Virginia state business leaders have called on legislators to act on two huge tax proposals that would increase the tax burden on Virginia families by at least $1 billion. Surprisingly, business is supporting the increases!
This is despite baseline revenue forecast assumes economic growth of 5.3 percent in FY05 and 5.1 percent in FY06. This may seem high but in the past two months, growth has exceeded forecast by more than a full percentage point. In fact tax collections for FY04 are expected to exceed official forecast by $236.1 million - representing 6.8 growth.
The Commonwealth anticipates generating $1.55 billion in new revenue next year -- however, the Governor has submitted a plan that would increase spending by $3 billion. The lesson is simple: its a spending problem, not a revenue problem!
Despite this, business continues to rally for additional spending (aka corporate welfare). Some have even argued that "efficient and effective government is important, but Virginia's budget and spending for crucial state services have been trimmed as much as they can be" -- even though the budget has continued to grow at substantial rates.
Additionally, this is despite numerous cost saving and performance improving initatives currently being discussed in the General Assembly. They include a comprehensive competition plan similar to President Bush's, state propoerty divestiture, consolidation of school districts and contracting out of support services, and the introduction of full cost accounting at the Department of Transportation.