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GOP has doubts about Kaine plan

December 18, 2007 12:35 am

RICHMOND--Gov. Tim Kaine yesterday proposed a new two-year budget that increases borrowing and spending, despite slow revenue projections.

He also proposed using $261 million from the state's Rainy Day reserve fund to close up a shortfall in the current budget year.

Kaine's $78 billion 2008-2010 budget--the only one he'll see through in its entirety in his term as governor--borrows nearly $2 billion, much of it for colleges, and increases spending on mental health, foster care, health care and pre-K education.

Kaine didn't propose tax increases to pay for his proposals. He earlier this year asked state agencies to cut back to help forestall a budget shortfall in the current budget year, and he says part of the money he proposes to spend comes as a result of those savings.

He is also suggesting a $10 increase in driver's license renewal fees, as well as an increase to $20 the fee for car inspections--although he would make the inspections due once every two years, instead of annually.

Some spending items--like teacher pay raises--are being shunted to the 2010 part of the budget, when economists hope the economy improves. And Kaine wants to take $180 million of the General Assembly's last budget set aside for transportation, which hasn't yet been spent, and use it for other things, with the intention of replacing those dollars when the projects they're meant to pay for are ready to be built.

Kaine told lawmakers that in a year where there's already a budget shortfall and one contemplated for the 2009 fiscal year, he could have proposed a "standing in place" budget--one with no innovation.

"But a 'best-managed state' does not stand in place. A 'top state for business' does not stand in place," Kaine said.

But lawmakers are skeptical about Kaine's budget. They are doubtful that the economy will rebound as much as he predicts by 2010, and they are leery of increasing spending on programs while cutting back on others and dipping into the Rainy Day fund.

House and Senate Republican leaders held a news conference after Kaine's speech to talk about their concerns with the "overall soundness and long-term fiscal integrity of his spending plan," according to new House Appropriations Committee chairman Del. Lacey Putney, I-Bedford.

The Republicans said Kaine has presented them a "more aggressive" budget than they'd expected, and accused Kaine of trying to build his legacy.

"You can want a legacy too badly," said Del. Kirk Cox, R-Colonial Heights. "You can be a little bit too desperate for it. He's just grabbing money wherever he can."

The Republicans said they're also concerned about the level of debt Kaine is calling for in the budget--$1.6 billion in general obligation bonds for higher-education building, plus other bonds as well. They fear it gets the state too close to its debt limits, although Kaine said his bond proposals are within the state's debt ceiling.

They--as well as some Democrats--also oppose Kaine's use of the Rainy Day reserve fund. Kaine says the state's economic downturn justifies using the fund, and that it would still have $1 billion left in it. But legislators say he's taking reserve money in one year and then creating new programs in the next, which they think is irresponsible.

Sen. John Chichester, R-Northumberland, who yesterday presided over his last joint meeting of the House Appropriations and Senate Finance Committees--he's retiring--said after Kaine's presentation that he finds it "difficult to justify any new programs or the expansion of programs" when the state has a $641 million budget shortfall.

He said Kaine's new spending--to provide health care to the working poor, to expand pre-K programs to more children and to improve mental-health care--are all laudable. But asking for extra money and $2 billion in bonds is, Chichester said, "somewhat ambitious."

Chichester also said the state has put out more than $1.6 billion in bonds and cash for higher-education capital projects since 2002. Some of it--about $120 million from a 2002 bond sale, and much of a $668 million cash infusion in 2006--hasn't even been spent.

"The bulk of it is still there," Chichester said.

So to ask voters to approve another bond referendum for higher education, Chichester said, isn't necessary. To propose it, on top of other bonds the state is already paying the debt service for, "to me does not reflect the conduct of a best financially managed state in the nation," he said.

Democrats were less skeptical of Kaine's proposals.

"I think the governor has put forth an aggressive agenda for Virginia," said Sen. Edd Houck, D-Spotsylvania. "I know we have tight financial times, but I agree with the governor that we don't stand still."

Houck said Kaine actually proposed little in the way of new programs, although he is uncomfortable, like many of his colleagues, about using the Rainy Day Fund, and he also wants more emphasis on teacher pay raises.

In the end, Kaine can get only the spending that lawmakers allow him; he proposes this budget, but now legislators in both houses will refashion it over the two-month legislative session, and present him with their own version of it. It may look radically different.

"We're not just going to rubber-stamp this budget, we're going to look at it line by line and make some determinations," said Del. Phil Hamilton, R-Newport News.