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The Right Note: Budget Gap Solutions

by Mark Kelly — September 1, 2016 at 1:45 pm 0

Mark Kelly

The Right Note is a weekly opinion column. The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

This week, Governor McAuliffe’s office sent a memo to state agencies asking for proposals to trim 5% from their budgets to help close a $1.5 billion budget gap. The gap is roughly 1.5%, but leaders are working to avoid any cuts to education, so some programs will take bigger cuts than others.

This much more realistic approach comes after Republican General Assembly leaders rejected the governor’s assertion that Medicaid expansion would relieve the budget woes.

Medicaid expansion has actually made state budgets worse. In Ohio, Medicaid expansion cost $1.5 billion more than expected in the first 18 months. In Washington it was $2.3 billion more over two years. And in Kentucky, the state had to pay $1.8 billion more for 2014 and 2015 combined.

And, this is before the federal cost share is scheduled to be reduced in 2017.

You cannot blame a Governor for trying to pass his number one priority. But he should not continue to suggest a program that has failed to have positive outcomes in other states will miraculously do the opposite in Virginia.

The Governor should instead go about the business of getting the government out of the way of job creators in Virginia. Then economic growth can drive tax revenue.

But where do independent groups rank Virginia’s economic potential?

13th by ALEC. This study found twenty-nine states have a lower top marginal corporate income tax rate and twenty-five states have a lower property tax burden.

15th by Wallet Hub. The group found Virginia ranked 21st in “Innovation Potential.”

13th by CNBC. CNBC found Virginia in 36th place when it comes to the cost of doing business.

And, we continue to slide in the wrong direction.

The ongoing (and bi-partisan) effort focusing on economic development incentives is not doing the trick. Nor should we seek out higher, and debt-financed, federal government spending. Instead, our leaders must work to create a more favorable environment for the economy to thrive for all businesses.

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