Story by Chris Graham
The big news out of Richmond this week is that the state is facing a possible $300 million budget deficit due to slowed tax collections.
With tax and spending issues being paramount to the Emmett Hanger-Scott Sayre race for the 24th District Senate Republican nomination, we felt it wise to ask the candidates to weigh in on this news and what it means for the Commonwealth in our interviews with them for our “New Dominion” Internet radio podcast this week.
Emmett Hanger
“It’s something that some of us on the Finance Committee, as we were looking at budget projections, were aware of last year. In fact, one of the additional responsibilities that I have is I have been active nationally in the Conference of State Legislatures, and I chaired a couple of panels on the subject with economists that came in and a member of the Federal Reserve out of Chicago that we had at our last meeting – and we were looking ahead. Because clearly we have these business cycles – and we have times where things are booming, and then there are other times where we’ll go through a cycle where there will be a downturn.”
“And we right now are seeing or have seen indications that the housing market in Northern Virginia, in particular, was somewhat overpriced, and it was going through a corrective action. So really for Northern Virginia, and for Virginia as a whole, it really depends in part on the stability of the federal government – the federal government really ramped up with homeland security and some of the defense contractors spending a lot of money in Northern Virginia and Hampton Roads – and that in part was fueling spinoff businesses and keeping the economy pretty hot up in those areas, so we were enjoying those funds.”
“That’s why many of us on the Finance Committee – and that was part of the strategy that I adopted – decided that rather than allowing the budget to grow, the base budget to grow, that we would spend the additional monies that were being cranked up that hadn’t been expected on one-time expenditures, on capital. Rather than borrowing money and issuing bonds, we would spend cash when we had it to build college and university buildings, and for our commitment to the Chesapeake Bay – we would put cash into those programs as long as we could when money was available. And we also used the good years of the last four years, where we particularly had a strong economy, and we came out of the downturn in 2003 and 2004, that period there, to replenish the rainy-day fund.”
“So from a standpoint of fiscal stability, we’re very strong right now – in that we have budgeted conservatively, we have replenished our rainy-day fund, and we have additional borrowing capacity, if needed.”
“One of the concerns, of course, is that this recently enacted transportation plan relies on taking money out of the general fund – which is something that I opposed. But that’s where we are right now.”
“I expect some mild corrections – but we’re not really seeing anything of major significance right now, other than the fact that with the softening of the housing market, and the resulting slowdown in sales-tax collections, that we are a couple hundred million that we project going out under what our estimate had been.”
Scott Sayre
“When you look back to 1997, you see a budget of $17 billion. And my opponent, during his watch, increases your state spending up to thirty-four, thirty-five billion dollars. Eventually, it’s going to catch up to you.”
“Now, how does this play into it? Well, you’ve got to figure out, what are you going to do? When you’ve got a shortfall, is it because you’ve overspent – and if you’ve overspent, what do you do? Decide to just suck it up and not spend more? Or do you go back and find ways to cut your taxes?”
“It’s fundamental principles of governance that need to be addressed here. Republicans are for less government, lower taxes, supporting the free-enterprise system. We haven’t seen that in the Senate, especially – and we need some changes.”
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