Friday, January 30, 2009
Editorial: Stimulus windfalls and budget shortfalls
Virginia could put federal stimulus dollars to good use, but they won't be a panacea.
From the RoundTable blog
Read the latest entries
The economic stimulus package making its way through Congress could pour $4 billion or more into Virginia at a time when the commonwealth is facing more than a $3 billion shortfall in its two-year budget and looming deficits in local government budgets.
Still, Gov. Tim Kaine warned budget writers in Virginia's General Assembly this week that the potential infusion of federal dollars won't be a means to avoid making painful budget cuts. The new money could mean only that the state doesn't have to make even deeper cuts if, as expected, revenues keep dropping in a worsening economy.
Even that assumes the U.S. Senate will follow the House lead and quickly pass a massive stimulus package so President Obama can sign it, as he has asked, by Feb. 16. The cash infusion will provide a welcome windfall, but it won't resolve many of the state's budget woes.
For example, the perennial battle between state Democratic and Republican leaders over transportation funding is not going to be resolved, though stimulus money is expected to ease the sense of urgency, at least in some areas.
Of the $4 billion the state expects to get from the stimulus, Virginia officials estimate $700 million to $800 million will go into transportation. Northern Virginia expects to do well by it. Regional transportation officials tell The Washington Post that federal spending on roads and rail in the gridlocked Washington metropolitan area would double this year.
Nice. But it's only stopgap relief, considering that Virginia recently cut $2.2 billion of projects out of its six-year transportation plan. And after the two-year federal infusion, the state will still lack a dedicated revenue stream to build the infrastructure Virginia needs to be economically competitive into the future.
If the stimulus works, it will reignite the national economy, and higher tax revenues will begin to flow again into federal, state and local coffers. Budgets decimated by a historic recession gradually will recover. But a tax structure that doesn't adequately, equitably and efficiently meet state government's core responsibilities won't be a natural byproduct of recovery.
State lawmakers have to work at that.
