The news in yesterday’s Washington Post is that Virginia is now facing a $300 million shortfall for the upcoming budget year. The reason is largely the slumping housing market in Northern Virginia which has a “ripple effect” in state and local revenues.
These cycles happen in a modern-day economy. Some years are good, some are not. To prepare for the lean years, the state maintains a “rainy day” fund to meet its obligations. This is a process as old as Biblical times, when Joseph counseled Pharoah to store his surplus grain for a famine. In contrast, the Federal government simply prints more money in slow times, thereby increasing its annual budget deficit.
The state shortfall would be ordinary news, except for the fact that the 2007 General Assembly passed a major bill which relies on “future surpluses” to supply the state’s share of increased transportation dollars.
This is the same Assembly which made million-dollar inheritances tax free in 2006, thereby lopping off another $100 million in annual revenue (and significantly skewing the equity of our tax system).
Now we are facing a deficit.
I could write my opinion on all this — but I think the facts speak for themselves.