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February 3, 2015

Arbitrary, Flawed, and Bad for Virginia

If you like crowded classrooms for your kids, less police protection for your neighborhood, and fewer resources for public health, then some legislators in Richmond have just the legislation for you.

If legislators approve a measure that would artificially limit the amount we can invest in public needs from year to year, they will hamstring our ability to respond to changing public needs and to restore cuts in education, public safety, and other services that occur during recessions.

The legislation (SB 826) is bad for Virginia because it would put our future on autopilot, tying the state budget to a flawed formula that has little basis in reality. It would also make it harder for the state to respond to recessions and other unforeseen events.

In essence, lawmakers would be dodging their responsibility to make the most important decisions we elect them to make, since the legislation would arbitrarily limit state spending to a formula of population growth plus inflation in the cost of common consumer goods.

These are limits that don’t make sense.

Population growth is not a sound method for predicting the amount of services people will need. That’s because certain segments of the population grow faster than the population as a whole, so the cost of maintaining even the current level of public services we have now would require more funding than the spending limit would allow. As Virginia’s many baby boomers reach retirement and the number of children grows, for example, health care and education spending must also grow to meet the needs of these populations.

Tying  spending to inflation in consumer goods also is flawed because it does not accurately reflect changes in the cost of health care, public safety, education, and other services. Consumer goods are the things people buy every day like food, gas, car repairs, and medicine. But the costs of services typically paid for by state government  can grow at a faster rate than the cost of consumer goods.

The proposal closely resembles a now infamous Colorado law enacted in 1992. It led to such drastic cuts in public services and damaged the state’s business environment to such an extent that a coalition of business leaders, higher education officials, and legislators of both parties worked together to suspend the law for five years. With Colorado’s experience in mind, 30 states have rejected efforts to enact similar  legislation since 2004.

If Virginia takes this path it will severely inhibit the state’s ability to maintain the quantity and quality of services that Virginians and Virginia businesses have come to expect and rely on. It’s not hard to imagine that class sizes will grow, help for low-income working families will diminish, and local police will have fewer resources.

Virginia is facing many obstacles and will face more in the future. When the next recession hits or the federal government cuts spending, our elected leaders will need the flexibility to meet these challenges. Legislators should not be abdicating their responsibility to make spending decisions. They should be charting the best course for Virginia.

–Jeff Connor-Naylor, Program Director

The Commonwealth Institute

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