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Mark Warner: on
the budget crisis and plans for a “debate”
to set funding priorities
Related
stories:
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session, it's budget, budget, budget
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quiet man takes a raucous job
Gov.
Mark R. Warner |
Flanked
by a huge portrait of Thomas Jefferson and a giant map
of Virginia in the 1820s, Mark R. Warner sat down in
the governor’s conference room on the third floor
of the State Capitol on Nov. 26 for a wide-ranging interview
with Virginia Business editors. For more than 45 minutes,
the governor spoke about his first year in office, its
frustrations and challenges with the budget crisis and
failure of the transportation sales tax referendums.
“It’s been a wild ten and a half months,”
he said. Warner spoke of what he hopes to accomplish
in this year’s General Assembly session and his
plans to restructure state government. Following are
excerpts from this interview:
On
what he hopes to accomplish in this legislative session
and in the coming months:
“Two major issues. One will be the budget and how
we take an additional billion dollars out of our revenue
stream, which will mean we will take close to $6 billion
out of the state’s revenue. That’s unprecedented.
No budget shortfall in history has been close to this
magnitude. No one will have shrunk government more and
in less time than this administration. ...
“...
I think the second issue will be the ability to take
this period and restructure state government.. . . There’s
going to be massive consolidation in technology. ...
The overarching theme is how we bring more business-like
principles to state government. You have to make a lot
of lemonade out of lemons here. I look on this as a
positive.
“Some
of the structural changes that we’re going to be
bringing forward, you’d never get passed in a normal
cycle. You’d never get passed because the institutional
resistance to change is enormous. A lot of people make
sound bites about wanting to change but as you’ve
seen on the DMV (Department of Motor Vehicles) office
closings, the very people who argue for smaller government
are the first to scream when they see the effects of
smaller government. ...
“...
If we’re successful, it will be the most dramatic
technology reorganization of any state in the country.
... I’m very excited about it. I think I’m
the right guy for the job at the time. I think the business
background, the entrepreneurial background, the venture
capital background that makes you open to new ideas
and new approaches, that’s what we desperately
need right now.”
On
cuts in the state’s higher education sector:
“I don’t anticipate additional major cuts
to higher education ... Most of the college presidents
I’ve talked with were pleased that considering
the fact that 61 out of the 93 agencies received the
full 15 percent cuts, they’ve only averaged between
9 and 13 percent.” (The governor was referring
to his cuts last fall — colleges had already been
through an earlier round of cuts.)
On
criticism that the state’s colleges are hard-pressed
to maintain quality education and keep Virginia’s
economic position competitive:
“I agree with that criticism. The state built a
business plan that was a fiscal house of cards. They
said we can go out and cut taxes and increase spending
and assume that the revenue bubble of the late ’90s
was going to last forever. It was a sham. And higher
ed didn’t get the kind of attention and sustainable
needs, if we’re going to maintain world-class institutions.
I 100 percent agree with that. ... The good news is
we got the bond package passed, but the bad news is
that we don’t have the money to get the equipment
or hire the professors to go into the buildings.
“...
[What] I’ve asked college presidents is, ‘Would
[you] have us cut mental health more? Would [you] have
us cut law enforcement?’ You don’t take $6
billion out of your revenue stream and not feel the
effects. And higher education at least has a release
valve since they’ve been able to raise tuition,
and most institutions have been able to raise tuition
twice. Now Virginia institutions are still a pretty
good value because even after raising tuitions twice,
they are lower even in non-inflation dollars than they
were in 1997.
On
his upcoming plans for state government:
“We need to decide whether we want to have colleges
and universities continue to turn out Nobel Prize winners
and whether we’re willing to invest in that or
whether we want to have an ‘also-ran’ university
system. I also think that part of this discussion needs
to be that not every institution can be all things to
all people. We have the value of a decentralized higher
system in Virginia that has allowed us to create a series
of world-class universities. Where some states have
a single, flagship university, we have a Tech, a U.Va.,
a William & Mary and rising universities like GMU
and JMU. That comes from a decentralized system. That’s
the upside. The downside is every college and university
wants to have duplicative, degree-granting programs,
and I’m not sure we can still afford that.
“But
it raises the overall question of how does this fit
into our economic development plan? I believe it is
a critical part of our economic development. The stock
market may be down, but the move towards a knowledge-based
economy has not slowed one bit. That means you’ve
got to have a well-educated, quality work force and
a quality of life the community offers. These are the
two most essential criteria. And colleges and universities
are the places to create the intellectual capital. They’re
the factories of the 21st century, because they create
the ideas that are going to create the new companies.”
More
on higher education:
“We don’t do a very good job in Virginia of
attaining federal research dollars or private research
dollars. Part of that is going to require much greater
collaboration between colleges and universities. I saw
recently we won this major NASA grant (for a new aviation
research institute in Hampton), but we had tremendous
competition instead of cooperation between Virginia’s
colleges and universities. ...
“...
One of the major reasons why I ran for this job in the
first place was to bring some of the knowledge from
the knowledge-based economy to the communities who have
been left out — Southside and southwest Virginia.
