OMT One Man's Trash...from Norman Leahy

Thursday, March 09, 2006 :::

Tomato, Tomahto

Dueling letters to the Editor in this Morning's Wall Street Journal regarding a editorial the paper ran more than a week ago on the state's slow slide from red to blue. Here are the letters, the first from Sen. Chichester, the second from Peter Ferrara:

In regard to your Feb. 23 editorial "How to Turn a Red State Blue":

Virginia consistently ranks as one of the lowest tax states in the nation relative to personal income. Projecting to 2008, our general fund budget still accounts for just over 4.5% of total Virginia personal income, about what it has been for 35 years, and that is after we account for the 2004 sales tax increase for education. Our sons and daughters attend the best public colleges in the nation, we operate one of the most cost-effective Medicaid programs in the country, and we have Triple-A bond rating.

But we are facing a wave of aging baby boomers who soon will be placing unprecedented service demands on our budget and we are facing the fact that our transportation system is collapsing under its own weight. We can't offer the false promise that our general fund can both meet existing responsibilities, with what we know is on the horizon, and also take on a whole new responsibility -- that of transportation. If there is anything that will turn a red state blue, it is the deception of that false promise. Virginians know the same dollar can't be spent twice, and they do not want to pit education or health care or public safety against transportation.

In the current economic expansion there are some general fund dollars that can be applied to specific, one-time transportation projects. These are dollars that accrue in a "hot" economy from corporate profits and investment returns of wealthier taxpayers. In the current expansion, they also have accrued from an exceptional housing market. But these dollars are the first to go when the economy turns south, as it does every 10 years.

House members, Senate members, the governor, and numerous entities representing the state's business community and economic interests all agree on one thing -- that a minimum of a billion dollars a year in sustainable revenue is needed to cure Virginia's 21st-century transportation ills.

Sen. John H. Chichester

(Sen. Chichester is chairman of the Finance Committee and president pro tempore of the Senate of Virginia.)

Ferrara's rejoinder:

The problem of runaway taxes and spending in Virginia is even worse than suggested in your editorial. The state probably now suffers the most rapidly increasing taxes and spending in the nation.

In 2004, then Gov. Mark Warner argued that the state faced an intractable budget deficit, and proposed to fix it with a record tax increase of $1.1 billion in the first two years alone. The Republican House of Delegates produced a balanced budget that increased state spending by over 10% without any tax increase.

But the Senate Republican leadership responded with a bill to raise taxes by an extremist $3.9 billion in just the first two years, and insisted they would shut down the government unless their tax increase was passed.

This ultimately led the legislature to adopt a tax increase generating $1.4 billion in a two-year budget that increased state spending by 19%. Even with that increase, the state has since reported a surplus of $2 billion. This proves all the talk of a deficit was an egregious falsehood.

Now Democrat Gov. Tim Kaine has proposed a new budget for the next two years that would raise state spending another 16.6%, backed by a tax increase raising another billion a year. That would be a rise in state taxes and spending of 35.6% in four years. While the House of Delegates again opposes any tax increase, the badly confused Senate Republicans overwhelmingly support it.

Peter Ferrara

(Mr. Ferrara is president, Virginia Free Enterprise Fund and senior fellow, Institute for Policy Innovation.)

I read both and was struck by the almost stick-figure quality of each man's argument. Mrs. Leahy thought they were fine for someone who wasn't steeped in the debate. She's right, of course.

I am fascinated to see how the pro-tax side continually weaves and bobs to justify its desire for even more taxes against the backdrop of budgetary surpluses. I can only imagine what the next incarnation might be. At the same time, Peter does precious little to advance the no-hike cause, preferring instead to trot out shop-worn phrases like "extremist" to belittle the other side.

Compromise is looking more attractive all the time...if only to force each side to come up with new buzzwords.

::: posted by Norman Leahy at 3/09/2006 1 comments


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