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Archive for Thursday, August 25, 2011

Yes, Virginia, there really is a surplus!

August 25, 2011

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While the federal government continues to drown in a sea of debt, several states are reporting surpluses, thanks to policies Washington would do well to emulate.

Nowhere has the economic turnaround been more immediate than in Virginia. When Governor Bob McDonnell took office in January 2010, he was faced with a $2.2 billion shortfall bequeathed to him by outgoing Democratic governor (and now Senate candidate) Tim Kaine. In less than two years, McDonnell has delivered two budget surpluses without raising taxes or causing harm to the “most vulnerable.” Instead, he has judiciously cut spending.

Last week, the governor’s office announced a surplus of $544.8 million. That is $234.1 million more than McDonnell told the legislature on June 30 he has saved state taxpayers. Call it compound savings.

According to the Pollina Corporate Real Estate Study: “Pollina Corporate Top 10 Pro-Business States for 2011,” “Virginia is the unquestionable brightest star on the American flag when it comes to pro-business. ... Virginia is truly in a class by itself.” Nine other states made Pollina’s list. Republican governors lead eight of them. Anyone else see a pattern?

Compared to the federal economic picture, Virginia’s statistics are astounding: In less than two years, McDonnell’s administration reports that it has added 48,200 net new jobs. As recently as 2009, Virginia ranked 35th nationally in jobs created. Significantly, “only 8 percent of net new jobs are government positions.”

Virginia’s “6.0 percent unemployment rate is tied for eighth lowest in the nation,” though the Washington Times reports, “the state will likely have to borrow an additional $251 million ... to pay back the federal government for loans to its unemployment insurance trust fund.” The loans were necessary because of the economic recession and the aftermath of the Kaine administration, which ran out of money in 2009 and had to visit the federal trough.

Last month, CNBC named Virginia the “Best State for Business.”

In May, a Washington Post poll found that while only 31 percent of Virginians believe the country is on the right track, 52 percent think their state is headed in the right direction.

The Pollina study, according to the McDonnell administration, is “the gold standard for evaluating and ranking states based on 32 factors controlled by state government, including taxes, human resources, education, right-to-work legislation” (this one is key because it reduces union power to strangle businesses with ever-growing demands for benefits), “energy costs, infrastructure spending, workers compensation laws, economic incentive programs and state economic development efforts. Two new factors — state budget deficit and state property tax index — along with a comprehensive State Report Card are new to this year’s study.”

Gov. McDonnell has plans for the surplus: “We will deposit another $132.7 million into the state’s Rainy Day Fund. And we will ask the general assembly to create a ‘Federal Action Contingency Trust’ Fund that will help increase our ability to handle the impact of likely future federal reductions. I am recommending that $30 million from the surplus be used to initiate this fund.” At least a small portion of the surplus should go to state taxpayers who earn the money, which would be “stimulus” of a different sort.

The reason Washington — and especially the Obama administration — has difficulty replicating what is occurring in Virginia and those nine other states is because it’s incapable of abandoning a failed ideology. When old ideologies have proven bankrupt, they are mostly discarded and replaced with something new that has a better chance of working. But the liberal ideology that government can better care for you than you can care for yourself remains on life support, though clearly it, too, has failed.

An old Virginia slogan says, “Virginia is for Lovers.” A new one might say, “Virginia is for business.”

Jobs created in Texas during Governor Rick Perry’s terms are receiving national attention, but Texas didn’t make Pollina’s list. Perhaps that’s because, according to the Bureau of Labor Statistics, in Texas jobs in the private sector declined 0.6 percent while those in government increased 6.4 percent.

Should our nation’s capital be moved to Richmond? Perhaps electing a Republican president in 2012 who thinks like Bob McDonnell would be easier and more practical.

Comments

Straponious 2 years, 7 months ago

Surplus? Don't anyone tell Obama.

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somedude20 2 years, 7 months ago

OK, so who is playing with Virginia's wolf again? I am lost here. Virginia, cleaner gene pool than West Virginia

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autie 2 years, 7 months ago

That's it! Brownback can just hire all the people on welfare to work for the state. Problems solved.

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jafs 2 years, 7 months ago

I'd be interested in what spending was cut, and didn't hurt the "most vulnerable", according to Thomas.

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just_another_bozo_on_this_bus 2 years, 7 months ago

Cal neglects to mention that 27% of workers in Virginia work for the government-- behind only Alaska and D.C.

http://www.gallup.com/poll/141785/gov-employment-ranges-ohio.aspx

So just like Perry in Texas, the boast about "job creation" neglects to mention that government is a huge part of that story.

Is Cal an idiot, or does he just think we are? (OK, it's both.)

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Bob_Keeshan 2 years, 7 months ago

Virginia was also the brightest pro-business star under Tim Kaine and Mark Warner, ranked #1 by numerous publications including CNBC and Polina.

How does Cal explain that?

This entire column is based upon a fallacy. Virginia is for business is a slogan that was created by Dem Governors Tim Kaine and Mark Warner, who are the two Governors that created the #1 ranking.

Warner, by the way, did it with a tax increase. Before the tax increase, Virginia had a lower ranking.

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tange 2 years, 7 months ago

Virginia... vermeil... veneer.

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Gandalf 2 years, 7 months ago

Take out the money they make off the federal teat for defense and see what happens.

Far more than whatever plan the President presents are the looming super committee negotiations on additional savings in the federal budget. if that committee fails, automatic cuts will occur. As half of those cuts would be in defense spending, Virginia’s defense-dependent economy could be kneecapped — thus making those higher unemployment insurance taxes on state businesses even worse.

http://bearingdrift.com/2011/08/22/yes-virginia-theres-a-tax-increase-in-your-future/

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