Crisis should spark change

The News Virginian
Published: November 13, 2008

Red ink is trickling on the verge of spilling in gushers from municipal budgets as Gov. Timothy M. Kaine sharpens his scalpel for deeper incisions into a state spending plan starved for revenue. The squeeze reflects a trend uniquely American: Banks foolishly gave home loans to people who sought more than they could afford, investment firms inked mortgage securities deals with more holes than Sonny Corleone’s car at the toll booth and governments continued spending like a swindler handed a wad of blank checks. All assumed with carefree ease that the money would continue to flow.

Now budgets gasp for cash as rosy revenue projections – by Kaine and others – turn to mirages and the piper stands waiting to be paid.

The state is seeking to close a $2.5-billion gap, the effects of which are spreading like an infection. Budget cuts and looming deficits in the central Shenandoah Valley and Charlottesville and Albemarle County combined total $8.5 million. Hiring freezes already are in effect in many communities with pay freezes possibly to follow. Most officials concede that those measures are likely to be insufficient. Steeper cuts are sure to come.

Like so much of the rest of America, local governments have been confronted with a crisis of far greater proportion than they imagined even as the turn of the fiscal year approached last spring, a time when the economy’s fissures were widening. The housing market’s freefall endures, tax collections are painfully slow and the state money pool is shrinking. No one was caught unaware by the economy’s lurch southward, but many have been stunned by the sharpness of the turn.

In some locales, the current state of affairs may precipitate a step in another wrong direction: an increase in taxes, which is just the sort of thing already strained household budgets do not need. In Augusta County, a recent reassessment boosts total property values by more than a third, running counter to housing trends in almost every other market.

What should happen there and elsewhere is what should have been happening for years at all levels of government. Officials should imbibe a heavy dose of fiscal restraint, possibly with tax cuts to go with it. What particularly grates most taxpayers about the series of federal bailouts that began last spring is that many of the companies receiving the money only a few years ago were raking in profits by the billions. The same applies to governments along with the Big Three automakers whose hands now reach for taxpayer wallets.

Governments along with Corporate America have instead formed in their habits a biblical alloy, combining the spirit of Epicureans – “Eat, drink and be merry, for tomorrow we die” – with the myopia of Joseph’s brothers, who faced famine after failing to stockpile grain in times of bounty. Such thinking is a product of American prosperity, and nowhere is the product in greater supply than in government. The thinking goes, if the money is there, it must be spent.

But times good and tough do not last. Now is when a surplus – like the one Charlottesville officials say they may have from last fiscal year – would be of use. And it is when past fiscal restraint – like that which particularly marks Waynesboro – can prove a savior.

When the dark economic clouds fade, as invariably they do, the temptation will be for many communities as well as state government to cast aside the reasonable cuts that now are being forced upon them. Instead of caving to this urge, officials would do better to rethink government spending generally and make permanent cuts where possible.

Cultivating a determination to restrain spending impulses could gird governments here and everywhere for famines whenever they come and ensure that today’s belt-tightening is more than a passing necessity. The present trouble has shown vividly the folly of spending like tomorrow’s trouble never will come.