Richmond's Attack on the Middle Class

Last week, Governor Tim Kaine proposed his 2011-2012 budget to the Virginia General Assembly. Governor Kaine has a responsibility to balance the budget, but I also believe that his proposal is unduly focuses its burdens on Virginia’s poor and Northern Virginia’s middle class.

First, his budget proposes to delay “rebenchmarking” or correction of the formula that determines state funds for local schools – the Local Composite Index (“LCI”). Because Fairfax County has some of the highest income earners and property values in Virginia, the LCI approach disadvantages us and we get very little money from the state. However, because our property values cratered more rapidly than other Virginia localities, Fairfax County is slated to receive an additional $60-70 million more per year from the state.

The budget proposes to delay rebenchmarking one year to give local jurisdictions “more certainty.” One would think that “more certainty” would favor 25% of the Commonwealth (e.g. Fairfax, Arlington & Alexandria) getting this money to avoid cuts to full-day kindergarten, elementary band & strings, focus programs, or increased class sizes, after all, most rural jurisdictions have property tax rates that are half of what we pay in Northern Virginia and they have room to grow. If his proposal is adopted, we could pay higher 2010 property taxes to make for the shortfall or that the Fairfax County School Board will have to cut an additional $315,000 from every school ($60 million divided by 190 schools).

Next, the Governor’s budget proposes to prohibit any new enrollees in Medicaid and to cut Medicaid payments to health care providers by $419 million. “Cutting” Medicaid does not “cut” anything. It reduces the availability of health care and it causes health care providers to increase rates for private insurance to make up the “cut” – small businesses and middle class working families in Fairfax County. “Cuts” to government healthcare programs (Medicaid or Medicare) are really not “cuts.” They are simply a way to pass the buck on health care for the uninsured to those with private health insurance – in other words, Northern Virginia’s middle class. These so-called “cuts” are what causes businesses’ health insurance costs to rise 15 percent per year.

In addition, people who have no way to pay for their healthcare, end up in hospital emergency rooms, the most expensive form of health care for which we all pay. Medicaid also pays for 43 percent of all nursing home care. As the population ages, cutting funds for what little coverage we have for long-term care makes no sense.

Third, in October 2009 Governor Kaine cut higher education by 15 percent. He proposes cutting by another 26% over the next two years. Historically, when there are budget shortfalls, Virginia cuts funds for colleges and universities and then raise tuition rates or admit more out-of-state students - taking up positions that should be reserved for Virginia residents. These are not “cuts” they are cost shifts to the middle class who make long-term plans to utilize our high-quality public universities for their children. To add insult to injury, he proposes to inflict these costs on middle class families right in the middle of an anemic economy.

If you think the attack on the poor and Fairfax County’s Middle Class is over - just wait. It has just begun. Remember that the budget that was just proposed contained $300 million of tax increases to close a $4.0 billion hole. Also, remember that this does not even begin to address transportation. While raising taxes is rarely welcomed by anyone, revenues must come from somewhere or government services must be cut. Governor-Elect McDonnell and House of Delegates leadership has already rejected Kaine’s proposals foreshadowing what in my view will be an all-out assault on Fairfax County’s middle class instead spreading the burdens fairly among people who can afford to bear them. This is just the beginning of the War on Fairfax.

While this budget may be bad, it is also partly a function of an outdated tax system that was designed for a homogenous rural and agricultural economy that cannot support an increasingly urban-suburban and service-oriented economy. If we approached this rationally, we would view this budget crisis as an opportunity to transform the way we do business in this Commonwealth. It is time for a fair tax structure that raises revenues commensurate with all income and productivity, and equitably focuses expenses commensurate with need and economic development. So long as we adhere to old constructs, Northern Virginians will be sacrificed in the process and I will fight all efforts to balance this budget on the backs of the poor and Mount Vernon’s middle class.