Different Agendas

 

DATE:               Thursday, September 7, 2007

 

MONDAY, AUGUST 28, 2007

 

This proved to be a busy day at the seat of our state government.  A meeting of the joint money committees to hear the Governor’s report on the progress of the state during the past fiscal year had been set for the last Monday in August on the legislative calendar since last November.  The agendas for the day changed rather drastically during the year.  The budgetary impasse leading to the most extended special session known to Capitol watchers, the unfinished business of trying to come to grips with the transportation crisis, and the revelation about the miscalculation of sales tax money for public education caused a change in the way this day developed from similar occasions in the past.

The regular events on this day would have been for the Governor to make his speech to the assembled members of the three “money committees”—The House and Senate Finance Committees and the House Appropriations Committee--, then the Governor’s staff people—The Secretary of Finance and the Director of Planning and Budget—would present more detailed information about the revenues for the past biennium and answer questions from the members.  Most of the questions would be for clarification of the information provided.  Normally, however, the tough questions are saved for the December meeting when the Governor presents his budget.  There may have been some pointed, politically motivated questions if the past biennium had been a financially tough period. 

This year the agenda for the day was a bit more extensive and the atmosphere was a bit more strained.

 

A MORE EXTENSIVE AGENDA FOR THE DAY AND FOR THE HOUSE

 

In addition to the usual Joint Money Committee meeting, the Joint Rules Committee held a meeting: there was the session of the full legislature (just another of the meetings in this continuing Special Session of 2006): the Senate Finance Committee held a separate meeting and the House Appropriation Committee had an intensive two-and-a-half hour afternoon meeting (really an investigative hearing on the “Recent Errors in the Sales Tax Allocation for Local School Divisions”).

The issue of “the education error” and its possible political ramifications were obviously uppermost in the minds of the Delegates.  The Senators took a much lower key approach to this misallocation.  From the pointed questions asked by the house members at the morning joint committee meeting, to the dramatic speeches on the floor during the meeting of the full House, to the digging--often sarcastic-- questions to the administration staff at the Appropriations Committee, the goal of the Republican Delegates seemed evident to the Capitol watchers.  They really wanted to make the Warner administration—which had touted its financial integrity—look as bad as possible.

The House Majority Leader, Morgan Griffith, in a floor speech referring to this education allocation error and several other “miscalculations of public education funds” as a definite  “…cover up…” and he wondered if “… the past administration was mathematically challenged!”  He also wondered if this cover-up was “…purposeful and deliberate or just an exercise in a slight-of-hand?”  He also wondered, “…if Fairfax County hadn’t made the error known” …would we ever have known about it?”  He acknowledged the current Governor didn’t know about it but did now and stated, “If we see the Governor addressing this transgression with a wink, that just won’t be good enough!”

The House Democrats tried to force the Republican dominated House to take a vote on HB 5032. The Governor had sent this bill to the House Floor to correct the misallocation.  Under the normal protocol the sponsor of the bill was The Appropriations Committee Chair, Vince Callahan.  Of course the Republican majority had a firm caucus position. 

The Democrat members argued that not to pass the bill was going to disrupt localities in implementing their school budgets and thus hurt the school children of the state (an exaggeration--the amount of money under discussion was less than one-half of one percent of the state appropriation for public education).  Vince countered with the points that the bill had been given to him only that morning and it needed “…proper consideration and waiting until the Assembly returns on September 27 would give the Appropriations Committee the time to work on it properly.”  Needless to say the Republican majority prevailed.  (See below for more details on this issue.)  

While the House members were delivering their speeches under the Morning Hour Rule, the Senate recessed briefly, allowing the Senate Finance Committee to hear an explanation of what had happened.  Secretary of Finance, Jody Wagner, and Director of the Department of Planning and Budget, Ric Brown gave their presentations. The Committee Members and most of the other Senators listened. With a different agenda--maybe to solve the problem rather than point fingers or maybe to support their former Director of the Senate Finance Committee’s staff--the Senators accepted the explanations.  After returning to their chamber the Senators voted unanimously for Chichester’s SB 5020, the companion bill to HB 5032.  Both bills now reside in the House Appropriations Committee which is scheduled to meet on Monday, September 18.  Reliable sources indicate these bills will not be on the agenda for that meeting. This means no action will be taken until the week of September 25 when the Special Session of 2006 is suppose to be concluded. 

