Forty percent of the average family’s earnings go to pay taxes at the federal, state or local level. Virginians don’t mind paying taxes if it is fair and the money is wisely spent. As your Senator, I have and will continue to fight against efforts to raise your taxes for every excuse that comes around the corner.
Our state’s revenues rise by varying amounts depending on how our economy is doing that particular fiscal year. If the economy is doing well, Virginians are producing and spending more, thus paying more in taxes providing ample revenue for the state’s budget. If the economy slows, so does the rate of revenue growth. The trick for successful budgeters is to even out those peaks and valleys so we can keep our core service areas properly funded while also meeting our capital needs (roads and school buildings, etc).
The late, great economist Milton Friedman had it right on his take on this issue. He properly advised that in good times (peak revenue periods) you must put money aside for bad times. We do that through the fund we refer to as the rainy-day fund, but even then, there can be excess revenues. This excess should not be spent to grow the base budget. To do so would make budgeting during the next slow economic period even more difficult. Friedman advised that those excess dollars be put into one-time capital improvement projects. For state government, that would be such things as construction at our institutions of higher learning and road construction.
The argument we have heard over the past five to six years is that such excess tax revenue should not be spent on road construction because it takes money that could be spent in core service areas such as education, public safety, healthcare and human services. This argument prevailed for several years in the Senate despite the fact that our investment in those core service areas was increasing 12-20%, respectively, in each of the past two biennial budgets.
Virginia does not need new ways to take money from your pockets to increase the amount of money it has to spend. We simply need to adhere to sound budgeting principles and be responsible about our spending priorities.
We can and should impose caps on the rate of spending increases at both the state and local levels. The increase in real estate assessments at the local level is supposed to be a reflection of the growth in real value of the property itself. Local officials across the state tend to blame the resulting tax increases on the assessments, but, that does not hold water. If they do not want to take that much in new tax revenue from you, then they can lower the tax rate they charge. Chesterfield recently made a decision to do just that which is not the norm across the state.
Many taxpayers in localities throughout the Commonwealth find themselves facing increased real estate tax burdens far exceeding their individual financial growth or ability to pay. Therefore, I believe it is entirely appropriate to cap the rate of spending increases somewhere above the rate of inflation plus population growth. This will assure that state and local governments work harder to set appropriate spending priorities.
At the state level, we also need to implement Zero Based Budgeting for discretionary programs. Doing so would help reduce the overall rate of spending increases and help control growth of the state budget.