Virginia Needs to Ditch Unwieldy Two-Year Budget Process

BY DELS. ALBERT POLLARD AND CHRIS SAXMAN As members of opposite parties in the House of Delegates, we realize that revenue shortfalls know no partisan bounds.

While no one could predict Wall Street's meltdown, we believe that a concrete step to bring greater budget discipline to Virginia is the enactment of annual budgets. For that reason, we are co-sponsoring legislation to change Virginia's traditional two-year budget to a one-year document.

Virginia's present reliance on a two-year budget is a throwback to Virginia's first 200 years, when the legislature met only every other year -- a practice that ended 40 years ago. Today's economy moves at lightning speed and our revenue and expenditures can be tracked on a daily basis.

Indeed, Virginia is one of only 11 states that have biennial budgets that get heavily amended the second year. Thirty states have annual budget cycles, and only nine states have biennial enactments of true two-year budgets.

The argument for an annual budget can be summed up in two words: accountability and discipline.

The two-year budget creates a muddy picture of the state's true finances. For instance, when a headline screams about a billion-dollar shortfall, is it a billion dollar annual shortfall, or is that spread over two years? When a leader talks about a $500 million cut, is it an annual cut or a biennial?

Agencies (including the Department of Planning and Budget) do much of their planning on an annual basis, but the budget is not annualized. Confusion is also created on the spending side of the ledger. Politicians might brag of putting aside $100 million for teacher's pay raises, but it could actually be that there was only $50 million per year for the effort.

Since almost everybody thinks in an annual budget cycle -- people's personal budgets, church budgets, and business budgets are almost all annual -- a two-year budget cycle can create considerable confusion even among policymakers. As members of the legislature, we see annual and biennial numbers interchanged in a way that -- purposely or not -- obfuscates the truth.

We also believe annual budgets will bring about more discipline to the budgeting process. Like a child who extracts a promise of dessert after homework, many lawmakers extract promises of programmatic increases in the second year of the budget if they vote for the first year.

Sometimes these promises are nefarious, but more often legislators are trying to chisel their way into the marketplace of ideas by fighting for mental health, environmental, or educational programs. Regardless of the motivation, such promises put tremendous pressure on having favorable forecasting numbers for two years in a row. Such promises certainly make it harder to "pull back" in the face of a sluggish economy.

As Virginia becomes larger and more diverse, we have become increasingly dependent upon personal income and sales taxes for revenue. These revenue streams fluctuate disproportionately in rapidly changing economic situations and this instability further begs for a shorter budgeting window.

Very rarely is there a free lunch, and there are several -- real or perceived -- downsides to implementing an annual budget.

First, Virginia would likely need to deviate from its 45-day "short" session in the odd-numbered years and have annual 60-day sessions. This can be done without a constitutional amendment. Our legislation will also provide a no-pay provision for legislators if we do not finish the job. If we do not pass a budget, our salary will be forfeited until the job is done.

Second, some say a disadvantage to moving to an annual budget is that it impedes longer-range financial planning. Long-range financial planning will continue and possibly be improved with more honest budgeting.

Third, some who have managed Virginia's budget like the flexibility of moving money between the years in tight times. It is an extra tool they have to manage very difficult situations. While we understand wanting to retain this flexibility, we believe annual budgets mean tough decisions could not be put off.

In conclusion, by modernizing the way Virginia crafts a budget we believe we can help the commonwealth's star shine even brighter in the future than it has in her past.

Albert Pollard, a Democrat, represents the 99th District in the Virginia House of Delegates, including King George, Lancaster, Northumberland, Westmoreland, and Richmond counties and part of Caroline County. Contact him at (804) 698-1099 or .