The budget Virginia Gov. Mark R. Warner (D) is asking the General Assembly to pass in January balances spending and revenue, but it does so with one-time financial maneuvers an important businessman repeatedly derided as dangerous to the state's long-term fiscal health.
That businessman is Mark R. Warner.
For most of the past two years, Warner the Businessman has been telling anyone who would listen that Virginia has a "structural imbalance" in its state budget. He patiently explained that the state regularly plans to spend more than it expects to get.
The solution, he has said, is not to count on one-time infusions of cash but rather find ways to permanently adjust spending on state programs to equal tax revenue. Virginia spends about $50 billion during its two-year budget cycle.
"The challenge," Warner said Jan. 10, "is whether we keep papering it over, one-time fixing it. . . . That's just not in the best interest of Virginia, not the fiscally prudent thing to do, not the fiscally conservative thing to do."
But in the 11 months since Warner the Businessman made that statement, Warner the Governor has done very much the opposite, taking a variety of accounting maneuvers and other steps that helped close the spending gap -- but only temporarily.
For Warner, who became governor on the strength of his business experience, the reality of governing during a financial crisis has set in. Like governors in many other states, Warner is discovering that sticking firm to tried-and-true business principles means demanding too many sacrifices from state employees, the poor, doctors, local governments and every other interest group.
A report issued this week by the Center on Budget and Policy Priorities says that almost all of the states are facing huge budget shortfalls totaling between $60 billion and $85 billion.
Maryland expects a $1.2 billion shortfall in its $22 billion budget in the coming year, and the District had to close a $373 million shortfall in its current $5.8 billion budget, which is still awaiting congressional approval.
Iris J. Lav, the center's deputy director, said that many governors are trying to avoid severe service cuts by turning to one-time fixes.
"The danger is that none of those things are repeatable," Lav said. "Unless you believe that next year you are going to find ways to replace that revenue, a state digs itself into a pretty deep hole."
For years, business leaders in Northern Virginia have been saying that to the state's governors. In 1999, the business group Virginia Forward urged a revamping of the state's tax code to correct what it called "a mismatch" between services and revenue.
And in February, Dan Bannister, chairman of the Northern Virginia Roundtable, called for an increase in income and gas taxes and cuts in services to rein in the budget.
"We have run out of these gimmicks," Bannister said. "We have masked the problem for as long as possible. The due bill has arrived. We have no alternative at this point but to get past denial."
Warner has refused to consider tax increases, but he has imposed some pain. In October, he slashed spending on state programs by $858 million, closing several DMV offices and laying off 1,800 workers. He cut funding for colleges, forcing tuition increases. His new budget pares some programs even further.
And he has proposed consolidating several state agencies and functions to save money and improve efficiency.
But he has been unwilling to go all the way, turning instead to a series of one-time fixes that protect funding for education, social services and public safety from the worst of the cuts.
"When the choice is whether to make use of one-time savings and revenues or to substantially damage our most basic services, we have elected to preserve basic services," Warner told members of the assembly's money committees last Friday.
In his first legislative session, Warner proposed closing a $3.8 billion shortfall in large part by borrowing against a special transportation fund, withdrawing money from the state's "rainy day" account, changing Medicaid transfers and implementing accounting adjustments -- most of which could be done only once.
Now, Warner is doing the same kinds of things to cover a $2 billion shortfall.
He proposes to make the ongoing difference between spending and revenue seem about $790 million smaller by plucking money from the lottery fund for education, selling the state's housing loan portfolio, instituting a tax amnesty program, and once again taking money from the rainy day fund.
Lav, who criticized Warner's predecessor, James S. Gilmore III (R), for similar budget techniques, said Warner has also failed to address the underlying problems in Virginia's finances.
"Nobody has been willing to deal with it," she said. "Virginia has been sort of Scotch-taping its budget together for many years now, shifting money here and there but not really balancing their budget."
She praised Warner for attempting to reform state agencies and make government more efficient. But she predicted that the state would soon have to raise taxes to pay for the growth in services.
"There are very big holes," she said. "You probably have to fill them with revenue."
Warner, in his speech to the money committees last week, said his willingness to use one-time budget techniques when they "made business sense to do so" was driven by a desire to avoid further cuts in important state programs.
But Warner the Businessman warned lawmakers of the implications of his actions: "This means that absent a stronger economic recovery than any experts are now projecting, we will again experience a difficult budget next year."