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Friday, November 12, 2010

Del. Kory's Report from Richmond: Full legislative agenda will address ABC privatization, 'murky' budget picture

By Del. Kaye Kory

The legislative calendar for the commonwealth is accelerating as the deadline approaches for delegates to submit legislation for the upcoming session. This session is the “short” session, as it is the second year of the biennium. Still, the legislative agenda will be a full one, or at least should be, and the prospect of redistricting hangs over the entire session. In an upcoming column, I will outline the legislation that I will be introducing, but for this report, I want to discuss some of the key issues that the commonwealth is facing.

The budget picture remains somewhat murky. The “surplus” the governor announced a few weeks ago creates an unrealistic picture of Virginia’s fiscal condition. His “surplus” includes the effects of borrowing (by deferring payments) $620 million from the Virginia Retirement System, while creating an obligation in future budgets of paying back the “loan” over 10 years beginning in 2013. It also includes the requirement that Virginia businesses remit July 2010 sales taxes a month early, in June 2010, technically allowing the revenue to count this fiscal year (accrual accounting anyone?).

Even with these gimmicks, the budget we adopted included significant cuts in core state programs as well as freezing employee compensation. In addition, the upcoming Budget Office revenue estimates, due in December, are uncertain, and there could be further fiscal challenges on the horizon for the year.

As you know, the last session was a non-starter for Northern Virginia’s key transportation priorities. I think the governor did himself a disservice by linking transportation funding to the privatization of the state ABC stores. Even in the best-case revenue scenarios he presented, the proceeds would not make much of a dent in the long-term infrastructure investment challenges we face.

This linkage certainly seemed like a diversion and undoubtedly triggered skeptical responses among Democrats to what, taken alone on its own merits, may be reasonable to consider. The governor has met skepticism from Republicans as well, because of the liquor excise tax increases he included to maintain the current ABC-generated general fund revenues. In any case, funding for long-term transportation infrastructure is an open wound. I am afraid in the current climate our only option will be massive expansion of toll revenues.

As for ABC privatization, I think the governor has an uphill battle. My position will be driven by the pragmatic realities of:

(1) the impact on general fund revenues;
(2) the impact on Virginia business—who would be the new entrants into the liquor business? and how would it affect current businesses?
(3) plans for assisting the 2000 state employees affected; and
(4) other impacts, for example, on the hospitality industry.

What the governor's initiative will certainly reveal is that the commonwealth’s ABC system is in serious need of modernization. For example, it’s probably not very efficient to require the employees of hotels and other licensees to make trips to ABC stores to buy liquor at the same prices you or I would pay.

Another area of concern is the movement among some in the legislature, in effect, to undertake the systematic nullification of federal programs, beginning with health care, but also including EPA, OSHA and the new consumer financial protection reforms. Fueled by their mistaken assessments of the recent election, their misreading of the constitution and by private business interests, this minority of the legislature, with the active political support of the attorney general, is a costly threat to the future well-being of millions of ordinary Virginians.

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