GOP Challenges Kaine's Revenue Projections

By Tim Craig
Washington Post Staff Writer
Friday, December 21, 2007

RICHMOND, Dec. 20 -- Top Republican leaders Thursday accused Gov. Timothy M. Kaine (D) of presenting an unjustifiably rosy economic forecast to accommodate his spending priorities in the two-year budget he unveiled this week.

Kaine, like state and local government leaders across the country, is struggling to balance the budget at the same time a downturn in the housing market has reduced revenue growth after several robust years.

He is projecting that revenue growth will roughly double, from 3.2 to 6.6 percent, from fiscal 2009 to fiscal 2010. GOP leaders say that the state might be headed for a recession and that Kaine risks leaving the next governor in an even bigger economic jam.

In a letter, House Speaker William J. Howell (R-Stafford) requested that Kaine reconvene an advisory panel on state revenue before the General Assembly considers the budget in February.

"We are confident that you share our desire to build the Commonwealth's budget around a realistic and accurate fiscal framework," Howell said in the letter, also signed by Del. Lacey E. Putney (I-Bedford), chairman of the House Appropriations Committee.

Delaney Skinner, Kaine's communications director, said Republicans are trying create a sense of panic about the state's economy to undermine the governor.

"Two months ago, they said the economy was better than we thought it was. Now they are saying it's worse than we thought it was," Skinner said. "It sounds a lot like politics rather than sound fiscal judgment."

Skinner said Kaine administration officials will review the revenue forecasts in February, as is done every year.

In a meeting with reporters Wednesday, Kaine was even more direct, saying that the GOP was making "goofy claims."

"Do they understand fiscal reality, or do they understand and they don't care?" Kaine asked. "I think it is probably the latter."

Howell's letter is the first salvo in what could be a contentious budget debate when the General Assembly convenes next month.

To close a $300 million shortfall in the current budget, which would carry over into the next spending plan if not addressed, Kaine is proposing to transfer $261 million from the state's $1.2 billion reserve, or "rainy day" fund.

Kaine's budget also includes almost $500 million in spending cuts through streamlining and other cost-saving measures.

Because Virginia governors cannot run for consecutive four-year terms, the midterm budget is historically their best chance to leave an imprint on state government.

Kaine, who has ruled out a tax increase, is trying to expand access to health care, bolster spending on environmental protection and extend free pre-kindergarten to more 4-year-olds.

To help him pay for his priorities, Kaine is proposing to divert $180 million temporarily from highway construction programs.

Senate Democrats are also a bit nervous about Kaine's revenue estimates, although they do not say they plan to oppose the governor.

"No one knows what will happen next year. Hopefully, the governor's numbers are close," said Sen. Charles J. Colgan (D-Prince William), incoming chairman of the Senate Finance Committee.

On Wednesday, GOP leaders took aim at Kaine's proposal to divert transportation funds. Kaine said that the highway money, appropriated last year, couldn't be spent next year and that it would be replaced when the construction projects are ready to begin.

But Del. Timothy D. Hugo (R-Fairfax) said Kaine is making "a tragic mistake."

"The ink is not even dry on the transportation deal, and the governor is trying to undo it," Hugo said.

Kaine said Republicans, who lost control of the Senate in the November election, might "marginalize themselves" by developing a reputation for being "bomb throwers."