About that Mark Warner Tax Increase

I’m baffled by Eli’s contention that Mark Warner, as governor of Virginia, controlled government spending. Warner became a champion big spender after initially practicing fiscal restraint. Spending rose much faster than inflation, economic growth, and population growth, while Warner was governor of Virginia. (He received a “D” on the Cato Institute Fiscal Report Card of the Governors).

Eli notes that he raised taxes as governor. The Warner tax increase wasn’t necessary to maintain a balanced budget. Soon after the tax increase was enacted, it turned out that Virginia would have run a surplus even without the tax increase, owing to increased revenues resulting from economic growth.

That illustrates the breathtaking dishonesty of the tax increase. It was sold to the public as a way of staving off state budget deficits and preserving the state’s bond rating. Yet its true purpose was just to further inflate state spending.

Veteran centrist Delegate Vincent F. Callahan, chairman of the appropriations committee (and a leader of the GOP’s dwindling moderate wing), pointed this out at the time. He warned that if the tax increase was enacted, Warner and the state legislature were “going to spend all this money like drunken sailors.” And after it was enacted, he observed that “they’ve got a big pot of money and now they’re going to spend it all.”

And they did. They further increased state spending by the full amount of the tax increase, ensuring that it would do absolutely nothing to increase the state’s financial reserves in the event of another recession.

They put not one penny of the tax increase into long-term investments like roads and bridges, choosing to spend it all on public employee salaries, education, and social services. They did so even though education and health spending and teacher pay had already been rising faster than inflation even before the tax increase.

The teachers’ unions had argued that teacher pay raises were inadequate. But in reality, Virginia teacher salaries were appropriate and in keeping with the important role teachers perform in society. In Arlington County, Virginia, for example, the average base salary for a teacher last year was $69,156, which is slightly less than what the average attorney working for the state of Virginia received. (Virginia teachers also typically have relatively good retirement benefits).

The big increases in spending resulting from the Warner tax increase had no impact on students’ test scores and academic proficiency, which have changed little since the tax increase. That shouldn’t have been a surprise, since teacher pay was already adequate, and it was not pay levels, but arbitrary credentialing requirements for teachers, that had limited the pool of applicants for teaching positions in most of Virginia.