Virginia faces yearly deficits that would add up to $36 billion over the next decade if state and local leaders try to meet education, transportation and Medicaid needs without raising taxes or cutting other programs, according to an analysis by a group of business leaders.
The group, which calls itself Virginia Forward, predicted a growing gap between state revenue and the amount of money needed to keep the state competitive for business and maintain a high quality of life for residents. By 2008, the group projected the gap could grow to $4.8 billion a year unless policies are changed.
"What will happen is, the state's competitive situation will steadily decline," said the group's chairman, Earle C. Williams, a wealthy defense contractor who once sought the Republican nomination for governor. "There's no free lunch."
The Virginia Forward report, released yesterday, does not directly advocate a tax increase to make up the difference. Williams said the group eventually will release a study offering a range of specific solutions to the funding gap. Currently, the state's overall budget is about $20 billion a year.
"Important spending needs that have been identified . . . cannot even be partially met without some combination of cuts in other spending programs, tax increases or significant bond financing," the group's report said.
A spokesman for Gov. James S. Gilmore III (R) said the governor had not seen the Virginia Forward report because he was busy preparing for Hurricane Floyd.
Del. John H. "Jack" Rust Jr. (R-Fairfax) said the group's predictions of unmet needs seems too large. "I think it is overstating it," Rust said after hearing a summary of the study's findings. "I can't see that government requires that much more investment than we now have."
Rust said the members of Virginia Forward are painting a dire picture as a prelude to a push for tax increases, something he doesn't support.
"Clearly the people in Virginia Forward are looking to infrastructure needs," he said. "This is the beginning of the discussion of higher taxes."
Williams said his group is not calling for new taxes now. If growth in state revenue remains high, the needs might be met without resorting to that unpopular solution, he said.
"What business man in his right mind wants to increase his costs?" he asked.
At the same time, Williams said the group's leaders--including real estate developer John T. "Til" Hazel and engineering magnate Sidney O. Dewberry--recognize the value of investing in the state's long-term future.
Specifically, yesterday's report calls for yearly increases in road spending of $1.5 billion to $2 billion above the growth already planned in the state's transportation budget.
In Northern Virginia, the group advocates building a new Wilson Bridge and widening the Capital Beltway, the Fairfax County Parkway, Interstate 95 and Route 28, among other roads. It also urges a new interchange at Interstate 66 in Gainesville and the construction of a Tri-County Parkway in Loudoun County.
The report calls for an additional $530 million in each of the next nine years to pay for keeping Virginia's colleges competitive. And it says the state should spend an additional $360 million each year on repairing and upgrading schools throughout the state.
The report notes that it would cost $560 million to $1 billion a year to expand Medicaid coverage to 90 percent of people eligible and to increase reimbursement rates to match those in surrounding states.