Additional Lessons from Richmond for Washington

I have reported previously on the successful action being taken by the new Governor of Virginia, Bob McDonnell, to reduce spending in the state government and eliminate the deficit he inherited from the current Chairman of the National Democratic Party (his predecessor, Tim Kaine). In my last post on this subject, I noted that Governor McDonnell announced in July that the $1.8 billion deficit projected for fiscal year 2010 when he entered office had been eliminated and that he estimated that the fiscal year would end with about a $220 million surplus. See http://jaxonnews.blogspot.com/2010/07/more-lessons-for-washington-from.html

Well, the fiscal year has now ended and the Governor announced on August 19, 2010 that the fiscal year ended with an actual SURPLUS of $403.2 million. However, rather than take all the credit for the turnaround and blame his predecessor for the mess he "inherited" as our President repeatedly does as the national debt grows and the country's economy continues to falter, Governor McDonnell said this:

"Last session we faced a potential $1.8 billion shortfall in the remaining FY 2010 budget. Today I am pleased to report that we closed the fiscal year with a $403.2 million surplus. We collected $228 million more in revenues than expected and spent $175 million less than budgeted. But please don't get too excited, most of it is already obligated in statute or in the budget to meet various needs.

This modest surplus and fiscal turnaround was achieved by two Administrations, two houses of the General Assembly, and two political parties.

I applaud former Governor Tim Kaine for the tough cuts he made in this budget prior to leaving office. Governor Kaine also exercised conservative judgment in his revenue reforecast in December. Our Administration continued that policy of restraint during this session.

With a politically divided General Assembly, nothing meritorious is possible without bipartisan cooperation. The spending cuts and fiscal discipline that led to this surplus were the result of tough negotiations and agreement between a Republican House and a Democratic Senate. Thank you for your leadership and cooperation in this endeavor....

The other side of the surplus is found in savings. Virginia's dedicated state employees deserve credit for their efforts to save nearly $175 million in tax dollars at the end of the fiscal year, rather than spending their budgets down to zero. Our managers found savings, and the Cabinet found smarter ways to do business, adhered to our hiring freeze, and brought in strong leaders.

Of the $228.5 million collected above the official forecast for general fund revenues and transfers, individual non-withholding payments and corporate income tax payments accounted for $169 million of that total. In addition, withholding and sales tax collections, which are directly tied to economic activity in the Commonwealth, exceeded the forecast by $62 million. This revenue growth occurred in the last four months of the year, beginning in March....

I am pleased to report that $82.2 million of the revenue surplus will go to provide the general fund share of a one-time 3% bonus to state employees on December 1, an action we all agreed to in the budget last session. Our state employees have not received any increase in pay since November of 2007. A prudent budget strategy we adopted was to incentivize state workers to generate savings and not spend their entire agency budgets by the June fiscal year close. Our employees knew there would be a financial reward for saving taxpayer dollars and returning unspent balances to the General Fund. I thank our hard working state employees, though there are fewer of them, for saving so much even after their budgets were reduced.

What this result also shows us is the power in economic incentives. This notion of gain sharing or economic rewards for getting results is a concept widely used in the private sector, and long overdue in practice and implementation within state government operations. I plan to look for more ways to use such incentives in the budget and amendments I submit to you in the coming years....

The preliminary balance sheet for June 30, 2010 indicates that the Commonwealth ended the fiscal year with cash equivalent assets in the general fund of $872.9 million. This is the first time since June 30, 2007, that we have seen an increase in general fund assets from the previous fiscal year....

Working together during this past General Assembly session, we made the very tough choices necessary to close an unprecedented $4.2 billion shortfall in the FY 2011/2012 budget through reducing spending, not increasing taxes. And we did it on time, in a bipartisan fashion.

We also made Virginia one of the only states to have already balanced a budget for FY 2012, the first year in which states will no longer receive Federal stimulus funding...

While we have balanced our budget responsibly by making tough choices and not raising taxes, other states have chosen a different approach. Wisconsin, Massachusetts, California, New York and many others have chosen higher taxes as their solution to budgetary shortfalls. These choices have repercussions for future economic growth....

I thank you again for giving me the tools to tell the Virginia free enterprise success story around the nation and the world to help create jobs for our people.

From February to June, Virginia ranked 3rd highest nationally in the total number of jobs created, trailing only Texas and Pennsylvania, and 4th highest nationally as a percentage increase.

Our statewide unemployment rate has fallen to 7.0%, which ranks Virginia the 12th lowest rate in the nation and the 3rd lowest east of the Mississippi behind only Vermont and New Hampshire. During these tough economic times, it appears that our business-friendly policies are bearing fruit as we fare better than most states. Virginia's workforce remains one of the most diversified in the country, but workforce development remains a top priority to facilitate greater competitiveness in the growth industries of tomorrow....

