THE NUMBERS MAY differ from state to state, but the word from governors and local leaders across the country has a familiar plaintive ring: the word is shortfall, which is an executive's way of saying that government's ends aren't meeting. Already we have heard from Gov. Hughes in Maryland, Mayor Barry in the District and, just last week, from Gov. Robb in Virginia, where projections now show a shortfall growing to $305 million over the next two years. What to do?
No matter which state, the options are basically the same grim choices: higher taxes, deeper budget cuts or both. The decisions do vary, though, generally based on the proximity of a governor or the legislature to the next election. Virginia, of course, is close; the legislative campaigns that aren't off and running already will move into high gear after the General Assembly session ends. So Gov. Robb is talking drastic cuts that could touch "every item in the budget."
A tax increase, says the governor, "is not presently contemplated." If not, the state will be staring at further cuts in already tight areas, such as Medicaid, which already has reduced medical services to the poor, and -- here come the complaints -- in the amounts the state returns to local governments for schools, police, courts and other services. Hopes in Richmond as elsewhere are for a recovery before too many months go by. But wasn't it these same hopes on which past revenue projections have been made and then scrapped? How long can, or should, Virginia go without some tax changes to improve the revenue picture and ease the strains on the state and local budgets?
Politicians may prefer to defer action, but here's what should be done -- sooner or later, and the sooner the more likely to be better:
Raise the state income tax. Virginia's state and local tax burden is relatively low. The income tax is graduated, but the highest rate is 5.75 percent on any income above $12,000. If some offsetting tax sweetener is necessary to accompany this increase, perhaps a phased elimination of the sales tax on food could be tied to the income tax proposals.
Is there anyone in Richmond who will dare to suggest consideration of a higher income tax? Or will the governor and the legislature be content to cut now and pray later? The answers will begin to be apparent when the legislators return for an up- front look at the books next month.