After November

Barnie Day was a Democratic delegate from Patrick County from his election in 1997 through the 2001 session. A former county administrator and business owner, he is now a banker.

A number of factors come into play:

• A big increase in Medicaid costs that the state must pick up. Most likely in the neighborhood of 8%, it could go higher.

• A half a billion dollar shortfall in K-12 funding. This is a bare minimum number.

• A shortage in the state’s pension fund, brought on by investment losses on Wall Street. Add another half a billion.

• A commitment made to Moody’s Investment Services to double the state’s ‘rainy day’ fund, spent down, some say recklessly, by tax-averse legislators over the last couple of budget cycles.

• New debt service on new bonds will kick in this budget cycle.

• The state’s commitment to reimburse localities for revenue lost by elimination of the car tax will escalate dramatically, even if it remains pegged at 70 percent. This, of course, is driven by more Virginians buying better, more expensive vehicles, theoretically using the money they don’t have to pay in taxes now. Think about it as ‘mo’ better’ cars. But there is another, very real, conundrum here. State budget forecasters at the moment are estimating revenue growth in the 4.6% neighborhood. If it goes to $5% -- and it well might, there being signs that the economy is, in fact, bestirring itself after a long slumber -- guess what? Virginia law says the car tax reimbursement will go to 100%. This is probably the first time in the history of the state that budget writers, though they’d never admit it, hope the revenues go up, but just not too much. If they do, kick in another couple of hundred million dollars in car tax ‘costs.’

• The governor’s Education for a Lifetime initiative, a good, well-received, overdue contemplation of our education system but one knocked off the front pages in mid-launch by Hurricne Isabel, is not a big ticket item, as big ticket items go. Still, add $50 million.

• And we haven’t even considered the needs in Virginia higher education. Or transportation. Or law enforcement. Or ... well, you get the picture.

So where is the latest blue ribbon commission on tax reform, that gutless, do-nothing hen club? Doesn’t matter. They’re going to do exactly nothing.

Add up the facts of the matter and you get a shortfall of at least $1.5 billion -- probably higher. It is a long ways from what it was last time around, but is still significant. And all the easy, one-time fixes, the fiscal sleights of hand tricks, are gone.

So, what’s that leave? Spell it T-A-X I-N-C-R-E-A-S-E.

Call in fixing the structure, call it revenue enhancement, call it fee adjustment, call it what you will, Warner and the House and Senate budget writers face the sales job of a tax increase in a decidedly anti-tax environment.

Sometime after the November elections the governor will roll out his proposals. He’s going to need to hold every Democrat in the House and Senate and pick up a few Republicans. Holding the Democrats will be tough enough, particularly Southside Democrats, those representing districts that really are Republican by nature and number, the same districts reeling from double-digit unemployment. Picking up a few Republicans may be a pipedream but don’t discount that possibility completely -- not yet.

Senate Finance Committee Chairman John Chichester, a ‘must have’ in any budget deal, has been talking common sense these days in major speeches around the Commonwealth.

Said he in an address earlier this year to Virginia FREE: “People elected us to make informed judgments on their behalf. It’s easy to tell people what they want to here -- it’s sometimes difficult to tell people what they need to know.”

Post a message to Barnie Day's board