Is It Wise to Use the General Fund? Answer Could Shape State for Years
Sunday, March 11, 2007
RICHMOND -- Throughout the General Assembly session, Republican leaders argued that Virginia could afford to tap its general fund to pay for road and transit projects across the state.
Democrats, including Gov. Timothy M. Kaine, countered that relying on the general fund to finance transportation projects would reduce the money available for schools, health and human services and public safety.
Until there's a serious economic downturn, which rarely happens in Virginia, neither side can really prove whether spending general fund dollars would hurt the state's finances.
But their debate exposes a deep philosophical rift that could affect Virginia taxpayers for a generation. And with all 140 legislators up for reelection this fall, voters are going to be asked to choose between vastly different visions for ensuring that government is adequately funded.
Kaine, who has not ruled out using some general fund revenue to pay for transportation bonds, has vowed to amend a GOP roads plan before legislators return for a one-day session April 4.
Del. Terry G. Kilgore (R-Scott), who helped craft the Republican-backed transportation deal approved last month, explained the GOP position. "We just really believe transportation is a core service of government and we should be spending some general fund dollars on it."
Senate Minority Leader Richard L. Saslaw (D-Fairfax) replied that Republicans are out to "starve government."
"You starve out public schools. You starve out higher education. You starve out health and human service. And this is the down payment for doing just that," he said.
In Virginia, transportation needs have historically been paid out of a separate pot of money derived from a gasoline tax, a portion of the state sales tax and other fees. Money for schools, health care, parks, public safety and other services comes from the general fund, which is supported by money from income, corporate and sales taxes.
The plan approved by the General Assembly last month includes no statewide tax increase, although it would raise vehicle registration fees and fines on bad drivers. It would allow local governments in Hampton Roads and Northern Virginia to raise taxes and fees to pay for transportation needs in their areas.
In addition, the state would borrow $2.5 billion to build highways and mass transit. The money would be paid back over the next two decades by diverting about $150 million to $200 million a year from the general fund.
The yearly payments would equal about 1 percent of the $17 billion general fund budget.