Federal gov’t should follow Virginia’s lead and establish consensus to reduce deficit

On January 18th, two days after taking the oath of office, I delivered my first address to the Joint Houses of the Virginia General Assembly. Waiting for our administration was a Virginia budget with an unprecedented $4.2 billion deficit, a politically divided General Assembly and the toughest economy in modern Virginia history.

In my address, I made clear this administration would be dedicated to bipartisan cooperation in the pursuit of job creation and economic growth. I also made it clear that on one key issue I would not budge.

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We would not balance Virginia’s budget by making it harder for Virginia families and business owners to balance their own. I said, “If you pass a bill in this recession that raises taxes on the hardworking families of Virginia, I will veto it. And if you pass a budget embedded with those same tax increases, I will not approve it.”

To many observers this was a recipe for an extended and contentious legislative session. Instead, the parameters set in that speech brought all the parties involved to the table. Through hard work and without raising taxes we closed the largest budget shortfall in Virginia history. We set priorities, reduced state spending to 2006 levels and laid the foundation for a future budget surplus.

Virginia is a unique state. Our odd-year gubernatorial election cycle makes us an object of national political attention. It also leads to a tough budget calendar. We run for governor in odd-numbered years, we budget in even-numbered ones, and we do not allow our chief executives to serve consecutive terms. This arrangement leads to a situation where once every four years an outgoing governor introduces a two-year budget that will be ultimately signed into law by his successor. Even in transitions of power within the same party, this handoff is awkward at best. When it comes to transitions of power between different parties, the potential is certainly there for a flat-out fumble. In our case, it involved a transition between two different philosophies as to how government should be run and how it should operate in difficult fiscal times.

My predecessor, Gov. Tim Kaine (D), proposed to close the budget gap with $2 billion in cuts and a $2 billion-a-year increase in the state income tax.  He would also phase out car tax relief for Virginians, with an offer to localities to use the proceeds from his income tax increase to continue that tax relief if they wished. I fundamentally disagreed with his proposal to enact the largest tax increase in Virginia history during one of the worst economic downturns in memory. I objected to any effort to take away car tax relief from Virginians.

My priorities for this budget were straightforward. We would eliminate the proposed increase in the income tax by identifying an additional $2.2 billion in budgetary savings. We would protect car tax relief for our citizens. At the same time, we would put in place significant new tools for job creation and economic development to foster future growth. 

It is evident to most Americans that federal spending driving the debt to $13 trillion and growing is just not acceptable. During the past decade, state spending in Virginia had also been increasing dramatically.

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According to Virginia’s watchdog agency JLARC, the total state operating budget grew 73.4 percent from 2000 to 2009. After adjusting for population and inflation, it still grew by 28 percent. In good times, we had put in place rates of spending that could not be maintained in bad ones. This was the time to responsibly reverse that trend, just as families and businesses were doing with their budgets.

Forging consensus across party lines, we found the spending reductions necessary to balance our budget. And on March 14th, just one day later than scheduled, the General Assembly adjourned with passage of a new biennial budget that contained no tax increases, kept car tax relief in place and made Virginia’s government smaller and more efficient while adding major new tools to attract job-creating businesses to the state. There was no deadlock, no overtime session and no government shutdown. There was simply frank discussion and bipartisan cooperation to get state spending under control in a responsible fashion during a difficult economic period.

The passage of this budget has positioned Virginia for economic growth and job creation in the years ahead. As one of the few states to budget already for Fiscal Year 2012, we were one of the first to have to prepare for the end of federal stimulus dollars. And while many other states turned to higher taxes on their citizens to navigate the difficult present, we did not, making Virginia a more attractive location for businesses and families in the future. Remarkably, even in these tough times, we will likely realize a small budget surplus at the end of this fiscal year. This is a Virginia success story.  Promoting fiscal discipline, strengthening free enterprise and bringing new ideas and entrepreneurship to government are the keys to our future economic vitality as a state and as a nation.