Unlike Maryland officials, Virginia Gov. Tim Kaine, a Democrat, did not let the Potomac primaries overshadow his official duties. He said Tuesday the state must cut spending and jobs aspart of a plan to fix a $1.4 billion deficit through 2010.
Imagine, a Democratic governor who says the state must cut spending “because the economy has dramatically slowed.”
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In developing his revised report on the state of the economy, Gov. Kaine consulted “representatives from the private sector” along with state legislators and economists. How refreshing to include those who must suffer the consequences of government regulation and taxes in the discussion.
Gov. Martin O?Malley, who locked opposition out of meetings to discuss his tax plan, and Democratic state legislators, who rammed through the sales tax on computer services without first giving the soon-to-be taxed any opportunity to express their views, should be ashamed of themselves.
Facing a similar bleak economic forecast as Maryland, Kaine chose to analyze the situation instead of throwing citizens and the legislature into a panic mode and demanding higher taxes. Not once did Gov. O?Malley or legislators consider combing through the state budget to reduce spending to match projected revenue.
As Kaine showed, doing so is not just possible, but the right thing to do under the circumstances. Virginia, like Maryland, benefits from an influx of billions of federal dollars from grants, contracts and salaries. But as Kaine notes, “While Virginia can weather economic downturns better than most states, we are not immune.”
Neither is Maryland. Aside from making Maryland less attractive to business, the $1.4 billion in higher taxes passed during the special session could negatively influence the state?s credit rating if they slow growth enough to push projected revenues below expectations. Moody?s Investors Service said recently many U.S. states could see lower credit ratings this year as the weakening economy hurts tax collection. Lower ratings mean higher borrowing costs for state taxpayers.
Legislators still have time to exercise common sense and help to prepare the state for lean times by cutting spending. They can start by repealing the sales tax on computer services and freezing the inflation adjustment on state aid to schools, which would cancel each other out.
Exercising leadership muscles can only help prepare legislators for when revenues fail to match expenditures again next year.
