Return to Virginia Business - January 2003

by Peter Galuszka

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- Mark Warner: on the budget crisis and plans for a "debate" to set funding priorities
- A quiet man takes a raucous job

When the General Assembly begins its upcoming session on Jan. 8, the primary item — perhaps the only item — for consideration will be Gov. Mark R. Warner’s emergency measures to handle the remaining $1.1 billion budget shortage.

What isn’t known is whether legislators will pull together and resolve the crisis or fall into the same kind of internecine warfare that they did two years ago. Back then, infighting, primarily by Republicans, stymied the budget’s approval and helped create today’s painful deficits.

The smart money seems to be on the former scenario, however. The atmosphere is so grim that many of the players just won’t be able to posture. “The size and depth of our fiscal challenges are so great that we don’t have time for partisan politics,” Warner told Virginia Business. Del. Vincent F. Callahan (R-Fairfax County), chairman of the House Appropriations Committee, notes that the budget crisis is so vast that there really won’t be much else on the agenda.

Contending that “no one will have shrunk government more and in less time,” Warner has already taken draconian steps to reduce the nearly $2 billion budget deficit. In October, Warner cut 1,850 jobs and took other steps to trim $858 million, such as cutting educational programs (page 8), shuttering some Department of Motor Vehicles driver’s license offices and curtailing other state services. The next shoe to drop is Warner’s plan to deal with the remaining $1.1 billion deficit, issued last month, and the General Assembly’s response to it.

To be sure, Virginia is hardly alone among the states when it comes to budget shortfalls. Most have seen tax revenues dip dramatically after last year’s recession. Yet Virginia’s plight has been made worse by the battles in 2000 between GOP legislators and Jim Gilmore, the former Republican governor, over Gilmore’s insistence that the car tax be cut. Recent press reports assert that funding for such state agencies as the Virginia Department of Transportation was already on the ropes during the last years of the Gilmore regime, but the information wasn’t made public.

In his first session as governor last year, Warner did manage to keep the peace as the enormity of the budget woes became clear. Warner did this by working closely with Del. S. Vance Wilkins, Jr. of Amherst, a powerful Republican who was house speaker. Yet Wilkins resigned suddenly in June following disclosures that he paid $100,000 in a legal settlement to a woman who claimed he had made sexual advances. With Wilkins gone, Warner must forge an alliance with Wilkins’ mild-mannered replacement, Republican Bill Howell of Stafford County (page 21).

Looking for the bright side, Warner says the budget crisis has created an atmosphere of urgency that is allowing the state to take big steps that would be mired in controversy in calmer times. Indeed, Warner sees the budget woes as helping set the stage for a statewide debate on what voters, the business community and officials really want from state government and what they are willing to pay for. For instance, Warner says, Virginians need to determine how many top-drawer universities they really want and should be prepared to fund them. Meanwhile, the governor says, he’s taking other steps to run Virginia on a more business-like basis, such as consolidating computer purchases to get a better price.

Other budget issues are certain to come up, such as whether to raise the 2.5-cent state tax on cigarette packs — the lowest in the nation — and whether to boost sagging revenues in the employment compensation fund. Whatever happens during this session, nothing is likely to stray far from the budget mess.

Return to Virginia Business - January 2003