Friday, July 22, 2005

Kilgore's General Fund

GOP gubernatorial candidate Jerry Kilgore told a Greater Richmond Chamber of Commerce group yesterday that a growing state budget surplus means the general fund will be able to fund transportation projects, thus adding to the funding that traditionally comes from nongeneral fund sources such as the fuels tax. Democrat Tim Kaine also supports using the general fund for transportation projects.

This AP story in the Daily Press outlines details of the $544 million surplus. The surplus is actually closer to $1 billion above the revenue expected when the biennial budget was passed in 2004, says the story, which also has thoughtful analysis of this event by the gubernatorial candidates and their clever spokespersons.

A point worth noting:
As hearty as the revenue collections have been, they are unlikely to last, at least at their 2005 pace.
The bulk of the growth came from the most volatile and unpredictable sources: non-withholding income taxes generally paid by the self-employed or on bonuses and stock dividends; taxes on real estate transactions during the home-buying and refinancing boom; and record corporate income tax receipts. "Those account for $414 (million) of the $544 (million), and separate those out and we're only about 1 percent over the forecast," (Finance Secretary John) Bennett said.


At 1:27 PM, Blogger Jim Bacon said...

Ah, yes, now we see the outlines of the future. Both candidates can claim to be fiscally conservative by refusing to endorse more taxes. At the same time, they let the state continue to pile up huge surpluses -- and channel those surpluses into road projects. That game can continue as long as the economic expansion continues (or competing claims like Medicaid) eventually whittle down the surpluses.

There are two points worth noting here. (1) In the absence of fundamental governance and land use reform, money spent on roads is largely money wasted. (2) Given the fact that the surplus is approaching two to three times the tax increase passed in 2004, I can see absolutely no justification for ratcheting taxes back down. To do otherwise is to totally break faith with the taxpayers. (But what else would be new?)


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