Both houses, with very little debate, passed the Governor’s substitute bill for HB 5019 (and SB 5019) dealing with the repeal of the “death tax” and modifying the conservation tax credits.

 

THE NEXT STEPS TO BRING THE SPECIAL SESSION TO A CLOSE 

 

Both houses adjourned until Wednesday, September 27 for the “final session of the Special Session of 2006.”  The leadership of both houses, following the Joint Rules Committee meeting in the morning had indicated an agreement had been reached to reconvene on the 27^th.  The plan is to have committees dealing with transportation bills (primarily the House Finance Committee) meet on Monday and Tuesday, the 25^th and 26^th, start the full sessions on the 27^th and finish by Saturday the 30^th.  It will be interesting to see if the House Appropriations Committee decides to meet early this week as well. 

 

THE GOVERNOR’S CHALLENGE

 

In his August 28th speech to the money committees the Governor used the term “working together” six times in the early part of his delivery.

He emphasized that:

“In its first ever ranking of the best states for business, Forbes ranked Virginia first.”

“For the first time ever, Virginia’s ‘Rainey Day’ fund is full.”

“The nonpartisan Tax Foundation ranked Virginia 41^st among the 50 states in state and local individual tax burden.  Virginia’s business tax burden was cited as the nation’s lowest by the Council on State Taxation.  And the U.S. Chamber of Commerce designated Virginia as one of the five top states for overall legal fairness.”

“WORKING TOGETHER, we have ensured that Virginia remained one of only a handful of states that still carries the best-possible Triple-A bond rating.”

He finished this introductory part of his presentation by stressing the state’s low unemployment rate and the new jobs created in the past year.  Then again said, “We contributed to this by WORKING TOGETHER—Democrats and Republicans, executives and legislative branch—and I thank you for your service to our Commonwealth.”

He continued to outline other 2006 accomplishments noting that by WORKING TOGETHER we get results.

He briefly mentioned that the executive branch had made “…a significant bookkeeping error in allocating sales tax revenues for education.

“I accept responsibility for this.”  He noted his administration was bringing in outside experts to review their process to minimize the chances of this happening again.  He then stressed, “Honorable, valued, and veteran state employees from the previous administration—and my own—have stepped-up and assumed responsibility as well.”  He then asked the Assembly to pass his legislation to fix this problem before the school year begins, like today.  (This did not happen!)

After going over the transportation situation, Governor Kaine seemed to soften his previous stand that a new stream of income of approximately $1 billion per year was needed to help solve the crisis.  He noted that the House and Senate leadership, the Commonwealth Transportation Board, and outside groups, “…persistently return to the figure of $1 billion per year as the magnitude of new dollars needed statewide to match our system with the needs of our people.”  Yet, in the same breath (actually a breath before the last quote) he stated, “There is no magic number, and our success cannot be measured just by a budget number.”

He stressed points on which there is already general agreement (rather than the  extreme differences between the House and Senate positions), so he could “In closing, let me just say: I know we can do this WORKING TOGETHER.” Then, three sentences later, he could conclude with, “We are all proud to be Virginians.  Let’s WORK TOGETHER in the next weeks to make them proud of us.”  DO you think this was a good agenda?

The Governor then retired from the center stage (as is customary in this type of presentation) and left his subordinates to take the heat of the questions regarding the “…significant bookkeeping error…”  And from the Republican House they did take a lot of heat as noted above and below.  This heat has not calmed down in the last week and a half.  Some Republican House members, the media, and even some editorial writers, keep fanning the flames. 

The Governor’s efforts to have the various people with different views WORK TOGETHER doesn’t seem to be happening.  Thus, his challenge, in the next three weeks, is to devise some way of making this “togetherness” happen.  That is a very tough task. Since he delivered his address to the committee members and via the media, the people of the Commonwealth, The Governor has made several very political speeches.  He has again pledged his efforts to help defeat a Republican U.S. Senator, who happens to be a favorite of many of the Republican legislators he needs to bring to the table for the “working together to make Virginians proud.” 

