economics expert offers long-term solutions
Financial Needs Require More Than A Quick Fix
29, 2001-- As a result of generous tax cuts followed
by a major downturn in the economy, Virginia faces more than just
a short-term fiscal crisis, a University of Virginia economist warned
business and government leaders today.
the state weathers the effects of the current recession and recent
terrorist attacks, significant long-term problems will still need
to be addressed, John L. Knapp, economics research director of U.Va.s
Weldon Cooper Center for Public Service, said at a Conference on
Virginias Future held today in Richmond. The meeting was sponsored
by the Coalition for Virginias Future, a nonpartisan business
group composed of the Virginia Chamber of Commerce and 15 other
statewide and regional business groups.
addition to finding ways to bridge this years state budget
gap of close to $1 billion, leaders must also figure how to support
major programs adequately in the years ahead, Knapp said. These
major programs that account for about two-thirds of state spending
include transportation, higher education, K-12 education, and Medicaid.
most daunting problem Virginia faces is transportation, especially
highways improvements in the Washington, D.C. suburbs, Knapp said.
The states most recent 20-year highway-needs assessment, using
a moderate, rather than aggressive scenario, projected costs of
$82 billion, he noted. That estimate doesnt address needs
such as mass transit, ports and airports.
is another rapidly growing program in Virginia, that will create
vast needs, as in K-12 public education, which is severely under
funded according to a study released last week by the Joint Legislative
and Audit Review Commission.
deal with some of these needs, Knapp said that greater efficiency,
reordering of priorities, increases in charges and fees, and borrowing
are all possibilities that should be considered. A major bond issue
would be another strong source of funding, he added.
the state and local tax system in a way that considers state and
local finances as a whole is another important goal for Virginia,
Knapp said, because "the two levels of government are bound
together." But restructuring the tax system wont solve
all the states problems, he said.
taxpayers, and the Virginia business community should be prepared
for tax increases, Knapp said. The overall tax burden in Virginia
is low compared to other states, he said, "and it is unrealistic
to take this major source off the table," he said, adding that
income tax, gasoline tax, and motor vehicle sales tax all should
be examined for increases, while taxing Internet sales should also
Bob Brickhouse, (434) 924-6856