included more than $2 billion in "new spend-
10 Reasons to Oppose a
ing."7 As soon as politicians anticipate money
Sales Tax Increase
coming in the door, new spending projects are
found to expand state government.
1. State Spending Has Grown Excessively
Virginia voters should ask why it is that,
State spending in Virginia soared during the
after the 1990s spending boom and planned
1990s as the economic boom flooded state cof-
increases next year, there is no money left to
fers with tax revenue and prompted legislators to
solve transportation problems in northern
expand programs beyond sustainable levels.
Virginia and Hampton Roads. If transportation
State spending in
During nine boom years from 1992 to 2001,
is a top spending priority, legislators and the
state spending (general and nongeneral funds)
governor should begin to reduce spending, or
Virginia soared
rose an average of 6.8 percent per year.5 By con-
slow spending growth, in other budget areas in
during the 1990s
trast, inflation grew at just 2.6 percent annually
order to reallocate funds to highway projects.
as the economic
and Virginia's population grew at 1.2 percent
2. Tax Revenues Rose Quickly during the
annually during that period. Figure 1 shows that
boom flooded
1990s
recent spending increases have been particularly
state coffers with
large, including increases of 13.3 percent in 1999,
Virginia has a history of fiscal conser-
7.0 percent in 2000, and 9.1 percent in 2001.6
vatism; its overall tax load has been somewhat
tax revenue and
Although legislators were forced to slow
below the average of the 50 states. But in the
prompted legisla-
spending growth to just 0.7 percent in 2002
late 1990s large tax revenue increases pushed
tors to expand
Virginia closer to the midpoint.8 Unless bud-
because of stagnant tax revenue, they have
enacted a 7 percent increase in spending for
get restraints are imposed, Virginia may ulti-
programs beyond
2003. Despite cries of large budget shortfalls,
mately lose its low-tax advantage and become
sustainable levels.
the May budget plan for the 200304 biennium
less economically competitive.
Figure 1
Growth in Virginia Spending vs. Growth in Inflation Plus Virginia Population
14%
13.3%
State government spending
12%
Inflation plus population
10%
9.1%
8.3%
8.0%
8%
7.0%
6.6%
6.6%
5.6%
6%
5.4%
5.2%
5.1%
4.4%
4.1%
4.0%
4.0%
4.0%
3.8%
3.4%
3.7%
4%
3.3%
2.9%
2.8%
2.7%
2.2%
1.9%
2%
0.7%
0%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Source: Virginia Department of Planning and Budget, www.ddpb.state.va.us/budget/budget.htm.
Notes: Spending is total fiscal year operating budget (general and nongeneral funds). Inflation and popluation
growth are estimated for 2002 and 2003.
3