THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Wednesday, January 11, 1995 TAG: 9501110426
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY WARREN FISKE, STAFF WRITER
DATELINE: RICHMOND LENGTH: Long : 139 lines
For $46 a year, are you willing to buy the services of 1,100 state employees, pay for dropout-prevention programs in public schools and help localities put police officers on the street?
That is the key question facing legislators as they convene today for a 46-day General Assembly session that could fundamentally alter the future of state and local governments.
Gov. George F. Allen and his increasingly powerful Republican allies in the legislature are betting that Virginians want less government, lower taxes and fewer services.
He is proposing an ambitious plan to cut the state budget by $403 million that also would slash in half money for the arts, reduce funding for mental health facilities, eliminate Medicaid funding for many teenagers and decrease aid to localities for police protection. Allen wants to pass some of the savings back to taxpayers: A family of four with an adjusted federal gross income of $40,000 would save $46 next year.
That's just the beginning. Over the next five years Allen wants to cut taxes by a total of $2.1 billion, saving the same family $368 annually beginning in the year 2000. Allen has not said how he will make cuts for the future, but he is considering a proposal to eliminate 16,000 jobs from the state payroll of 110,000 workers.
Democratic leaders say the results will be catastrophic to education and social services. They argue that Allen would merely shift the burden of paying for many programs from the state government to cities, counties and towns and that any savings from lowered income taxes would be wiped out by higher local property levies.
In an election year with all 140 seats in the General Assembly up for grabs, Democrats face the daunting task of convincing voters that massive tax relief may not be in their best interest and that state government is a good bargain just the way it is.
Virginia is a relatively wealthy, low-tax state that already provides services far below its ability to pay, statistics show. Consider these figures provided by state agencies and by the 1994 State Policy Reference Book, which is produced by a private, nationwide statistical clearinghouse:
Although Virginia's per capita income of $22,052 ranks 15th among states, its tax burden ranks 46th. Out of every $1,000 earned, state and local governments claim $192 in taxes.
Virginia ranks 43rd in tax support per college student. As a result, average tuitions at nonresearch state colleges are the third-highest in the nation.
Virginia ranks 45th in per capita spending on welfare - $327 a year.
Virginia ranks 27th in the amount of state aid provided for each public school student - $2,297.
Virginia ranks 24th in the number of state employees per 10,000 residents - 182.
Virginia ranks 25th in the average salary paid to state employees - $27,204.
Given those numbers, why is Allen pushing for greater cuts? Lawmakers say the answer lies in part with the philosophy of the 42-year-old governor and in part with the politics confronting him.
Allen, a former history major who laces all his speeches with references to Thomas Jefferson, genuinely believes that the role of state government should be limited to providing for public safety, transportation and education. He has deep distaste for business regulation, the welfare system and public subsidies for the arts.
Allen has obeyed his convictions by putting forth an exhaustive array of initiatives for the legislature to digest. Welfare reform, revamping education and paying for parole reform all are facets of his larger goal of remaking government.
The promise of change was central to Allen's runaway election in 1992, making him Virginia's first Republican governor in 16 years. ``Maybe I'm just not smart enough to figure out why the Democrats are so surprised,'' said Senate Minority Leader Joseph B. Benedetti, R-Richmond. ``The governor campaigned on downsizing government; that's what the people wanted and that's what he's doing.''
Democrats say Allen's tax-cutting plan is an irresponsible attempt to influence this fall's elections. Republicans need gain only three seats in the 40-member Senate and three in the 100-member House to seize control of the legislature for the first time in state history.
House Speaker Thomas M. Moss Jr., D-Norfolk, said he is worried that voters may not listen to explanations about why a tax cut is not in their best interest. ``It's one of those situations where if we act responsibly, we lose,'' he said.
Moss and other Democrats question the wisdom of granting tax relief at the same time Allen is proposing that the state borrow money to build new prisons. Allen responds that it is customary for the state to borrow money for construction of new buildings and that even with his budget cuts, there will be ample money to pay off the added debt.
Democrats accuse Allen of trying to transfer the public's dissatisfaction with the federal government onto the state government. Unlike Congress, however, the General Assembly is required by law to pass a balanced budget. Virginia is one of five states with a top-notch AAA bond rating. Twice in the past three years, Virginia has been cited as fiscally the best-run state in the nation by Financial World magazine.
``The logic is mystifying,'' said Del. Jay DeBoer, D-Petersburg. ``What the governor is saying is, `Virginia is the best-run state; let's fix it.' ''
Although many Republicans acknowledge that Virginia has been run soundly, they say there is room for improvement. State spending, they point out, more than doubled over the past 10 years and exceeded the rate of inflation.
``If we can operate more efficiently and give taxpayers a break, we have a duty to do that,'' Benedetti said.
But will taxpayers really save in the long run? As part of his budget package, Allen is proposing a five-year phaseout of a tax on gross business receipts that provides $300 million a year to local governments across Virginia.
To make up the revenue, cities would either have to drastically cut services or raise real estate tax rates by 17 cents per $100 of assessed value, according to Michael Amyx, executive director of the Virginia Municipal League.
Local governments say they have already slashed spending. For example, Norfolk has eliminated 800 employees from its payroll in recent years and Virginia Beach has cut 558. ``There's nowhere left to cut,'' complained Norfolk Councilman Mason Andrews.
Allen also has proposed cutting money for a host of economic development projects that cities consider vital to their futures. Allen wants to slash $1.3 million for construction of a downtown Norfolk campus of Tidewater Community College. He's proposed eliminating $700,000 for revitalization of the Hotel Roanoke in Southwest Virginia.
Outside of Allen's budget proposals, a host of other thorny issues will occupy legislators' time: allowing riverboat gambling in Hampton Roads; placing limits on teenage abortion; toughening penalties for those who block access to abortion clinics.
But none will be as crucial as the $46 question. ILLUSTRATION: Color photo
GOV. ALLEN
Graphic
JOHN EARLE/Staff
PROPOSED SPENDING CUTS:
ARE THEY WORTH IT?
SOURCES: The State Policy Reference Book, the Virginia Senate
Finance Committee, the State Council on Higher Education, the
Virginia Arts Commission.
[For complete graphic, please see microfilm]
by CNB