In the toughest economy since the Great Depression, with our national deficit at $1.6 trillion for the year and our national debt exploding to over $13 trillion, Virginians and Americans are looking at how things are done in the Commonwealth, and they see that there is another way forward. We should not hesitate to tell the story of Virginia's balanced budget and spending restraint, and to encourage our federal government to learn from our bipartisan effort." http://www.governor.virginia.gov/news/viewRelease.cfm?id=319

Our nation's Chief Executive and other federal employees should learn some lessons from Virginia's leader and his state's accomplishments: bi-partisanship; spreading credit rather than blame among one's political opponents; using private sector approaches to provide incentives for cutting spending rather bureaucratic approaches to using every dollar appropriated before the the fiscal year ends; rejecting tax increases as a method to balance budgets; rewarding government employees for contributing to reductions in public spending after freezing public compensation in earlier periods, and thanking all those who contributed to the good results rather than seeking to divide political factions with selective praise and pointed attacks at the opposition party.

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Jaxon News Anticipates Mainstream News and Events

Federal Debt Crisis: In my latest post on July 31, 2010 below, I noted that Congressman Paul Ryan (R-WI) had a plan to cut the federal debt:

"To reduce spending in the long term, [Grover] Norquist [of the Americans for Tax reform] recommended a Republican proposal offered by Rep. Paul Ryan (R-WI), who is also a member of the National Commission, that Ryan calls a 'Roadmap for America's Future'.... Liberals would probably be surprised to learn that Republicans actually have ideas for fixing major problems in our country. That is the natural result of believing what the Democrats say about the GOP and only reading the mainstream media or liberal blogs and never watching Fox News."

Well to my surprise, the Washington Post (a long time member of the "mainstream media") actually ran a story about Paul Ryan's "Roadmap for America's Future" (on the front page!) two days later on August 2, 2010! The Post stated that

"[Paul Ryan] is determined to persuade colleagues to get serious about eliminating the national debt, even if it means openly broaching overhauls of Medicare and Social Security. He speaks in apocalyptic terms, saying the debt is 'completely unsustainable' and warning that 'it will crash our economy.' He urges fellow politicians, and voters, to stop pretending that this problem will go away on its own.

He administers his sermons with evangelical zeal. He will go anywhere and talk to anyone who will listen. When he is not writing op-eds and appearing on television, he can often be found speaking to liberal and conservative audiences alike about his 'Roadmap for America's Future,' a plan he says would fix the problem." http://www.washingtonpost.com/wp-dyn/content/article/2010/08/01/AR2010080103518.html

Illegal Immigrants: In my blog post on May 23, 2010 discussing the announcement by the Director of Immigration and Customs Enforcement (ICE) that his agency might not process illegal immigrants sent to him by Arizona authorities because he feared that the new Arizona immigration law could lead to racial profiling, I expressed my outrage that a federal official would fail to carry out his duty to enforce the laws he swore an oath to enforce. I also noted my view that the Arizona law would not seem to require law enforcement officers in Arizona to do anything unusual for any police officers to do:

"[T]he new Arizona law only requires state law enforcement officers to inquire about immigration status whenever "any lawful stop, detention or arrest [is] made by a law enforcement official" and a "reasonable suspicion exists that the person [stopped] is an alien and is unlawfully present in the United States". Even without any statute, it would seem that such an inquiry would be a logical approach for any law enforcement officer to take in any state in the country." http://jaxonnews.blogspot.com/2010/05/dereliction-of-duty.html

Well, on July 30, 2010, Ken Cuccinelli, the Attorney General of Virginia, issued an opinion to a member of the Virginia legislature that agrees with my assessment in May:

"Indeed, it would be most surprising if state and local officers lacked the authority,
where appropriate, to arrest individuals suspected of committing federal crimes such as bank robbery, kidnapping or terrorism. State and local officers are not required to stand idly by and allow such criminals to proceed with impunity. The same holds true with criminal violations of the immigration laws....

The new Arizona law does not purport to grant new powers to law enforcement officers in Arizona; nor does it suggest the absence of authority by police officers in Virginia. The Arizona law expressly leaves the determination of an alien's immigration status to ICE or to a federally authorized law enforcement officer. Virginia law enforcement officers have the authority to make the same inquiries as those contemplated by the new Arizona law. So long as the officers have the requisite level of suspicion to believe that a violation of the law has occurred, the officers may detain and briefly question a person they suspect has committed a federal crime.

Furthermore, the United States Supreme Court has found that so long as the questioning does not prolong a lawful detention, police may ask questions about immigration status. [Footnote on this point cites Muehler v. Mella, 544 U.S. 93 (2005) as the Supreme Court case referenced above].

It also should be noted that under Article 36 of the Vienna Convention on Consular Relations,
state and local officers are required to advise foreign nationals of their right to speak with a consular officer when those persons are arrested and held for longer than a short period of time. It is difficult - if not impossible - to effectively provide that advice, mandated by treaty, without making an inquiry into the nationality of a person who is in custody." http://www.oag.state.va.us/OPINIONS/2010opns/10-047-Marshall.pdf

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Keep reading this blog if you want to stay ahead of events......

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