- The Washington Times - Monday, August 29, 2005

RICHMOND — Gov. Mark Warner warned yesterday the state’s $544 million surplus isn’t big enough to justify tax cuts or new spending — with most of the cash earmarked to replenish the Rainy-Day Fund and the rest needed to pay for raises for state workers, the Chesapeake Bay cleanup, and the effort to save Oceana Naval Air Station.

At a joint meeting of the House and Senate finance committees and the House Appropriations Committee, the governor warned legislators that cost increases for already approved programs — including car-tax relief — will push the state’s 2006-08 budget almost $3 billion higher than the 2004-06 budget of $63 billion.

Mr. Warner, a Democrat in his last four months in office, pledged to leave the state’s finances in stable condition and repeated a commitment to use this year’s $544 million surplus to shore up the state’s Rainy-Day Fund to $1.1 billion and avoid spending the money on new programs.

As required by the state constitution, the bulk of the surplus will be deposited in the fund. He reminded legislators that during tough times and budget shortfalls they were forced to make substantial withdrawals from the fund.

“If we learned anything from the technology and stock market boom of the late 1990s, it should be that we cannot bet our financial future on any volatile revenue source or assume that extraordinary revenue will simply roll and the good times will last forever,” Mr. Warner said.



Republican gubernatorial candidate Jerry W. Kilgore and Democratic candidate Timothy M. Kaine yesterday each weighed in on the budget surplus and the $1.38 billion in new taxes passed last year that helped create the surplus.

“We see the massive surplus as absolute proof the tax increase was not necessary,” said Kilgore spokesman Tim Murtaugh.

Mr. Murtaugh said Mr. Kilgore’s campaign proposals to offer tax relief in the form of tax credits for school supplies and for purchasing long-term health insurance are ways to reward taxpayers and cut costs.

He noted the overall surplus since lawmakers approved the tax package is about $2 billion.

“We will quite easily be able to cover Jerry Kilgore’s campaign promises with room to spare,” he said.

Kaine campaign spokesman Jeff Kraus said lawmakers must not use the surplus for any new programs, echoing the governor’s warnings.

“Looking at numbers in a shortsighted way is how we got into the hole that the Warner-Kaine administration found themselves in in 2002, when they were inaugurated,” Mr. Kraus said. “If you take fiscal responsibility seriously, you look at things like this in the long term.”

Independent candidate H. Russell Potts Jr. said there is no surplus. “Tax-cut proposals are right now the most irresponsible proposals I have ever seen when you think about our obligations,” he said.

He added that Virginia has substantial spending needs for transportation and education and that lawmakers must be willing to consider tax increases to invest in the state’s future.

Mr. Warner cautioned incumbents and candidates running for office this fall not to pledge more than they can deliver. Voters will select a new governor, lieutenant governor and attorney general in November. All 100 House seats also are up for election.

“Candidates love to promise and aren’t always as willing to say how they are going to pay for it,” the governor said.

House Majority Leader H. Morgan Griffith, who opposed the tax increases last year, said after the governor’s presentation that Virginia families are hurting and deserve a tax break.

The Salem Republican said, as a whole, the spending items Mr. Warner laid out might be “overstated.” He disagrees with the governor’s claim that the booming economy is unsustainable and predicted the surplus will be even larger when legislators return for the 2006 session in January.

“We won’t forget the taxpayers,” he said. “We’ll have to see just how big that surplus is.”

Senate Finance Committee Chairman John H. Chichester, a Warner ally, commended the governor for outlining the almost $3 billion in expected spending needs for items such as education standards, Medicaid and car-tax relief.

The Stafford County Republican noted the expected budget increases do not include any transportation funding.

“I don’t think he’s underestimating the problems, and I don’t think he’s saying the sky is falling,” Mr. Chichester said. “Will there be enough to meet the requirements set forth by the governor this morning? I don’t think so.”

Mr. Warner, who is constitutionally prohibited from seeking a second consecutive term, will lay out his budget plan for the next two years in December. Lawmakers will consider his proposal and then must pass their own spending plan during the 2006 session.

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