State of the Commonwealth – 2005
Kenneth R. “Ken” Plum

Each year I present my views on the condition of the Commonwealth of Virginia. I bring to this task a perspective of 25 years of service in the General Assembly and a lifetime as a Virginian and as a student of her history.

Today I will talk about Virginia’s economy, challenges being faced by the state, and the political climate within which these challenges must be faced. I will use others’ statistics, but the opinions – strongly held – will be my own.

Economy

Virginia is doing quite well. In fact, next to Nevada, Virginia is the fastest growing state in the Nation. And as Governor Mark R. Warner likes to point out, we are not willing to adopt gambling and prostitution in order to become the fastest growing state.

The May 2005 unemployment rate for the state was 3.6 percent compared to a national rate of 4.9 percent. The unemployment rate varied widely across the state – 2.7 percent in Fairfax County, 5 to 6 percent in Southwest Virginia, and 6 to over 10 percent in Southside.

In the knowledge-based economy of the future – high technology – Virginia is doing exceptionally well.

The American Electronics Association lists Virginia 5th in its ranking of cyberstates, those with large numbers of high technology companies. According to the AEA, Virginia has the second highest concentration of private sector workers in high tech firms in the Nation.

The Milken Institute, an independent think tank organization, lists Virginia as 5th among the states in its most recent technology and service index.

In that ranking Virginia followed Massachusetts, California, Colorado and Maryland. Other neighboring states did not do as well. North Carolina, often touted as a high tech state, was ranked 10th, Tennessee was 34th, and West Virginia was 46th. Georgia as a southern state is known for its progressive economy, but only ranked 18th.

Virginia’s success in high technology is not shared equally across the Commonwealth. Northern Virginia with 30 percent of the state’s total population has 56 percent of the state’s high-tech jobs. The Hampton Roads region that has the second highest concentration of high-tech jobs in the state has but a fourth of the number of high tech jobs in Northern Virginia.

In Northern Virginia, one in five jobs is in high tech while in the rest of Virginia the number is less than one in ten.

Last year the gross domestic product of the state grew by 5.5 percent. This year is expected to be better. The state as whole has been growing in population over the past four years at a rate of 5.4 percent with Northern Virginia growing at a rate of 12 percent.

Challenges facing the Commonwealth over the next decade are numerous, but I will address only four: transportation, education, health, and public safety.

Transportation

There is little debate that transportation is the greatest challenge facing the Commonwealth. As the state and particularly our region become more urbanized, traffic and congestion are becoming a way of life. But when your traffic congestion is ranked second worst in the country, it is past time to do something about it.

Traffic congestion adversely affects the economy and quality of family life and mental health of the people of our region and to a lesser degree other areas of the state.

Consider these facts: Virginia has the third largest state-operated highway system in the country with 58,000 miles of road and 12,000 bridges. Virginia’s gas tax at 17.5 cents per gallon is the 41st lowest of the 50 states. It has not been raised since 1987.

But since 1987 the purchasing power of a dollar has been eroded by inflation by about 40 percent; the number of new cars has increased by 53 percent; the number of drivers has increased by 34 percent; and the miles of travel has increased by 79 percent.

Any wonder that we have the problems we have?

Currently, 75 percent of the $3.1 billion transportation budget goes to maintenance. Funds for new construction – already inadequate – continue to decline as maintenance costs increase faster than available resources. By 2014 there will be no dollars to match federal dollars for new construction. By 2018 all construction money will go for maintenance.

A long-range study, VTrans 2025, estimates unfunded road, transit, and other transportation needs to be $100 billion over the next 20 years.

In the last session of the General Assembly, the House of Delegates and the Senate could not agree even on the timing and scope of a study on transportation.

Education

The picture in education funding is not much rosier.

By provision of the State Constitution, public education is to be a shared responsibility of state and local government. While the goal has been for the state to fund 55 percent of the cost of public schools, the actual funding level has been closer to 45 percent.

This shortfall in state funding amounting to about a billion dollars a year has been documented by the legislature’s own researchers, the Joint Legislative Audit and Review Commission (JLARC). 

If the General Assembly attempts next year to make up its deficit in Standards of Quality funding and to re-benchmark funding formulae based on enrollment growths and inflation, more than two billion additional dollars will be needed.

That amount does not include any improvements in instruction to meet the infamous Standards of Learning or SOL’s, or the underfunded federal No Child Left Behind program.

Regardless of the action or inaction of the legislature, school buses will run, and the school bells will ring. The shortfall will be made up by local governments through their principal source of revenue, the local property tax.

State funding for colleges has dipped so low that some of the leading universities explored the possibility of charter status. They calculated that the cost of state regulation exceeded the revenue coming from the state. They figured that they might actually do better with some form of semi-autonomous governance.

