WASHINGTON - Outgoing Virginia Gov. Douglas Wilder yesterday submitted a two-year state budget to the General Assembly that he said would fund rapidly expanding programs in health care, education, and public safety without any general tax increases.
Wilder's budget will become the official responsibility of Republican Gov.-elect George Allen when he takes office on Jan. 15. Allen has pledged not to raise taxes and to take a hard look at state programs.
The biennial budget would raise state outlays from an estimated $14.77 billion in fiscal 1994, which ends June 30, by 8.7% to $16.05 billion in fiscal 1996. It is based on expectations that the state economy will continue to improve gradually but will be held back by continuing cutbacks in the federal defense establishment.
The budget also relies heavily on aggressive tax collection efforts to capture delinquent accounts and scales back state tax breaks, mainly business deductions for meals and entertainment to conform with the new federal tax law. There would be some reductions in the state work force beginning next year, although state employees would get annual raises of 2.5%.
"As the national economy expands and defense cuts are phased in, we believe that Virginia will underperform the national economy in terms of jobs and personal income growth," Wilder said in a speech to state legislators.
"Thanks to a recovering economy - although at levels disappointing to all of us - there will be new money to allocate to the state's budget priorities.
"But the new money will not be sufficient to satisfy the people's many demands and special interests that will so eagerly seek you out in the coming weeks. Nor will it be sufficient to avoid another round of budget cuts across a variety of state government programs."
Wilder's budget will be taken up by state legislators when they convene Jan. 12. Allen will then have a chance to make his own recommendations to a General Assembly that remains in the hands of rival Democrats.
Although Allen billed himself during the election as a fiscal conservative in defeating state Attorney General Mary Sue Terry, he does not appear to have a lot of maneuvering room if he sticks to his pledge not to raise taxes. Wilder was forced by a tough economy to run a lean budget while keeping the state's triple-A bond rating from the major rating agencies intact.
Wilder projected that general state revenues would rise by 4.8% in fiscal 1994 and 5.2% in fiscal 1996, for a total increase of $1.26 billion.
Two thirds of the increase, or $795 million, would come from growth in the state economy, he said.
Budget documents released by state officials show that real personal income of Virginians grew by 2.4% in 1993, the first increase in two years. All regions of the state saw job gains, with total service-sector jobs up 4.8%, or 35,400, and state and local government jobs up 2.7%, or 10,900.
The budget also calls for collecting $142 million from reduced meal and expense deductions claimed by business, $62 million in back taxes from individuals and businesses, and $233 million from unspent balances and a projected revenue surplus at the end of fiscal 1994. Another $26 million would come from forgoing a change in income tax withholding tables due to go into effect on July 1.
The collection of delinquent taxes is part of an ongoing program to upgrade computers and telephone systems at the state Tax Department, similar to efforts that have been under way at the U.S. Internal Revenue Service for a number of years.
General revenues account for slightly more than half of all state revenues. The remainder comes from federal grants, tuition fees, highway taxes, and other dedicated charges that are expected to rise from $7.55 billion to $8.707 billion by fiscal 1996.
Wilder recommended raising total outlays by $1.45 billion, including money to boost the state's rainy-day fund and pay for debt service. Part of the rise in outlays would be offset by budget cuts totaling $206 million that would include the elimination of 742 state positions.
A total of $405 million, or nearly 30% of the rise in spending, would pay for 2.5% annual raises for state employees and public school teachers.
Another $340 million, or 23%, would pay for public school construction and an increase in the state's share of teacher retirement costs.
Human resource programs, particularly Medicaid, would claim another $242 million in increased outlays, while $97 million would go for operating new prisons and local jails, as well as jail construction.
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