CHICHESTER URGES CAUTION 

By Chelyen Davis
Free Lance-Star
HAMPTON--Sen. John Chichester yesterday warned senators not to let surplus revenues make them "giddy" the way they did in the late 1990s.

Instead, millions in expected surplus monies should be spent carefully, on one-time expenditures, so the state isn't in the hole next time a recession comes along, he said at the Senate Finance Committee's annual budget retreat.

"There is uncertainty in this economy, and the booming revenues that flow from it," Chichester said. "Listen to that little voice in your head that says go slow, take it easy. Don't overextend the way we did last time."

Committee staffers said the state should have about $1 billion available in unbudgeted money at the end of the 2006 fiscal year. Of that, some $200 million is already tapped to pay for capital project overruns and revised expectations for Medicaid and lottery money. But, the staffers warned, much of the excess revenue comes from three volatile sources--non-withholding, corporate and deed recording taxes.

Those taxes fluctuate from year to year--for example, the deed recording tax collections are up because of the housing boom--and are not reliable enough to count on for future years, staffers said.

As a result, they recommended the legislature segregate the monies collected from those taxes, and perhaps make sure that a percentage of the collections are spent on items that could be postponed if the revenue dips.

Staffers also are forecasting nearly $4 billion in new general fund revenue in the 2006-2008 biennium--the budget lawmakers will be writing in the next session.

They said the first priority for that money will be mandatory spending on things like updating education standards ($1.2 billion), health programs including a federal Medicare prescription drug benefit and child welfare programs ($775 million), debt service ($103 million) and the cost of two new correctional facilities ($100 million), among other obligations. Additionally, the cost of a 1 percent pay raise for local employees and teachers would be nearly $300 million.

Chichester said lawmakers should be cautious with any surplus. He noted that despite efforts made in sessions past to put more money into outstanding obligations, like fully funding the state education standards, there are still needs that remain to be addressed, such as a $1.2 billion backlog in maintenance for state property, and a $2.1 billion obligation to help pay for cleaning up the Chesapeake Bay.

But transportation is looming as the biggest issue for the coming legislative session. It's widely accepted among lawmakers that changes, possibly expensive ones, need to be made to the state's transportation network.

Chichester has said in the past that a transportation solution could require $1 billion a year in additional spending--and, logically, revenues.

He did not mention that figure yesterday, warning only that the issue will require serious consideration next January.
"We know the problem will not be solved in the short term, and no amount of money can be thrown at transportation to change this fact of life," Chichester said. "It takes good transportation policy, it takes time, it takes resources, and it takes our commitment."

He noted that the Senate's efforts in 2004 to funnel more money to roads--by proposing a gas tax increase--were not successful.

"But I feel this session will be different," Chichester said. "I believe momentum is building."
The Senate has a task force working on transportation solutions. It will meet today here in Hampton after the budget retreat concludes. Leaders in the House of Delegates are preparing their own transportation plan, and governor-elect Tim Kaine has already begun town hall meetings around the state to get public input on the problem.

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