Plans for Va.'s economy long on ideas, not details

RICHMOND

If you're a voter who cares how the state spends money, Bob McDonnell will assure you he's the best man to elect as governor.

And Creigh Deeds will tell you that his fiscal plan would be better at steering the state out of recession.

Both men offer plenty of promises about managing state finances, eliminating waste and improving efficiency.

But when it comes to changing a complicated, entrenched system such as the state budget, the devil is in the details. And neither candidate has offered many.

Deeds says he can restore fiscal sanity in part by changing the way Virginia builds its budget. McDonnell says he will ferret out unnecessary spending and improve core government services without raising taxes. They each suggest the other is making commitments that can't possibly be fulfilled.

The men are running at a time when, after a decade of steady growth in the state budget, the recession has caused tax collections and other revenues to plunge. Gov. Timothy M. Kaine has directed state agencies to trim their budgets and eliminate hundreds of workers.

Ten years ago, the state's two-year operating budget was $41.3 billion. Now it is $74.9 billion.

Some of the growth is due to inflation and population increases. Those drive spending on programs such as public education and health care for uninsured children and the elderly.

When inflation and population changes are factored in, the spending growth amounts to 23 percent, or 2.4 percent per year on average, according to a 2008 analysis by the state Joint Legislative Audit and Review Commission.

Fiscal conservatives point to the increase as proof that government spending is out of control.

"There is no excuse to have our budget nearly double in the last 10 years," said Ben Marchi, state director of Americans for Prosperity, a group that preaches fiscal austerity. "It's evident that our budget growth... illustrates a culture of spending, not a culture of savings."

Michael Cassidy, executive director of the Commonwealth Institute for Fiscal Analysis, said much of that growth comes from new policies demanded by the public - that is, the person staring back at each of us in the mirror. He cited the abolition of parole as one example.

"Virginia is a wealthier state than it used to be, and people demand more services when they are more affluent," said Cassidy, whose group focuses on the implications of budget decisions for the poor and middle class.

Like 48 other states, Virginia is required to adopt a balanced budget.

More tough choices are likely to confront the next governor as he navigates the state out of the recession and into what is expected to be a slow economic recovery. Adding to that burden will be the expiration in 2011 of federal stimulus dollars that enabled the state to plug some budget holes and avoid deeper cuts.

During their legislative careers, Deeds, a Democrat from Bath County, has been more willing to support new taxes than McDonnell, a Virginia Beach Republican.

Democrats say McDonnell's opposition to new revenues approved in the 2004 budget battle typifies that pattern. Deeds voted for the bipartisan package that supporters say made landmark investments in education and preserved Virginia's fiscal health.

McDonnell has said he felt the "largest tax increase" in state history was unnecessary, noting that state revenues rebounded months after its passage.

Both candidates have pledged to cut state spending.

McDonnell wants independent audits to determine state agency performance, thinking those inspections will find excess spending that can be reprogrammed for other purposes. Among the agencies the Republican said he would initially target is Virginia's Transportation Department.

Deeds likewise wants "regular efficiency reviews" of state agencies, beginning with the embattled Virginia Information Technologies Agency. He also thinks savings can be found among local school divisions.

Cassidy is skeptical.

"There is a common refrain about what I like to call the evil triplets of waste, fraud and abuse running amok through government," he said. "But when you look at the performance audits we already do in state government, we haven't had a tremendous unveiling of wasteful spending and fraud going on."

Some conservatives welcome McDonnell's spending proposals as a return to the days of Gov. George Allen's tenure in the mid- '90s.

"You'll hear howls from all kinds of agencies and state workers," Marchi said. "But we know it worked, because Gov. Allen did it and the trains still ran on time."

Critics say McDonnell's unwillingness to consider a tax increase if the economic climate warrants it means he will slash core services to anemic funding levels and play shell games with budget dollars.

Deeds also wants to reform the way Virginia creates its budget. He proposes building a budget from scratch instead of basing it on previous funding levels. That concept, known as zero-based budgeting, has been used with middling success by other states, according to Scott Pattison, executive director of the National Association of State Budget Officers.

McDonnell sees zero-based budgeting as superfluous.

Both men also see economic development as key to solving the state's financial woes.

Getting a transportation funding package approved will spark the listless economy, Deeds contends. He has pledged to get a plan with new revenues approved during his first year in office.

McDonnell says his plans to fund transportation and education without raising taxes will stimulate a recovery.

Both Deeds and McDonnell have proposed stimulating job growth with tax credits to encourage companies to hire people. Cassidy said there's little evidence that's effective.

Julian Walker, (804) 697-1564, julian.walker@pilotonline.com