It's interesting, with all the arguments for and against the GOP transportation "compromise" bill (local vs. state responsibility, tying land-use planning to new transportation projects, providing adequate resources to get the job done, etc.), it looks like it's coming down to one issue: whether or not to take money from the General Fund. According to today's Washington Post, House Speaker William Howell (R) "made it clear that the House will not back down on a key element of the bill -- taking money from the general fund to pay for transportation." In contrast, Governor Kaine "does not want to use general fund money earmarked for schools, social services and environmental programs to repay the cost of borrowing." And both sides, according to the Post, "appear to be hardening their positions" on this issue.
Which raises the question: is this a matter for compromise, or is this a matter of fundamental principle? Is the argument by Governor Kaine that it is simply WRONG to take money away from programs for public safety, health care, education and the environment? Or, is this an area for potential compromise, let's say $50 million per year instead of $100 million per year, or whatever? And on the Republican side, is the use of General Fund moneys to repay bonds a non-negotiable part of their "shrink government to the size where it can be drowned in the bathtub" philosophy? According to the Post article:
Howell said the use of the general fund to repay the bonds is nonnegotiable. Republicans believe using the fund will limit future government spending on projects they deem unnecessary.
So thre you have it, two radically different philosophies of government. On the one hand are Democrats, who believe that government is a necessary force for the commmon good. On the other hand are Republicans, who see government as the "problem not the solution." And it all plays out in the debate over the General Fund, which cuts to the core of the matter. So what's it going to be: compromise between two differing world views, or take those differing world views to the voters this November and let THEM decide which they prefer? Personally, I vote for the latter course of action.
ยง 33.1-277. Credit of Commonwealth not pledged.A. Commonwealth of Virginia Toll Revenue Bonds issued under the provisions of this article shall not be deemed to constitute a debt of the Commonwealth of Virginia or a pledge of the faith and credit of the Commonwealth
And thereby, they get around the requirements of Article X, Section 9(b). They give the debt issuance power to state agencies.
Governor Kaine needs to stand fast on this issue, and give the Democrats a bedrock position to run on this November. If he caves on this, his last two years will be thoroughly miserable. If he doesn't, and the voters support the GOP, they will be miserable anyway.
So it's up the Democrats to make sure the voters really understand what's at stake here, that the hard-right Republicans are going to seriously downgrade the quality of life in the Commonwealth so they can make their Club for Growth bones.
Taking back the Senate and gaining in the House will strengthen the Governor's hand and help us make progress. It's do-able.
For FY06, the GF had $15.4 billion in total revenues and $14.5 billion in total expenditures. On top of that, the Secretary of Finance (a member of Governor Kaine's administration) estimated General Fund revenue to continue to grow in future year, not to mention the actual numbers for FY06 exceeded their projections.
The diversion of funds in FY08 represents 3.9% of the total estimated General Fund revenues ($17 billion) as projected by the Secretary of Finance. Does that sound like it will starve state services?
I think the GF issue should be dropped. I oppose forcing NoVA and Hampton Roads residents to shoulder the fiscal burden of this plan. NoVA already provides nearly half of state revenues. And we already pay a special Motor Fuels Sales Tax that is only applicable to NoVA counties! I also think the state shirking its responsibility for maintaining roads by pushing that off on localities stinks. But allocating some money from the General Fund does not seem to me to jeopardize core state services.
Remember, the real purpose of the endless borrowings and of plundering the General Fund is NOT to accomplish good government but to end public schools and make it impossible for future governments to do anything because there's no money. We will return to feudal society where all public projects are outsourced, only the rich have police protection because they hire their own bodyguards, all roads are toll roads, only the wealthy are educated because they can afford tutors, and charity is a religious obligation which provides for hospitals and "the poor." This is the neo-conservative ideal.
Capital projects are generally funded by a mixture of debt and equity in private industry. This is no different. Highway projects require a great deal of capital and it is only logical to finance those projects through debt. It is equally the same in individual finance. People generally don't pay in cash alone for houses or cars. So, I don't think you should be afraid of debt.
Finally, this money isn't taking away from the budgets of other programs. It might in the future should Virginia's economy go South and we dry out the Revenue Stabilization Fund. But I don't think this is really that dire.
Also, the debt accumulates over many years; it's not all issued at once. And the agencies are just given the authority to issue that debt if they need it for projects, which they probably will. The Wilson Bridge project cost over $2 billion and the first phase of the Dulles expansion is going to cost at least $2.25 billion. These large capital projects are financed by debt otherwise tax payer would end up hit with a huge upfront tax burden. This use of debt is sound unlike the federal debt which is used to cover current year expenses and not necessarily long lived capital projects.
To the Republican bashing, I wouldn't purport to know the intentions of every delegate or senator. So, I don't know that what you are saying is true. Most Republicans in the state government are definitely of the small government philosophy. But I don't think that engenders ending public education or dismantling essential state services like the police. Even if what you say is their goal was their goal, $2 billion in debt is not going to do it. They would have to saddle the state with many more billions than that and take our bonds down into Junk status in order to create a debt service so high that we had to end major public programs. I think again that this is hyperbole and it doesn't really serve anything than to demonize the other side and stifle real dialogue.