Kaine: Funding reductions to have least possible impact

RICHMOND — In his final State of the Common-wealth Address, Gov. Timothy M. Kaine on Wednesday night outlined his plans to fix a nearly $3 billion state budget shortfall, as well as his ideas to stimulate Virginia’s weak economy and promote renewable energy.

“I have presented you with a budget that tightens the belt of government, just as citizens and businesses are cutting their own expenses,” Kaine told lawmakers at a joint meeting of the General Assembly. “But, I have also built innovations and new strategies into my budget. I’ve made policy proposals that ensure we can continue to attract jobs, succeed in educating our children and training tomorrow’s workforce, and create new opportunities for a better environment and cleaner energy future.”

Kaine delivered his annual speech on the first day of the General Assembly’s 46-day session. In the coming weeks, the 140 legislators will aim to balance Virginia’s budget for fiscal 2009 and 2010 – a task that will likely require painful cuts of state government services such as public schools, higher education, transportation, health care for the poor and disabled, and much more.

Yet, Kaine said, his proposed budget does not rely on across-the-board spending cuts. Rather, he said, the budget emphasizes “targeted, performance-based” cuts that would have the least possible impact on essential government services. Kaine’s plan, he also noted, does not call for a general tax increase and would not “compromise” core services.

Kaine’s plan does, however, include one targeted tax increase. It would double the state’s tax on cigarettes to 60 cents per pack, a move that would bring Virginia’s tobacco sales tax to roughly half the national average.

“Virginia’s current cigarette excise tax covers less than half the $400 million in Medicaid costs that smoking creates,” Kaine said. “I believe that the taxes on smoking should more closely match the budget costs that Virginia taxpayers incur because of smoking. Under my proposal, fewer of Virginians tax dollars will be diverted to cover the costs of smoking.”

In the official GOP response, Del. David Albo, a Fairfax County Republican, said higher taxes are a wrongheaded idea when the economy is struggling.

“When I was an economics major at the University of Virginia, I learned you cannot tax your way out of a recession,” Albo said. “While my professors explained it in a much more erudite way, it is most simply stated as follows: Most of the U.S. economy is driven by consumer spending. And when government makes people pay higher taxes, they have less money. With less money, they buy less, and when they buy less, recessions get worse.”

Kaine is also proposing that the Department of Corrections be allowed to release nonviolent inmates from prison up to 60 days before their sentence is up. Under current policy, such offenders can be released up to 30 days early.

Del. Rob Bell, R-Albemarle County, praised Kaine’s budget cuts plan overall, but disagreed with the early prison release proposal. Under the definition of nonviolent offenders, Bell pointed out, drug dealers, burglars and child pornographers could be released before fully serving their time.

“These are people who were put in prison because they were a threat to public safety,” Bell said. “They’re people who most people believe should serve out the entirety of their term.”

Kaine also proposed legislation that seeks to slow the growth of the prison population — one of the fastest-growing contributors to the state budget — by reducing the number of “technical violators” who are sent back to jail for violating technicalities of their parole, as opposed to committing new crimes.

“This is the kind of smart sentencing approach that saves taxpayer money without compromising public safety.”

Not every part of the state’s two-year spending plan would be slashed under Kaine’s plan.

His plan would protect the state’s investment in care for the mentally ill, a package that was enacted in the aftermath of the Virginia Tech shootings.

It also would preserve funding of free clinics and community health centers and would continue the state’s expansion of pre-natal care for low-income mothers — an ongoing effort to curtail the infant mortality rate. And it would include funding for foreclosure prevention counseling to help families avoid losing their homes.

Kaine’s proposal would also increase spending in a few areas.

It would direct a $1 million grant to the Virginia Federation of Food Banks, which has seen a spike in need as the economy has worsened. And it would also deliver a $5 million boost to the Governor’s Opportunity Fund, which is used to help encourage job-creating companies to relocate to Virginia.

To create quickly more design and construction jobs, Kaine proposed “aggressively moving forward” with already approved state construction projects. State agencies have identified a list of projects in which the planning can be completed and construction can get under way in the next few months. He announced a goal of putting at least 30 state capital projects worth at least $250 million out to bid before June 30.

Kaine, the newly named chairman of the Democratic National Committee, also said that his administration is working closely with President-elect Barack Obama to ensure that Virginia will benefit from a planned federal economic stimulus package that will emphasize infrastructure projects.

“These projects put people to work, build a higher platform for long-term economic success and take advantage of a climate where construction costs are favorable,” Kaine said.

Kaine also said that Virginia can promote economic growth by making the state an attractive place for alternative energy companies. By luring such companies to Virginia, he said, creating many “green jobs.”

As part of this goal, Kaine proposed a long list of eco-friendly ideas. He suggested new incentives for solar power manufacturing businesses. He proposed an income tax credit of up to $8,000 for solar or wind generating devices for homes and businesses. He called for a year-round sales tax exemption for residential renewable energy systems.

Kaine also proposed increasing Virginia’s renewable portfolio standard, or the amount of alternative energy that must be generated by the state’s power companies, from 12 percent to 15 percent by 2025.

Plus, he proposed legislation that would implement the state Climate Change Commission’s top recommendation to reduce the state’s electricity consumption by 19 percent from its current level by 2025, with adjustments for population growth.

“All in all, the focus on creating alternative energy opportunities and better conservation technology will help our economy by creating new jobs and enabling people to save money,” Kaine said.

“A generation ago, Virginia had one of the fastest-growing solar industries in the United States. But the disappearance of state and federal tax incentives caused the industry to shrink and research to decline. Today, of the 10 largest solar manufacturers in the world, none are American. We need to bring these investments back to our shores and to our commonwealth.”

Del. David J. Toscano, D-Charlottesville, said Kaine’s green jobs and renewable energy proposals would position Virginia at the forefront of the new green economy as it recovers from the recession.

“He’s focusing on things that we can do that will help us once the economy improves,” Toscano said.

Bell said the GOP is supportive of promoting alternative energy as a means to spark economic development. He has introduced a bill that would create an entity called the Virginia Universities Clean Energy Development and Economic Stimulus Foundation that would administer a $100 million fund to finance research and development of alternative energy.

UVa and Virginia Tech would help administer the fund to decide which projects to finance, Bell said.

The money for the fund would come out of the state’s Tobacco Commission, which administers money from the national tobacco settlement.