Bolling ties state budget cuts to Wagner’s revenue forecasts

As Virginia again braces for budget cuts, Lt. Gov. Bill Bolling is trying to make the past of Jody Wagner, his Democratic opponent in the November election, come back to haunt her.

Bolling, a Hanover County Republican who is seeking re-election, says overly optimistic revenue forecasts by Wagner -- as Virginia's secretary of finance -- and the administration of Gov. Timothy M. Kaine have resulted in the series of painful budget cutbacks the state has been undergoing for the past two years.

"Nonsense," said Wagner, a Virginia Beach businesswoman who resigned as finance secretary in January to run for lieutenant governor.

Faced with declining revenues, Kaine has proposed more than $7 billion in budget cuts in the past two years that include employee layoffs, furloughs, closed prisons and reduced aid to higher education.

Wagner says a global economic meltdown that no one could have predicted -- or, for that matter, did predict -- has led to the sharp decline in tax revenues.

"Who would have predicted that [investment banking firms] Bear Stearns and Lehman Brothers would go out of business or that General Motors would file for bankruptcy?" she asked. "Those were the result of the failed economic policies of the Bush administration."

Wagner said every state is in the same predicament, although Virginia's economic situation is better than that of most other states.

But Bolling countered that he and other Republicans warned in December 2007 that the Kaine administration's revenue projections were too high.

"Every economist in late 2007 and early 2008 was forecasting an economic decline," Bolling said. He did not answer when asked whether he expected a decline as precipitous as the one that occurred.

Bolling pointed to an opinion article in the Richmond Times-Dispatch from early January last year in which he wrote:

"While I hope that economic conditions improve and our economy will grow at a rate of 6.6 percent in the 2010 fiscal year, we cannot be certain of that, and we should not base our budget on such an overly optimistic revenue forecast."

In the same article, Bolling noted that "it is important to remember that while state revenues are not increasing as rapidly as had been expected, they are still increasing."

Instead of 3.3 percent growth in the 2008-09 fiscal year and 6.6 percent in the 2009-10 fiscal year, the tax revenues are projected to decline an estimated 10.8 percent in the two years, Bolling said.

"It was her responsibility," Bolling said of Wagner.

Wagner noted that drawing up the budget is a bipartisan process that also asks members of the business community to chip in with their economic projections. Bolling never attended any of the budget meetings, she said.

Bolling said he was not a member of the Governor's Advisory Board of Economists, so it was "illogical for me to attend."

The state's secretary of finance helps preside over spending and revenue decisions on which the state budget is drawn up.

Kaine appointed Wagner as secretary of finance in 2006, after she served the previous four years as the state treasurer under then-Gov. Mark R. Warner.

Speaking to the legislature's money committees last month, Kaine said the nation officially went into recession in December 2007. That same December, Kaine rejected Republican suggestions that he should reconvene an advisory economic forecasting group to lower the revenue forecasts.

To do so "might be interpreted by the public as a sign of panic," Kaine said. An updated forecast could be made two months later, he noted. In February, he reduced budget projections by more than $800 million.

Contact Tyler Whitley at (804) 649-6780 or .