Landes Explains Senate’s Bad Revenue Estimate

VA HouseGOPBudget, Featured, Issues, Taxes

Del. Steve Landes (R-Augusta) relays a lesson the Senate has failed to learn–you have to know how much you can spend before you start spending it. The Senate Budget makes promises that responsible revenue figures won’t support. Landes details the flaws in the Senate revenue estimates and their irresponsible decision not to provide for a deposit to begin replenishing the Rainy Day fund.

Check out Landes’ speech on YouTube.

The transcript of his remarks follows:

Ladies and Gentlemen of the House, as you know, I’m a newbie to the budget conference this year.  But, one thing I do know already is that we have to figure out how many dollars we have to spend before we can actually spend those dollars.

Today, I’d like to talk about where we are relative to the revenues in the state budget.

As you know, we’ve had a challenge the last few years with whether the state revenue projections are on target and have really been accurate related to dollars coming in to the Commonwealth and making sure that we account for those in our state budget.

The last few years, unfortunately, those have not always been on target.

In Fiscal Year 2008, the final revenue projections barely met our forecast, and we ended the year only $5 million above the forecast.

Last year, even after pulling down the state revenue forecast by $821 million in the mid-2009 Session re-forecast, Governor Kaine’s forecast overestimated revenues by $299 million.  Unfortunately, the Commonwealth ended the year with a substantial budget shortfall.

Thankfully, in the House, we had the foresight to insist the budget conferees set aside a state revenue reserve of $150 million, which did help the state close the books at the end of the year to offset the impact of the FY 2009 shortfall.

This year, the House incorporated Governor McDonnell’s three-year upward adjustment in the state revenue mid-session reforecast, totaling $200 million.  But, the House also set aside an additional $165 million for deposit into the Commonwealth’s Revenue Stabilization (Rainy Day) Fund to help offset any potential setbacks that we may experience because of the weak economy. While all of us are pleased that the economy is showing some signs of improvement, we also know that economists believe that the economy is not recovering as quickly as we’ve seen in the past and that the recovery will probably be slow and steady, not like the robust recoveries that we’re used to seeing in past years.

Now, that’s what the House of Delegates did this year in its budget relative to revenues.

But, as Paul Harvey always used to say, “here’s the rest of the story” – regarding what our Senate colleagues have done with their budget.

Mr. Speaker, in contrast to the House, the Senate not only adopted and spent the entire $200 million recommended by Governor McDonnell, but also, in essence, revised the state revenue forecast and added an additional $247 million in revenues over the three-year period.

In particular, the Senate revisions included an amount of $69.1 million in the current year when we still trail the forecast with only four months remaining until the end of this fiscal year on June 30.

That’s concerning.

In addition to spending the $247 million in additional (or what I would consider pumped-up) revenues, the Senate eliminated $40 million that Governor Kaine had included in House Bill 30 as a deposit for the Rainy Day Fund.  And, they spent that $40 million too.

In my estimation, ladies and gentlemen of the House, the House and Senate budget conferees have to deal with the revenue issue.  This is the most important thing we’re going to have to do in the near term.

It’s very difficult and very troubling when we’re going into this conference with the fact that not only did the Senate build their budget on what I consider faulty and dangerous revenue assumptions, but they’ve also built a lot of the spending they’ve done in their budget on false promises, because those dollars just are not there.

What the Senate has done by spending more than every cent that we’ve tried to set aside in the past, the Senate also has raised expectations that many programs will not be cut.

The House took the more prudent course to assess our revenues, spend them accordingly and make the cuts necessary to meet our constitutional obligation of balancing our state budget.

Ladies and gentleman, I hope you will join me in thanking the members of the House Appropriations Committee on doing the prudent thing and not just trying to puff up the Commonwealth’s revenue estimates.

Thank you, Mr. Speaker.