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Distinguished Delegates and Senators:

My name is Arthur Purves. I address you as president of the Fairfax County Taxpayers Alliance.

Please limit state spending increases to the growth of population and inflation.

As documented by the Virginia Joint Legislative Audit and Review Commission (JLARC) in its report Review of State Spending: June 2002 Update, Virginia spending is out of control. The JLARC reported that between 1981 and 2001, state spending adjusted for population and inflation grew at an average annual rate of 2.3 percent. This increase compounded over 20 years caused annual state spending per resident to increase from $2200 to $3600 (in constant FY2003 dollars).

The JLARC neglected to state that an increase of $1400 for each of Virginia’s seven million residents costs $9 billion. Without the annual 2.3 percent growth, the FY2001 budget would have been $14 billion instead of $23 billion.

Page 11 of the JLARC report tells how the increases are spent. Inflation-adjusted public school spending increased ten times faster than enrollment. Public college spending increased four times faster than enrollment. Medicaid-eligible recipients increased four times faster than population. The state prison population, many of whom I fear are casualties of the public schools and the welfare system, increased nearly ten times faster than overall population.

If you update the JLARC analysis to this year (FY2003) and adjust for the state revenue shortfall identified last August, the average annual increase since 1981 is somewhat under 2 percent, giving the state an extra $7 billion. The headline on this week’s (1/2/03) Washington Post Fairfax Extra, "Much to Do, Little to Spend" is false. There is an extra $7 billion being spent on social programs of questionable effectiveness.

During the dot-com bubble (1997-2002) the average annual real growth in state spending was four percent over five years. This revenue surge gave the state an extra $7 billion over five years. As observed in the editorial in this week’s (1/3/03) Connection newspapers, the budget crisis occurred because the state spent "a short-term windfall … as if it were new annual income guaranteed in perpetuity."

There would have been no crisis if state spending increases had been limited to population growth and inflation, as we urge. Governor Warner should include this in his budget reforms.

Also Fairfax County taxpayers have received no savings following the car-tax cut. Since 1998, the car-tax cut has reduced the typical Fairfax County household’s property taxes by $400 but real estate taxes have increased $700 (in inflation-adjusted dollars). Therefore there has been no net decrease in combined state and county spending since the car tax cut.

Reckless spending triggered by excessive taxes caused Virginia’s so-called budget crisis. Prevent repeats by limiting annual state spending increases to population and inflation.

Thank you.

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Updated January 8, 2005