Press Release
Letter From Lieutenant Governor Bolling To Money Committees On Governor's Budget Recommendations
Friday, February 15, 2008
Richmond - Lt. Governor Bolling sent the below letter to members of the Senate Finance and House Appropriations Committees today expressing concerns about Governor Kaine's revised revenue forecasts and budget recommendations.
Key Quote:
"I believe that we should stand in fierce opposition to spending money on new programs at a time when revenues are declining and we are being asked to reduce funding for core government services."
-Lieutenant Governor Bolling
February 15, 2008
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Dear XXX:
I have grave concerns about the budget recommendations that have been made by Governor Kaine, and I wanted to write and share my concerns with you so you can consider them as you make your final budget decisions.
When the Governor released his proposed amendments to the current state budget and his proposed budget for the upcoming biennium to the members of the General Assembly in December of 2007, I expressed serious concerns about his budget recommendations.
In the current fiscal year, I was concerned that the Governor sought to close the Commonwealth's budget shortfall by taking $261M from the state's rainy day fund and using $180M that had been earmarked for transportation construction to help support spending for other government programs.
In the upcoming biennium, I was concerned that the Governor proposed hundreds of millions of dollars in spending for new and expanded government programs, and $3.2B in new state debt, while seeking to pay for these things through overly optimistic revenue projections.
When the Governor released his budget, I warned that if we failed to meet his overly optimistic revenue projections we could face even larger budget shortfalls than we were facing at the time. Unfortunately, those warnings have proven true, and in recent days it has become apparent that the Commonwealth's fiscal status is even more uncertain than previously acknowledged.
The economic challenges we face in Virginia today are not a surprise. We have known for months that these economic challenges awaited us. Unfortunately, Governor Kaine brought us a budget in December of 2007 that ignored these
warnings and proposed spending hundreds of millions of dollars on new programs - money that we simply didn't have.
Now, the Governor has acknowledged that reality. Unfortunately, the mistakes he made in submitting his initial budget recommendations have compounded the budgetary challenges facing the General Assembly.
But, these challenges are not the end of the story. I believe that even in his revised budget proposals, the Governor continues to make many of the same mistakes he made when he presented his initial budget in December. Let me highlight just a few.
First, the Governor's revised revenue forecast continues to estimate revenue growth of nearly 7% in the 2010 fiscal year. I remain concerned that this revenue estimate is still overly optimistic. If we fail to meet this revenue projection, we will face additional budget shortfalls next year and further spending reductions will have to be made. A more prudent course would be to base the second year of the budget on a more conservative revenue estimate and minimize the possibility of future budget shortfalls.
Second, the Governor's revised budget still proposes spending millions of dollars on new or expanded government programs. While many of these programs are very worthwhile, we should not be spending money on new government programs at a time when revenues are declining.
And if that were not bad enough, while the Governor continues to propose spending millions of dollars on new or expanded government programs, he would pay for these programs by making significant spending reductions in several core areas of state government's responsibilities, such as public education, health care and public safety.
I believe that we should stand in fierce opposition to spending money on new programs at a time when revenues are declining and we are being asked to reduce funding for core government services.
Finally, I am concerned that the Governor continues to propose a massive new bond program that we simply cannot afford. If all of the Governor's debt recommendations are approved, they will cost the Commonwealth more than $200M a year in additional debt service. This is a significant financial commitment that must be taken into consideration when determining our overall spending priorities. While some additional debt can be supported, we should not assume this much new debt at a time when revenues are declining.
While it is important for us to work with Governor Kaine and our colleagues in the Senate and House to adopt budget revisions for the current fiscal year and a new budget for the upcoming biennium, we should insist that our budget be based on a solid fiscal foundation; that the core responsibilities of state government be funded to the greatest extent possible; and that we minimize future spending commitments that cannot be supported.
Thank you for considering my views on this important issue.
Very Truly Yours,
WILLIAM T. BOLLING
Lieutenant Governor
Commonwealth of Virginia
WTB/
For additional information contact Randy Marcus at 804-814-7117 (cell) or randy.marcus@ltgov.virginia.gov.
