State revenue growth

Published 12:00 am Tuesday, January 25, 2005

Economic forecasting is not unlike forecasting the weather in that the forecast can change quickly.

We must admit we were skeptical initially of calls for some state GOP lawmakers to roll back last year’s $1.4 billion sales tax increase in the wake of

higher-paced growth than anticipated.

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It wasn’t that long ago that the state was faced with a $6 billion budget shortfall created by the tried and true short-sighted formula for disaster of large tax cuts without offsetting cuts in spending, much like what’s going on in Washington.

As a result, the state was unable to meet its constitutionally-mandated obligations and a courageous group of lawmakers, led by Suffolk’s Del. Chris Jones and a few others, put the good of the state ahead of their own political interests in enacting last year’s tax increase, preserving Virginia’s excellent bond rating and putting the state on sound financial footing.

Now, however, comes word that tax collections were up 20 percent in December over a year earlier, pushing general fund revenue growth for the first half of the budget year to 13 percent, far better than official forecasts.

The Associated Press reported last week that general fund revenues grew by 18.7 percent in December. Even without last year’s tax increases, growth would have reached 15.5 percent and 10.9 percent the first half of the year.

An annual growth rate of 8.2 percent would be sufficient to fund all the spending in the current budget.

You can anticipate many GOP lawmakers saying &uot;I told you so&uot; this coming week and pushing for repeal of last year’s tax increase.

It’s certainly tempting and a sold argument can be made for doing so. Nonetheless, such a move would be short-sighted. It’s far too soon to think that we are out of the woods.

Double digit growth such as that experienced is the exception, not the rule. It will not last.

The country is at war and there’s no way of knowing what tomorrow will bring. Lawmakers did the difficult work last year. Now that times are good, money should be used to address critical needs such as transportation and education. If last year’s tax increase is repealed, it’s not likely enough courage would be mustered again should the need arise, and it will.