The Virginia Senate Finance Committee today "shook the bushes" of the state's two-year budget and discovered $33.6 million that could be used to give state workers a pay raise, despite Gov. Mills E. Godwin's warnings that the budget is stretched to its limits.
The governor has warned that if a deficit develops it may force him to cut state aid to schools.
However, the committee decided that Godwin had underestimated tax revenues for the next year. By revising tax estimates upward slightly and tapping idle state funds, the committee unanimously passed and sent to the full Senate budget amendments that add approximately $37.5 million to the state's biennial budget that was approved by the House of Delegates 12-days ago.
If the committee's visions of higher revenues become reality, the measure would authorize Godwin to grant state workers a 4.8 per cent across-the-board pay increase in the next fiscal year.
"We did a pretty good shaking of the bushes and we got enough money and then we quit," said Finance Chairman Sen. Edward E. Willey (D-Richmond), who along with other committee members defended the budget changes as "sound and conservative."
Indeed, Willey told the full committee that a tax subcommittee "could have found a few million more" if it had wished to undertake a more detailed look at the state's $7.4 billion budget, which initially was approved by the legislature last year.
Word of the Senate Finance Committee action brought immediate criticism from some House members. "It's crazy," said Del. Ira M. Lechner (D-Arlington), who has long advocated higher pay for state workers. He said the Senate's promise of a pay raise was built on a "rather illusionary fund."
Senate leaders insisted that their calculations were correct and bases on more current figures than the House had when its appropriations committee drafted its budget revisions. "The money is solid," said Senate Majority Leader Adelard L. Brault (D-Fairfax). "I think it's going to hold together.
Godwin warned the Senate Finance Committee one week ago that failure to add new revenues to the revised budget adopted by the House would risk cuts in the state aid to cities and counties or layoffs of state government workers.
Godwin described the budget as it came to the Senate as "strained at best to be balanced" and said of various schemes to produce a wage increase without a tax increase, "The honest way to go about it would be to find new revenues."
Early in the session the governor told the legislators that the state faced a $102 million deficit because last year revenue was overestimated by $220 million.
The House closed this potential gap by a combination of speedups in sales tax collections and a transfer of special funds to the general fund.
Godwin told the committee that he probably will decide late next summer whether he must order a cut in state school aid to cities and counties to keep the budget in balance. The Senate committee action apparently would give him a choice. He could grant all or part of the senate worker's raise on July 1 and then cut city pay increase until tax collections are and county aid if necessary to help pay for it, or he could hold off on a more certain.
When Godwin cut school aid to localities to balance the budget in the last fiscal year, city and county officials throughout the state complained bitterly to their legislators. One of the primary goals of Assembly leaders this year was to balance the 1976-78 budget without resorting to reduced school aid to localities.
Despite the enthusiasm with which some senators embraced the committee's recommendations, members of Godwin's financial staff who had worked with the committee attempted to divorce themselves from the committee's revenue projections. "It was a judgement on their part," said Secretary of Finance and Administration Maurice B. Rowe after the committee's meeting.
When asked what he thought of the chances of the higher revenues materializing, Rowe paused and said, "You're asking me to predict an impossible situation."
The committee's prediction is based on an assumption that this year's severe winter actually will produce a tax bonus for the state, not the tax drop that some state economists have feared. About $8 million of an additional $13 million in added revenue the Senate committee is forecasting would come from higher taxes paid by public utilities because of increased energy consumed during the severe winter.
The committee estimate assumes an 11 per cent increase in taxes paid by utilities and transportation companies in each year of current biennium. This was once the Godwin adminstration estimate, but it was lowered in mid-November on the advice of utility executives.
If higher taxes on rising utility receipts provide funds for the pay raise, it will be a continuation of a trend toward heavier reliance on utility taxes. In the last fiscal year, for instance, soaring fuel costs increased utilities sales tax receipts 32 per cent over original estimates. This helped offset recession-induced shortfall in income and sales tax collections.
In response to appeals by such public figures Sen. Charles J. Colgan (D-Prince William) and former Lt. Gov. Henry E. Howell, the State Corporation Commission has ordered an investigation of utility earnings during this abnormal winter. Any refund of utility charges would reduce state tax collections on them.
In addition, the committee also predicted that the state could count on about $10 million in the previously appropriated funds not being spent during the two-year period. The committee took $5 million from a Division of Motor Vehicles fund that is supposed to be used for removing abandoned automobiles and $1 million from a little-used state insurance fund to help pay for the additional budget expenses.
It gained another $6 million by further accelerating the schedule under which large retail merchants must submit sales tax receipts and picked up $3.5 million of unused funds that were once scheduled for capital improvements at state institutions.
These items gave the committee enough new funds to grant the provisional pay increase, restore some House-imposed cuts on state colleges and institutions and add a number of minor appropriations. Among the new items were a $12,000 grant for a second volume of biographical data on members of the legislature over an 18-year period and $25,000 for aid in restoring "The White House of the Confederacy" the Richmond home of Jeferson Davis during the Civil War.