Ed Lynch is associate professor of political science at Hollins University. A former Roanoke County Republican Party chairman, he's been a frequent contributor to The Roanoke Times. Opinions expressed here do not necessarily reflect the opinions or policy of Hollins University. Post a message to Ed Lynch's board Recent columns Challenges past, challenges future Kilgore vs. Kaine Winners and losers Where good legislation goes to die What they were doing in Richmond while they weren't passing a budget Why is GOP caving in on taxes? Where's the leadership? Tactics of the tax-raisers The Ed Lynch archive Reprint Email this Article

Tuesday, May 25, 2004

Recently, national Democrats have had to deal with the fact that not only have chemical weapons been found in Iraq, but also found in a roadside bomb meant for our troops. Here in Virginia, we had a discovery almost as embarrassing for state Democrats: the discovery that there is no budget deficit in Virginia. In fact, working Virginians will produce a surplus this year.

Last year, the Governor’s Finance Secretary John M. Bennett forecast that there would be about a six percent increase in tax revenues, without a tax increase. This, the Warner administration argued, would result in a multibillion dollar shortfall in the state budget. Warner used this estimate to rationalize increasing taxes by $1.4 billion. Now the truth comes out: thanks in large part to the low tax policies of President George W. Bush, and former Govs. Jim Gilmore, George Allen and Doug Wilder, Virginia’s economy is rebounding more strongly than Warner’s aide said. Tax revenues will increase this year by almost ten percent over last year.

In an earlier column, I described the tactics of the tax raisers. I included in that list the “dire consequences” tactic. We all remember the warnings that, without a hefty tax increase, prisons would have to release violent criminals, road projects would cease, public school teachers would be fired en masse, and the state’s bond rating would plummet. We were told that the state budget could not be reduced, by the same people who insisted that every Virginia family be forced to make cuts in their own budgets.

Now, it turns out there was no need for either the government or the people to make drastic cuts. Every sector of Virginia’s economy is growing, including the manufacturing sector.

The large increase in tax revenues is largely due to increases in state income tax collections, especially those taxes paid quarterly. In other words, the surplus was produced last year. Even Finance Secretary Bennett admitted this, when he wrote in a recent report to Warner, “April is an important month for revenue collections, with processing of individual income non-withholding, corporate income and insurance premiums taxes."

Bennett’s admission should spark some serious legislative oversight. If the finance secretary knew that April would be a key month, were his estimates, used to justify the largest tax increase in Virginia’s history, based on months with historically lower tax collections? If so, why was this done? Did the governor’s office underestimate likely tax revenues to fuel the scare tactics that were effective in silencing Republicans who were looking out for the taxpayers?

During the 2001 campaign, in the rare moments when Mark Warner was not promising that he would not raise taxes, he was promising to run the state like a business. Perhaps had we known that the business he was planning to emulate was Enron, Virginians would have voted differently.

It is the job of a state Finance Secretary to know how much money is going to be coming in. Bennett’s own Web site says he “has spent his career in state government helping develop the Commonwealth's budget and fiscal policies.” Bennett has been in office since 2002 and worked for the Senate Finance Committee for 14 years before Warner hired him. It is inconceivable that he had no inkling that the state’s economy was growing so fast in 2003 until mid-May 2004. Sales tax revenues alone should have given him a clue what was really happening across the commonwealth. There are important questions here, suitable to be asked at hearings before the House Finance Committee. (There’s not much point in asking the Senate Finance Committee to play a role.)

Warner may have defrauded the people of Virginia by underestimating tax revenues, or by sitting on the good economic news during the legislative session. This is a serious matter, requiring investigation.

But what is undeniable, and even more revealing, is that Warner, at the most crucial moment of his administration, lost faith in the people of Virginia. It is our hard work, good choices, bright ideas and unshakeable confidence in the future of our commonwealth that produced this surplus, and made a tax increase unnecessary.

Warner did not think we could do it. Indeed, he evidently still does not believe that the booming Virginia economy is real. Confronted with the economic statistics, Warner said, “I wouldn’t bet the future of Virginia” on high economic growth.

We should remember this the next time Warner asks for our votes. There is no reason we, the people, should have more confidence in a politician than he has in us.