... One possibility is that we securitize part of the
tobacco funds — remember that a portion funds are
set aside for Southside and Southwest — that could
develop a $500 to $600 million economic development
bank for Southside and Southwest Virginia.”
On
raising the state’s 2.5 cent per pack cigarette
tax — the lowest in the U.S — to raise more
revenue:
“My position is that I’m open to an increase
in the cigarette tax. ... I haven’t committed to
any particular amount yet. This needs to be dealt with
in conjunction with both of the contraband issues that
are very real and alive for the industry and also of
how a statewide cigarette tax increase would relate
to those jurisdictions that already have power to assess
taxes.”
On
how Warner will continue with his strategy of bipartisanship
with the General Assembly and how he hopes to work with
William Howell, who is replacing Vance Wilkins as house
speaker. Wilkins resigned after being implicated in
a sex scandal:
“He (Howell) indicates to me that we want to work
cooperatively. The size and depth of our fiscal challenges
are so great that we don’t have time for partisan
politics, and there’ll be the occasional shot being
fired by hard-core partisans on both sides of the political
spectrum. I get as much criticism from Democrats as
well as Republicans that I’m not being partisan
enough. But I think that one of the reasons I was elected
was because we’d seen the effect of undue partisanship
even just within the Republican Party that led to a
budget crisis. It’s been an interesting thing.
Most business people think, ‘Why aren’t more
people bipartisan?’ I want to tell you that being
bipartisan is the hardest thing to be. The people who
are your natural allies are upset because you’re
not being partisan enough and they’re not getting
the rewards and spoils. Your opposition, especially
the hard core ones, is nervous because they’re
afraid you’re going to be able to forge alliances
with some of the more moderate members. But if we are
going to get Virginia moving forward again it is going
to take that kind of cooperation between both parties
because the extremes in both parties sure don’t
have the same kind of agenda I’ve got for Virginia.”
On
his failure to win the passage of state tax referendums
to boost transportation in Northern Virginia and Hampton
Roads:
“I was very proud of the coalition we put together.
That was the best example of bipartisanship. These were
Republican driven initiatives by Del. (John P.) Rollison
and Sen. (Martin E.) Williams. We had people from (Sen.)
John Warner to (Rep.) Tom Davis and (Rep.) Jim Moran.
... They were not ideas that were hatched recently.
The Northern Virginia transportation referendum was
the result of five years of vetting.”
On
the irony of being placed in a reactive mode in his
first year in office with problems not of his making,
such as the budget disaster, the drought ...
(Laughs), “The sniper, drought, avian flu, a tire
fire, political loss of the speaker, eavesdropping,
do you want the list any more?
“First of all, at the end of this year, no one
is going to have the credentials that we have in terms
of shrinking state government. There are a lot of people
who talk about it, but we’ve actually done it.
Nobody else has eliminated 6,000 positions from state
government, and got close to $6 billion by the time
we’re done. At the same time, it’s going to
have major restructuring of state government. ...
“We’ll
need a debate. It’s going to need the business
community. It’s going to need everybody, it’s
too important to be left to the politicians or elected
officials about what kind of Virginia do we want to
have and how much are we willing to pay for that? Do
we want world-class universities? Do we want a transportation
system that’s ready for a 21st century economy?
Do we want 70 percent of our kids to pass the SOLs or
95 percent?
“...
That will drive the kind of overdue revamping of the
tax code. Right now we’ve got a tax code where
the state cuts back services and passes back burdens
to localities ... I’m about as pro-business a governor
as you can find, but at the same time, you see the diminution
of corporate income tax has dropped to only 3 percent
of our overall tax revenues, not just in Virginia but
in state taxes in every state in the country. “
On
the importance of streamlining procurement:
“We buy from 44,000 vendors in the state. Makes
no sense. We buy Dell computers from 28 different sources
at 28 different prices. Those are the kind of examples.
Is that going to plug a $6 billion hole? No. But I can
go and say to the legislature and the people that you
are getting the best value we can for your tax dollar.”
On
how he has handled the budget crisis:
“We went in a business-like approach and reforecast
our revenues. We could have swept this under a rug for
a few more months — but we went out and in July
said revenues are down. Let’s reforecast, let’s
go ahead and make the cuts now. The politically expedient
thing would have been to wait until now and then dump
it all in the legislature’s lap in January. I wouldn’t
be taking the hits for the cuts I’ve made. But
that’s not the fiscally responsible thing to do.
...
“...
The best evaluation of how we’re doing on fiscal
management came when all three of the ratings agencies
reaffirmed the Triple A rating and states like North
Carolina lost their Triple A rating. Moody’s even
went to the extent of saying that because Virginia’s
been so proactive on the budget shortfall, that’s
a model states ought to emulate. So as the incoming
shots come about the budget cuts, well I guess I’ve
lived too long in the business world, those independent
validators is how we’re going to be judged. ...
“
... Virginia’s economy is strong. It is extraordinarily
diverse, and state government is going to come out of
this stronger, and we’re going to have this debate
that goes back into your question about higher ed and
all of these services. It’s a debate we may not
have had for 30 years or 40 years. Maybe the last time
we had this debate was in the ’70s when there were
questions about whether we should have a community college
system. That gets you charged up.”
Return
to Virginia Business - January 2003
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