this was typical.
Had Allen been more politic in deciding where to cut, and left the gross-receipts tax off the table for now, he might have peeled away enough Democrats to win the battle on reducing the state income tax. But even this would have been better reserved for next year. Then, a new budget could have been presented, not in terms of taking back what somebody already counted upon, but in the context of a less-than-expected increase.
But the heart of the governor's problem was the appearance of making cuts willy-nilly, with no real basis for doing so. Allen was convinced that enough fat existed in a budget of $17 billion to make it unlikely the general public would ever notice a reduction of a few hundred million. He is almost certainly correct. But he couldn't cite chapter and verse to prove it, backed by the findings of an independent, nonpartisan source.
Had Allen pressed last year for a top-to-bottom review of all operations of state government by outside management consultants and brought their detailed blueprint to the legislature, he might have won a great victory - not only for himself and his party but for all citizens. This sort of thing is done routinely in the private sector with astonishing results.
By trusting to instinct and bravado to see him through, Allen has now dug himself quite a hole. It's not too much to say he has put his whole term at risk after only a single year. But having done that, the only proper course is to try to brass it out.
Ray L. Garland is a Roanoke Times & World-News columnist
Keywords:
GENERAL ASSEMBLY 1995
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