The Virginia General Assembly that convenes the second Wednesday in January will be meeting at a critical juncture in Virginia’s history.  In part because of the balanced budget mandate included in the Virginia constitution and also because of a long history of fiscal discipline, Virginia has enjoyed an enviable financial reputation among the states and has remained one of a very few states with a AAA bond rating.  It is now clear, however, that Virginia has a long term and structural problem with the state budget –- Virginia’s revenues and expenditures aren’t equal and won’t be unless changes are made.  The state is spending more annually than it brings in, and several years of budget sleight of hand have exhausted the quick fixes available to address this imbalance (like withdrawals from the state’s Rainy Day fund). 

The Governor says that the Plan will produce greater revenues while lowering taxes for 65% of Virginia families.  Some key elements of the Plan are:Increased personal and dependent exemptions and standard deductions from state income tax for all taxpayers;

• A lower income tax rate for taxable incomes between $5,000 and $7,000, and between $17,000 and $20,000, and an increased income tax rate for taxable incomes over $100,000;
• A reduction in allowable age based deductions for higher income taxpayers who turn 65 after January 1, 2005;
• Reductions in the sales tax on food;
• An increase of 1% in the sales tax on other goods;
• An increase in the cigarette tax with proceeds dedicated to health care;
• Elimination of the estate tax for family farms and family-owned businesses;
• Complete elimination of the car tax by 2008;
• Closure of some corporate tax loopholes; and
• An increase in the amount businesses may deduct each year for equipment or similar purchases from $25,000 to the new federal limit of $100,000.

The Governor proposes to use new revenues created by the Plan for the following purposes:“Properly fund” the Standards of Quality that establish the minimum level of educational quality for public school systems around the state (underfunding for the next biennium is estimated to exceed a half billion dollars);

• Begin to address “chronic underfunding” of higher education (estimated at $140,000,000);
• Keep the commitment to fund the state’s transportation needs;
• Restore monies spent from the Rainy Day fund(at least $100,000,00 is needed to preserve the state’s AAA bond rating); and
• Reduce pressure on local governments to raise property taxes.

But, even with the changes the Governor proposed in the Plan, spending cuts will likely be necessary to balance the budget for the next biennium.  Moreover, the Governor’s budget incorporating the Plan is only the first step in the budget process.  There is an old saying around the State Capitol:  “the Governor proposes and the General Assembly disposes.”  It is clear that the legislature will have a lot to say about the Governor’s Budget and Tax Reform Plan and which, if any, elements finally are incorporated in the budget for the next biennium (beginning July 1, 2004).

Richmond women will want to keep a close eye on this process as it unfolds between December 17^th when the Governor presented his budget and the end of the legislative session the second week in March.  Start now by reviewing the Governor’s Budget and Tax Reform Plan posted on his official website, http://www.governor.virginia.gov, and figuring out what impact it would have on your family and/or your business.  Then, get ready to consider carefully the full range of proposals offered to produce a balanced budget for the next biennium.

Key figures in this process (in addition to the Governor) are the chair of the Senate Finance Committee, John H. Chichester (R Fredericksburg), the Speaker of the House of Delegates, William J. Howell (R Stafford County), the Chair of the Appropriations Committee in the House of Delegates, Vincent F. Callahan, Jr (R Fairfax), and the Chair of the House Finance Committee, Harry Parrish (R Prince William).  Richmond area legislators who are positioned to play important roles in the debate include: Senators Walter Stosch (R Henrico) and Benjamin Lambert (D Richmond) who serve on the Senate Finance Committee; Delegates Kirk Cox (R Colonial Heights), Frank Hall (D Richmond), Riley Ingram (R Hopewell), Jack Reid (R Henrico) who serve on the House Appropriations Committee; and Delegates Sam Nixon (R Chesterfield), John O’Bannon (R Henrico) and Lee Ware (R Powhatan) who serve on the House Finance Committee.

User friendly links to legislative bill tracking, executive branch and legislative contact information and press releases dealing with state government affairs can be found on the Public Policy page of the website of the Richmond chapter of the National Association of Women Business Owners, www.nawborichmond.org. The activities of the House Appropriations Committee may be monitored online at the Committee’s website, http://hac.state.va.us/welcome.htm. The Senate Finance Committee also maintains a website that can be found at http://leg3.state.va.us/quickplace/sfc2004/main.nsf/h_Toc/4c12e5b390d5472285256de5006c79ec/?OpenDocument.

The critical importance of the budget and tax reform debate that will take place in the 2004 General Assembly makes it especially necessary that we understand the unique opportunity our central location offers Richmond women to influence this debate.  We must step forward to meet this obligation fully so that the voices of the majority of Virginia’s population – women – are heard distinctly and clearly throughout the process. We cannot afford to be silent or unengaged while critical state programs that help ensure safe homes and streets, quality schools and access to health care are examined for cuts.  We cannot afford to be absent when policy decisions are made that will affect the financial health of our families and businesses for years to come.