The Commonwealth Institute nails it in this new report, "A Balanced Approach
As the state's policymakers work to secure Virginia's fiscal future, it is important that a balanced approach be taken. All options need to remain on the table. A family would not try to balance their household budget by ignoring what their income looks like, only focusing on their expenses. Similarly, Virginia should not ignore the revenue side of the state's budget. A "cuts-only" strategy is not what the Commonwealth and its residents need during these tough times. It does not speak to the underlying structural problems in the state's budget and would lead to unnecessary constriction of economic investment at the very time the economy needs stability.
In short, what we need to do is make targeted cuts - using a "scalpel" not a "hatchet," as is currently being done - and make some serious reforms in tax policy. The Commonwealth Institute recommends, and I STRONGLY endorse:
1. Use the "Rainy Day Fund." As the Commonwealth Institute correctly notes, "continually preserving the balance of a rainy day fund for use during even worse economic conditions is essentially as
bad as not having a fund at all."
2. "Reinstating the estate tax could generate $155 million per year for the state's general fund." This one's a complete no brainer, as it affects only a few hundred families but raises large sums of money. Basically, the estate tax is the most progressive tax ever invented.
3. "Closing corporate loopholes." It's outrageous that "[m[ore than 60 percent of corporations in the state pay no corporate tax at all." That should change, immediately.
4. Cap the "land preservation credit." As it's currently structured, "the open-endedness of the program not only has increased costs, but also has led to questions about the relative value of the land being preserved." Not good.
Combined, the tax reform measures raise $511 million next year. Adding in the "Rainy Day Fund" money and targeted cuts completely closes Virginia's projected budget shortfall. It still won't be easy, but the Commonwealth Institute is offering a plan that's reasonable, and one that keeps Virginia from having to make cuts to the "bone" in areas like public safety, education, transportation - this is what I'm talking about. Let's do it!