But the state legislature was not about to cut free the prestigious University of Virginia, Virginia Tech, or the College of William and Mary. A compromise was reached that grants all state colleges and universities more freedom to operate but with continued state oversight.

The last legislative study of higher education funding indicated that when funding for Virginia institutions is compared with their peer institutions around the country the Virginia legislature is underfunding colleges by about a half-billion dollars a year. Expect tuitions to continue to increase.

Health Care

The second largest claim on state revenues behind K-12 education is Medicaid, a program that now consumers 18 percent of the state budget. In Virginia, Medicaid spending growth has averaged ten percent annually; if this rate of growth continues the program will double in size every seven years.

In 2004, Medicaid covered over 720,000 persons in Virginia at a cost of $3.9 billion. Half that amount is paid by the federal government. Even at the current rate of spending a study by the Virginia Hospital and Healthcare Association (VHHA) found that Virginia spends about $1.5 billion less than nine other comparably sized states even though Virginia had more people over 65 and more people in poverty than the other states.

Virginia’s relatively low level of spending is attributable according to the VHHA study to the state’s strict eligibility criteria for recipients, one of the toughest in the Nation, and its low payment rates to providers. As the study points out, this combination puts tremendous pressure on Medicaid providers because of the double whammy it poses – strict eligibility leads to a higher number of uninsured individuals, and consequently a high level of uncompensated care, and low rates mean that providers lose a substantial amount of money for every Medicaid patient they serve. As a result, businesses and individuals across Virginia bear higher health care costs than they might otherwise have.

More than half the eligible recipients of Medicaid are children in low-income, uninsured families, but these children represent only 18 percent of Medicaid expenditures. The blind and disabled are 19 percent of the recipients, but they receive 48 percent of Medicaid expenditures. The aged are 17 percent of the Medicaid population and 27 percent of Medicaid expenditures. More than two-thirds of all nursing home patients are paid for by Medicaid.

Public Safety

Virginia is a safe place to live and do business, and Northern Virginia is among the safest places in the Commonwealth. According to national statistics, Virginia’s crime rate is among the lowest in the country. We eliminated parole, but we greatly added to our corrections costs.

The major area of concern in public safety is gangs and gang-related crime and violence. The persons responsible for the coordination of enforcement activities at all levels are to be commended for their swift response to gang activity. We need to continue after-school and other recreational activities to ensure that children have positive options for their use of free time.

Political Climate

Virginia has historically been a conservative state even during the last century when it was dominated by a Democratic political machine controlled by Governor and then Senator Harry F. Byrd. Even while electing Democrats of the Southern Variety to control the state legislature, Virginians voted for every Republican candidate for President since Harry Truman, with the exception of Lyndon Johnson.

While some describe a conservative shift in the state over the past several decades, the shift has been in more partisan labels. Conservative Democrats fed up with the national Democratic Party switched to be independents or Republicans. The party labels changed, but politics remained relatively unchanged.

That is, at least until the last decade.

Virginia has gotten caught up in an ultra-right-wing shift that has occurred throughout the country. Suddenly the most important issues have become abortion, the flag, school choice, and taxes, regardless of the challenges I outlined for you earlier.

Legislators who reflect these concerns now dominate the House of Delegates because of their numbers and because of their intimidation of more moderate members.

Annually the House of Delegates has more than 30 bills introduced related to abortion, and many of these pass only to be defeated in the Senate by one-vote margins. There is an obsession in the House of Delegates on the part of a few members who are feared by many other members that results in some bill, amendment, or debate related to abortion almost every day of the session. The latest effort is to try to have contraception considered as abortion.

There is a similar preoccupation with gun rights. Local governments have been virtually stripped of any ability to control guns, and the few remaining laws are under attack.

Gays and immigrants are under constant attack. Marriage in Virginia was long ago defined as being between a man and a woman, but now a movement is underway to amend the Constitution to define marriage. But the amendment is clearly intended to go further in taking away the rights of same sex individuals to have medical directives, power of attorney and contracts between them.

And although it can be statistically shown that immigrants are building our homes and staffing our service and hospitality industries, there is a movement to limit their access to employee benefits including medical services for injuries on the job. It does not matter to some legislators that a person may have lived in the state since infancy, attended 12 years of public schools, and paid taxes by parents all that time – they would still deny you admission to Virginia colleges because of our immigrant status.

Anti-tax sentiment is rampant. Although the combined state and local tax burden in Virginia is 34th lowest in the Nation according to the Tax Foundation and 44th lowest when tax burden is compared to income, there continues to be efforts to cut taxes further regardless of the list of needs I earlier stated.

Virginia already ranks 12th among the states in favorable business tax climate, according to the Tax Foundation.

The budget debate in 2004 that kept the General Assembly in session for almost double its scheduled time while focused on tax reform – was more about Virginia being willing to put its financial house in order and preserve its AAA bond rating (as one of only eight states with such a distinction) and fund the basic core services of government. By one-vote margins, the right decision was made.

