- The Washington Times - Thursday, December 19, 2002

RICHMOND Gov. Mark R. Warner proposed legislative reforms yesterday that would force the state to save more in good times, oblige governors to quickly reforecast revenues in bad times and curb budgetary gimmickry.
Mr. Warner announced the reforms after spending the first 11 months of his term struggling with budget shortfalls totaling nearly $6 billion and two days before he hands the legislature his blueprint for reconciling a budget still nearly $1 billion out of balance.
"There has been no issue in Virginia more dominant than how we in Virginia address the budget shortfall," Mr. Warner said at a news conference in his office.
Before Mr. Warner's inauguration a year ago, he watched the shortfall estimate grow from $890 million to $1.2 billion. By the time the 2002 General Assembly adjourned, the figure had more than tripled. During the summer, Mr. Warner learned that the imbalance had worsened again, by nearly $2 billion, forcing him to order $858 million in cuts in October.
Frustrated that the scope of the crisis was far greater than the initial estimates he received before he took office and the continued growth of the shortfall, Mr. Warner said his reforms would impose basic business disciplines on state finances.
"While I think … we have bottomed out and it's time to start looking to a more hopeful future, it's also not too soon to step back and examine how we got to this point," Mr. Warner said.
The legislation he proposes would compel governors to prepare a new, written estimate of general fund revenues anytime the state's core income from individual and corporate income taxes and sales taxes dip 1 percent or more below official, budgeted estimates.
"One of the real lessons of the past year is that the governor has to move quickly to reforecast revenues whenever there is evidence of a severe economic downturn. The people of Virginia and their elected representatives in the legislature should not have to wait for the problem to grow out of control before a shortfall exists," Mr. Warner said.
"This requirement for a prompt should not be influenced by any electoral calendar," he said.
Mr. Warner had criticized his predecessor, Republican James S. Gilmore III, for waiting until after the 2001 governor's race to re-estimate revenues to avoid a delay in the five-year phaseout of Mr. Gilmore's popular car tax elimination. Had the provision been in effect that year, Mr. Warner said, it would have triggered a reforecast in July and given Mr. Gilmore and legislators more time to address the shortfall.
Mr. Warner proposed a 50 percent increase in the money the state puts in its "rainy day" reserve fund during times of extraordinary revenue growth similar to those the state experienced during the record economic expansion of the late 1990s. Virginia would have put an additional $160 million into its rainy day fund had that proposal been in place then, the governor said.
His reforms would require the Department of Planning and Budget to do assess how any long-term spending legislation would affect the state's finances for six years into the future. It would also force reviews of new programs after one year to see if actual costs are in line with projections, and it would call for each new board or commission the state creates to die after three years unless the legislature renews it.
It also includes a provision that would create an actuarial review panel intended to remove the temptation during budget deliberations to make projected revenues to seem more rosy by adjusting actuarial assumptions.
Delegate Vincent F. Callahan Jr., Fairfax Republican and chairman of the budget-writing House Appropriations Committee, said Mr. Warner's safeguards make sense. "I applaud him for it," he said.
"We as a legislature have to use the figures that are provided by the administration when we do budgeting. We can't pick numbers out of the air," Mr. Callahan said.
But he cautioned Mr. Warner against presenting the reform legislation in a way that slights Mr. Gilmore, even implicitly.
"If this is interpreted as a dig at Governor Gilmore, he's making a mistake because there will be an adverse reaction," Mr. Callahan said. "If you're going to throw spears, you better expect some arrows in return."

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