ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Thursday, January 23, 1997 TAG: 9701240002
SECTION: EDITORIAL PAGE: A-11 EDITION: METRO
COLUMN: RAY L. GARLAND
SOURCE: RAY L. GARLAND
THE ABIDING maxim of modern politics is money = programs; programs = votes. There is certainly a constituency for less spending and lower taxes, but it's generally not organized. But those wanting more know the drill of keeping close company with those in public office or aspiring to it.
Last year, when Gov. George Allen presented a record-high budget of $34.8 billion for 1996-98, legislators offered almost 2,000 amendments to spend an additional $5 billion. There were many duplications, of course, and most were put in for the record, with scant expectation of funding. In the end, the assembly appropriated $428 million more than the governor requested - mainly by raising estimates of state revenues, which have been exceeded.
Last month, the governor submitted amendments to this budget increasing outlays by $235 million. While numerous minor adjustments are made, public education is favored. State general-fund appropriations to support grades K-12 were increased by $22 million for a two-year total of about $6.2 billion. But this represents less than half the some $15 billion Virginia's 132 school divisions will spend. Local taxpayers will supply most of the difference, with federal grants amounting to about 5 percent.
The formula by which the state dispenses money is a perpetual source of controversy. To figure local ability to support schools, it takes the true value of property, personal income and taxable retail sales. In many rural counties that complain of being shortchanged, state and federal funds represent the bulk of school outlays.
The opposite is true in Northern Virginia, where local taxpayers pay most of the cost. An extreme example is the city of Alexandria, where state aid amounts to less than 10 percent of school outlays. While many suggestions have been made to change the formula, they have foundered on the rock of insufficient funds to increase everybody's slice.
We might see the problem by comparing Halifax County, one of the state's poorest, with Alexandria, one of its richest. Where Alexandria raises locally more than 80 percent of the $9,200 it spent, per student, in 1993-94, Halifax supplied less than one-third of the $6,200 it spent. But Halifax had only $180,000 in property value behind each student while Alexandria had almost $1.5 million! And Alexandria had more than five times the personal income and retail sales per student than Halifax.
On the other side of the coin, Alexandria taxed its real estate at $1.07 per $100 of value while Halifax imposed a tax of only 33 cents. And the true rate of personal property tax on vehicles in Halifax was $1.19 per $100 vs. $4.75 in Alexandria. In truth, we are comparing apples and oranges, or filet mignon and pinto beans.
For 1996-98, Virginia's general fund also provides $3.6 billion for welfare, mental health and Medicaid. Higher education comes in for $2.24 billion. But federal grants and payments by students attending state colleges generate almost $10 billion outside the general fund in these same areas. Federal transportation grants and state road-user taxes will account for $4.4 billion of the total budget.
While the assembly appropriates these "special" funds, they are dedicated to the purpose for which they are collected. That is, federal Medicaid dollars must be spent for Medicaid; student fees stay with the colleges; and federal transportation grants reside with the Virginia Department of Transportation's commissioners.
So, less than half the governor's proposed budget of $34.5 billion represents general-fund spending paid for by regular state taxes and lottery profits.
While revenue estimates are being revised upward, figures released last November anticipated the collection of $15.8 billion in taxes to support the general fund. By far the largest source is the income tax, projected to collect $9.2 billion in 1996-98. This is followed by the sales tax at $3.7 billion, the corporate income tax at $800 million and other taxes of $2.1 billion. Lottery profits are expected to add about $700 million.
Allen had fought to transfer lottery profits to local governments with essentially no strings attached but was blocked by the Democratic majority, which made a show of earmarking them for education. Since state aid to schools was already more than eight times the lottery profits, this had no practical effect. The governor's battle to reduce spending, cut taxes and divert lottery profits to localities is but a distant memory.
Mum's the word on tax increases, though some would dearly love to find a way. Allen certainly, would have no part of it. It is, however, being whispered. Northern Virginia power broker John Hazel told assembly money panels, "We are coming to a time when we are going to have to make more funds available." For now, he wants another $200 million for colleges.
Hazel promised that his coalition of business leaders that intervened against Allen in a modest way in 1995 would push the issue to center stage in this year's election. But even with Democrat Don Beyer in the governor's chair, higher taxes will be a hard sell, though not impossible.
It may be a simpleton's perspective, but the state's 1982-84 budget set total spending at $12 billion. From 1984 to 1998, Virginia's population will grow about 15 percent. During those years, inflation won't be 100 percent. But let's say it will, and add 25 percent for good measure. By that reckoning, the budget for 1996-98 would be $32 billion. In fact, it will be around $35.5 billion. For the average family of four, the difference in taxes extracted would be around $1,000 a year. But they aren't clamoring for it.
Ray L. Garland is a Roanoke Times columnist.
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