The strong recovery of the economy along with the results of tax reform produced revenues that were used this year to make down payments on meeting some of the challenges we listed earlier. We cannot allow ourselves to backslide into the accounting gimmicks that were used before the last two years to keep the state going.

Looking for something fun and inexpensive to do as a family? Pack your dinner and a blanket for a “Movie in the Park” on Thursday, June 30, 7:30 to 10:30 p.m., at North Hills Pavilion, 1325 North Village Road. The movie will be “Shark Tale,” and it’s free. All ages are welcome; children must be accompanied by an adult. Pack your dinner, a blanket, and a flashlight. This FREE event will be canceled in the event of rain and is sponsored by the Reston Association. Call 703.435.6577 for more information.

Conclusion

Here is what I think needs to happen: Moderates in the General Assembly need to get a backbone. The Family Foundation, the Club for Growth, and other flat-earth kinds of groups are allowed free rein by moderates who fear primary challenges from the right. In the last two election cycles, only two challenges to incumbents have been successful, and both were for reasons more complex than their moderate positions. I stand ready to work with legislators of both parties who are willing to rise above ideology and cooperate in a bi-partisan manner to move the state forward.

The leadership of the House of Delegates that is under control of the far-right is making a mistake in trying to exclude me and other moderate Republicans and Democrats from a more active role in the legislative process. As you can hear from my comments today, they cannot shut me up.

The legislature needs to pass my independent reapportionment advisory commission bill. Democrats rejected the bill when I first introduced it in 1978; Republicans who supported it then refuse to pass it now that they are in power. It is simply not healthy for democracy to have Democrats packed into certain districts and Republicans packed into others while ignoring communities of interest just to protect incumbents. Under the present arrangement there is not the healthy debate of issues that could come with seriously contested races.

We need to get serious about transportation issues. The General Assembly did not deal with long-term transportation issues in the 2005 session because “it is an election year.” I never understood the rationale for wanting to run without tackling our greatest issue. Wouldn’t voters be more impressed to know that we had solved or at least moved in the direction of solving the transportation issue?

I continue to encourage and intend to provide leadership in revisiting the transportation referendum of 2002. Voters turned it down just as voters throughout the country have rejected referenda on the first try. By having a broader representation of the community putting together the projects in the referendum, I believe that a winning combination could be put together. Voters in this district voted for the first referendum.

While we need to ensure that we maximize the use of our highways, we need to put more emphasis on the use of mass transit. We have made wonderful progress on Dulles Rail the past several years, and I am pleased with the role the Dulles Corridor Rail Association has played in causing that to happen. The project will be expensive; there is no way to get around that fact. But it is needed to meet the projected growth in the corridor. I favor maximum oversight to ensure that we get our money’s worth, but this is not the time to falter.

Transportation and land use planning must be coordinated, but decisions on land use need to stay with local government. I know that there is a great deal of schizophrenia about land use. In Loudoun County there is concern about “density packing” with a bias toward single family housing. In Fairfax County, plans for transit oriented development are under attack at Vienna Metro and at Tysons Corner and Wiehle Avenue. But moving those decisions to Richmond or Washington, D.C. would only complicate, not resolve, the matter. And we have to learn that density is not a bad word.

A quick rundown on some other issues:

We need a response to the housing problem – more and affordable housing is needed. Our police and teachers should be able to live in our communities.

The Chesapeake Bay is a barometer of how we are doing environmentally. The $50 million appropriated this year is but a modest down payment to the half billion dollars needed.

We need to reject the Constitutional Amendment on marriages. It is not right to penalize those persons with a different sexual orientation.

We need to get the legislature out of the minutia of dealing with local government powers under the Dillon Rule. And we need to delegate responsibility for license plates to a commission.

Finally, we need to elect Tim Kaine Governor. I have already described the craziness going on in the House. That will not be changed with this election cycle. There is a concern that moderates could lose control of the Senate in two years. We need a strong and moderate Governor to stop the bad bills that would come out of the General Assembly.

I hope that you will re-elect me also. As big as the issues are that I have described, I want to continue to work on them on your behalf. Thank you for giving me the honor of representing you. And thank you for your attention and attentiveness today.

**********

Good News for Taxpayers
Delegate Kenneth R. “Ken” Plum

Amidst all the debate about the budget compromise of 2004 that saved Virginia’s AAA bond rating and set the state on sound financial footing, the significant tax reforms that were part of the compromise are often overlooked. The sales tax was increased by a half-penny to pay for core services of education of public health and safety.

