ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, November 22, 1996 TAG: 9611250121
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
DATELINE: NORFOLK
SOURCE: WARREN FISKE STAFF WRITER
For the first time in five years, state legislators will have a little spare cash to spend when the General Assembly convenes next month.
A steadily improving economy combined with lower-than-anticipated costs for providing welfare and health services for the poor have netted the state about $115 million in unbudgeted money, the Senate Finance Committee was told Thursday during a meeting at the Waterside Marriott.
``This is the first time in five years I have spoken about discretionary funding,'' said John Bennett, staff director of the money panel, who has spent much of the recession-wracked decade warning senators about budget shortfalls. ``This is good news for you.''
But senators were quick to warn that the surplus - which equals just six-tenths of one percent of the state's $15.8 billion biennial general fund budget - will not go far. And instead of pledging tax relief or fancy new education programs, several senate leaders said the top budgetary priority next year should be keeping the state from assuming new debt.
Virginia's debt has increased an unprecedented 645 percent this decade as the weak economy and demands not to raise taxes forced the state to depart from its pay-as-you-go tradition and borrow money to build prisons, colleges and roads.
As a result, interest payments have become the fastest growing expense in the state budget, expanding almost 14 times faster than revenues.
Virginia still is among only five states that have a top-notch triple-A credit rating. But Gov. George Allen and several legislative leaders have voiced concern that continuing the borrowing trend eventually would undermine the state's credit rating, which could force Virginia to pay hundreds of millions of dollars in higher interest rates in the future.
Allen has pledged to veto any projects requiring new borrowing next year. Sen. John Chichester, R-Fredericksburg, urged his colleagues to support a moratorium on borrowing, arguing that any new and essential capital projects should be paid for out of the $115 million surplus.
``There are times to issue debt, and there are times to avoid it,'' said Chichester, co-chairman of the Finance Committee. ``In retrospect, it seems to me that since the recession we haven't been avoiding it enough.''
Lawmakers expressed interest in spending the rest of the money on raises for teachers, college faculty and state employees. Many also hope to expand services for at-risk children by increasing funding for special education, juvenile courts and foster care.
``There's no shortage of needs,'' said Sen. Stanley Walker, D-Norfolk, co-chairman of the panel. He and Chichester agreed that tax cuts ``are off the table'' next year.
Allen will present official revenue forecasts and his budget proposal to the General Assembly next month.
The Finance Committee projected a $265 million surplus this year, a result of higher-than-expected tax revenues and lower-than-expected costs of running certain programs. Key among them was Medicaid, which after more than a decade of averaging 13 percent annual cost increases, slowed this year to 4.1 percent growth.
The panel also predicted about $150 million in mandates on the budget next year, largely in education and new prisons. That leaves the net $115 million in unencumbered money.
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