General Fund Usage Smackdown
By Greg L | 14 March 2007 | Virginia Politics | No Comments
While Governor “Gridlock” Kaine travels the state bemoaning the possibility that the General Fund — used to pay for core state functions of which transportation apparently fails to qualify — is going to be used to help finance transportation improvements throughout the commonwealth, his selective amnesia apparently is preventing him from recognizing that Virginia has traditionally financed quite a bit of transportation development using this fund in the past. Democrats used to raid the transportation fund in order to supplement General Fund expenditures in the past, which apparently is of little concern. Now Republicans have made a convincing argument that providing transportation improvements, if it’s really the number one issue facing Virginians as the Governor claims, is easily a core government function. So far that argument has been met only with hyperbole.
Today speaker Howell has highlighted this history in a press release, and it should give Democrats fits as it clearly exposes their rhetoric on this issue as utterly facetious:
1) The creation of the Route 58 Corridor Development Fund. Under the legislation, $40 million in recordation taxes (General Fund revenues) is deposited annually into the fund to pay for the $704.3 million in bonds issued to finance a portion of construction costs benefiting Southside Virginia.
2) Approximately $20 million per year in General Fund recordation taxes goes to the Northern Virginia Transportation District Fund to pay the debt service on $502.2 million in bonds issued for road projects in the Northern Virginia region.
3) An additional $20 million in General Fund recordation taxes flows back to localities based on deed recording. Localities must use these monies for transportation or public education. The City of Chesapeake uses their General Fund recordation allocation to pay the debt service on $56.2 million in bonds issued by the Department of Transportation for the construction of the Oak Grove Connector.
Consistent with requirements of the 1989 legislation, the recordation tax revenues (again, General Fund dollars) were first appropriated by the General Assembly and expended by the Governor in the 1990-92 Biennial Budget.
* In the 1990-1992 biennium, $80 million was the equivalent of 1.2 percent of the General Fund. By comparison, today the amount of General Funds pledged in House Bill 3202 equates to approximately 0.8 percent (eight-tenths of 1%) of the General Fund, or about one-third less than the percentage committed in 1989 for transportation, with the strong support of a Democratic governor and a Democratic-controlled House of Delegates and Senate of Virginia.* The total amount of debt issued using the $80 million in annual General Fund revenues is over $1.2 billion.
* The House of Delegates passed the legislation 83-12, with Delegates Cranwell, Hall, Plum, Melvin, Whitt Clement, Tom Moss, Speaker Philpott and future Senator Reynolds voting “aye.” The Senate passed the legislation 37-3, with Senators Saslaw, Houck, Lambert, Miller and Colgan voting “aye.” The bill was introduced at the request of the Democratic Governor Gerald Baliles.
* Overall, General Fund spending for transportation since FY 1991:
1991 - $ 40,490,207
1992 - $ 26,262,724
1993 - $ 15,324,114
1994 - $ 22,324,114
1995 - $ 40,050,099
1996 - $ 41,754,777
1997 - $ 40,270,099
1998 - $ 45,050,099
1999 - $ 44,475,099
2000 - $ 47,545,418
2001 - $255,584,000
2002 - $ 45,000,000
2003 - $140,604,200
2004 - $ 72,929,586
2005 - $317,439,911
2006 - $185,002,289
2007 - $642,744,067
2008 - $150,844,067
If raiding the General Fund and depriving so many people of their critical health care, education and social services is such a problem, why is it that we are only hearing this concern expressed now?
Here’s the rest of the release, which really lays out just how foolish the Governor’s arguments on HB 3203 are:
Citing the Commonwealth’s record of dedicating $2.2 billion in General Fund revenues to transportation over the past 16 years, Republican Delegates representing southwest Virginia today challenged the rhetoric of Governor Timothy M. Kaine and General Assembly Democrats who have expressed opposition to House Bill 3202, the Comprehensive Transportation Funding and Reform Act. The Governor and the majority of General Assembly Democrats have cited the allocation of 0.8% of future General Fund revenues to underwrite $2.5 billion in bonds to improve Virginia’s transportation network as a main reason for their opposition to the plan. The House of Delegates overwhelmingly approved the plan (64-34) and the Senate of Virginia likewise passed it (21-18) on the last day of the 2007 Regular Session. It now is awaiting the Governor’s action by March 26
“Based on their own voting records, some of our Democrat colleagues are being highly selective in their opposition to designating a tiny portion of future General Fund revenues to transportation,” remarked House Majority Leader H. Morgan Griffith (R-Salem). “When Speaker Philpott and Governor Baliles successfully passed legislation committing 1.2% of future General Fund revenues to transportation for the Route 58 Corridor Development Fund in 1989, they did so with the overwhelming support of Democrat legislators. Now, when lawmakers are working to commit a smaller percentage for this same purpose – just 0.8% – some of these same Democrats are claiming it’s far too much. Clearly, there’s a double standard here, and it would appear the difference is based on the party affiliation of those who crafted this landmark transportation plan.”
When approved by the General Assembly in 1989, the legislation that created the Route 58 Corridor Development Fund set aside $80 million annually from fees raised through the recordation tax, a General Fund revenue source. At that time, the legislation was approved by Democrat majorities in the Virginia House and Senate. Nine Democrats serving in the General Assembly at that time, including then-Delegate and now-Senator W. Roscoe Reynolds (D-Henry) and Senate Minority Leader Richard L. Saslaw (D-Fairfax), voted in favor of the legislation that dedicated 1.2% of General Fund revenues to transportation.
“The bill to commit General Fund revenues to transportation to improve Route 58 was important for our region, and has proven successful since it was enacted in 1989,” noted Delegate Charles W. “Bill” Carrico, Sr. (R-Grayson). “With the General Assembly’s strong, bi-partisan passage this year of its transportation plan, we’re applying a concept that is proven and has worked well in one region to the entire state. That just makes sense.”
“Transportation is a core service of state government and our transportation bill will bring real improvements to every corner of the Commonwealth,” declared House Republican Caucus Chairman Terry G. Kilgore (R-Scott). “For the Bristol District, the Governor’s signing HB 3202 into law means $120 million in bonds for road-construction projects, and an additional $200 million for Salem District. It also injects an additional $200 million every year to the Highway Maintenance and Operations Fund, and at least $200 million every year into the Transportation Trust Fund. And, it keeps the current transportation funding formulas intact. Anyone claiming that this plan won’t benefit rural or southwest Virginia just isn’t telling the whole story.”
The Comprehensive Transportation Funding and Reform Act was approved by the Virginia General Assembly on February 24. When fully implemented, the comprehensive compromise plan dedicates at least an additional $1.3 billion in funding for transportation annually.
“This is not the only occasion where Democrat leaders have applied different standards to the application of General Fund dollars to transportation,” noted Delegate Griffith. “Just this session, Senator Reynolds and now-House Minority Leader Ward Armstrong (D-Henry) sponsored Senate Bill 857. This legislation would have substantially increased the allocation of General Fund moneys going to transportation for the Route 58 corridor.
“There’s a familiar expression about ‘people in glass houses.’ It looks to me as though the Democrats objection to the use of General Fund revenues for transportation is based on politics and not policy.”
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