But at the same time, other taxes were reduced. Beginning on July 1 the state sales tax on groceries was cut by 1.5 percent from 4 to 2.5 percent. That eliminated the state general fund portion of the tax entirely. That action meets a goal that I and other legislators have been working on for many years. Estimates are that the food tax cut will save a family of four with a household income of $10,000 about $83 a year. A family of four with a household income of $100,000 will save about $105 a year.

Other elements of the tax reform will be seen by Virginians when they file their state income taxes after January 1, 2006. They include a reduction in the state income tax by raising the personal and dependent exemption from $800 to $900. State income taxes are further reduced by raising the standard deduction for married taxpayers filing jointly from $5,000 to $6,000 and the standard deduction for married taxpayers filing separately from $2,500 to $3,000. The additional reduction in the state income tax comes from raising the filing thresholds for single taxpayers from $5,000 to $7,000. For married taxpayers filing jointly the threshold is raised from $8,000 to $14,000, and for married persons filing separately from $4,000 to $7,000. The change in the filing threshold will take 142,000 taxpayers off the tax rolls altogether.

Starting July 1 the tax on cigarettes will be increased by 10 cents to 30 cents per pack. The money from the cigarette tax is dedicated to provide health care for children from low-income families and elderly and disabled Virginians.

With the tax reform package in place, Virginia moves from a state under a credit watch by the bond rating houses to leadership in fiscal management. In January, Virginia was the only state in the nation to receive straight A’s in the Government Performance Project report, “Grading the States 2005,” the nation’s only comprehensive, independent analysis of how well each state is managed. The budget and tax reforms were cited as outstanding examples of fiscal management.

With a strong economy Virginia is poised to meet its challenges in transportation and education funding. All this is good news for taxpayers.

ANNOUNCEMENTS

Stop by my booth at the Reston Festival, July 9-10. Celebrate Reston’s 41st Birthday at the Reston Festival. Bring your family and friends. Pick up a free Virginia highway map at my booth. Enjoy great music, artists’ and crafters’ booths, regional organizations’ booths, amusement rides and activities especially for young children and teens, laser tag, and a host of other enjoyable things to see, do, and eat. Festival hours are 10:00 a.m. to 10:00 p.m. on Saturday, July 9 and 10:00 a.m. to 7:00 p.m. on Sunday, July 10 at the Reston Town Center. Visit www.restonfestival.org for more information.

The Reston Association’s Senior Advisory Committee is charged with developing and implementing programs to benefit Reston’s senior adults. The Committee is looking for NEW ideas and FRESH perspectives. Give something back to your community by sharing your talents and ideas. There will be a meeting of the committee on Tuesday, July 12, 2:00 to 3:30 p.m. at RA Headquarters, 1930 Isaac Newton Square, Reston.

The 2005 “Virginia Campground Directory” is available from the Virginia Campground Association. Visit www.virginiacampgrounds.org to secure a copy.

Don’t miss the annual Reston Interfaith Rucker Golf Tournament on July 11. The activities begin with a golf tournament at Hidden Creek Country Club and Reston National Golf Course. The day promises to be filled with great golf, delicious food, a prize-filled raffle and spectacular silent and live auctions. Proceeds from the tournament will benefit the programs of Reston Interfaith. Visit www.restoninterfaith.org for registration and details.

Laurel Learning Center is looking for donations of new and used piano keyboards for their young students. Call 571.323.9565 to donate or for information.

Nominations for the Governor’s Community Service & Volunteerism Awards are now being accepted. The prestigious award has been honoring exemplary Virginians for more than 15 years and recognizes excellence in community service and volunteering. The awards include service on the part of businesses, faith-based groups, seniors, youth, families, individuals, government, homeland security, national service, nonprofits, and civic engagement organizations. The nomination process will end at 5:00 p.m. on Friday, July 15. A narrative and two letters of support are required. The awards ceremony will take place on Thursday, October 6 in Richmond. You may download the form to fill out and fax or mail it in or complete the nomination online. Go to the home page at www.vaservice.org.

The Fairfax County Department of Transportation will hold public workshops to discuss the travel demand forecasting results – an important component of the Transportation Plan Update. Additional transportation network alternatives also will be discussed. Workshops are on Saturday, July 16, 9:30 a.m., Conference Rooms 9 and 10, and on Wednesday, July 20, 7:30 p.m., Conference Rooms 4 and 5, at the Fairfax County Government Center, 12000 Government Center Parkway. Further information on the workshops, the County’s Transportation Plan and the update, and a summary of the March meetings are available at www.fairfaxcounty.gov/fcdot or by calling the Fairfax County Department of Transportation at 703.324.1100.

The American Cancer Society’s “Great American Health Check” is a new online program that helps you determine which early detection tests you need, and then provides a personalized action plan. This action plan provides information and offers helpful tips for reducing yoru cancer risk, as well as ways to talk with your doctor about early detection. Just log on to www.cancer.org/healthcheck and answer a few simple questions. It only takes a few minutes, and it could save your life.