It appears to most of the Capitol observers, the atmosphere isn’t right, the timing isn’t right, and the politics aren’t right, for the scheduled final meetings of the 2006 Special Session to have “togetherness.”  Will anything be accomplished?  It is very, very doubtful.  In our opinion, the gridlock will continue. 

 

THE FALL OUT FROM A BOOKKEEPING ERROR

 

The Appropriation Committee’s Meeting—August 28, 2006 in the pm

 

The meeting of the Appropriations Committee was “advertised” as an opportunity for the committee members to review the Governor’s Bill HB 5032 to help “hold localities harmless for the error which would send more money to the localities than they were suppose to receive. But, when all was said and done the meeting was an interrogation of the Administration’s main financial people.  Whether the goal was to find out as much as possible about the “…significant bookkeeping error on allocation of sales taxes to public education…” or to make political hay out of something they perceived to be an embarrassment to the past and present Democrat Administrations wasn’t hard to determine.

The JLARC staff briefed the committee on its findings and its recommendations at the beginning of the meeting.  Everyone in the room, including the spectators, should have understood what errors were made, when they were made and who was responsible. 

JLARC’s report noted, “The errors remained undisclosed.”  (The public certainly knows about the fact there wasn’t the proper disclosure—the media has given it enough attention.)

The Report also stressed, “…the consequences of the errors has no impact on Transportation Trust Fund sales tax estimates and that the decision of the Secretary of Finance to defer immediate resolution and to not inform the Governor or legislative budget committees proved inappropriate given the ultimate magnitude of the errors.”

JLARC also made several recommendations on how to avoid this type of oversight and non-disclosure in the future. Most of the questions centered on who knew about the errors and why wasn’t it reported and who was going to be “called on the carpet.”  However, at least two of the questioners point blank asked the present Secretary of Finance if the Commissioner of the Department of Taxation would in the future exercise greater oversight of the forecast function as recommended by JLARC?  Her answer given in a very strong voice, “Definitely!”

On the second recommendation which would require the Governor to establish by executive order,  “…a process for disclosure and correction of significant errors or adjustments in the State revenue estimates after the introduction of the Budget Bill…to include a threshold amount of an error when disclosure and correction would be mandatory…and a requirement for notification of the legislative budget committees…and a time limit on disclosure to ensure prompt notification,” a committee member asked if Governor Kaine would implement such a procedure.  The Secretary replied, “The Governor is reviewing this recommendation, and will probably issue an executive order, but it may be more restrictive than establishing a threshold.”  She emphasized, “This administration will not tolerate not reporting any error!”

The toughest questions were directed at the Director of the Department of Planning and Budge (DPB), since he is the only official who was in the original meeting where the first error was discussed.  This meeting was called by the then Secretary of Finance after the Director of DPB had identified the first error and reported it to the Secretary’s office.  Representatives from the Dept. of Taxation and DPB were present.  According to the JLARC report, “(The) group agreed there was (an) additional problem, but couldn’t pinpoint it.  The meeting adjourned with expectation TAX staff would identify the problem.” 

TAX never reported back to the Secretary or DPB.  DPB got caught up in developing Governor Kaine’s budget amendments and didn’t follow up with TAX.  DPB anticipated the normal re-estimation of the Sales Tax in mid session when this “bookkeeping error” could be easily resolved.  In 2006 there was no adjustment to the Sales Tax estimates (the first time that has happened in years!).  So the error got carried forward in the budget process.

You can image the questions thrown at Ric Brown, the DPB Director.   “Why wasn’t the error reported to the new Administration.”  “Shouldn’t the outgoing Governor been told so he could make the decision?’  Etc, etc. and so forth.  The questions came at this 40 year veteran of State Government service fast and furious.  He repeated the facts time and time again and continued to state firmly, “Yes, it was an error in judgment and certainly inappropriate.”  To his credit the Director never referred back to JLARC’s report which stated, “The decision by the Secretary of Finance (to whom DPB reports) to defer immediate resolution,… proved inappropriate given the ultimate magnitude of the errors.”  So the Director took the heat!

The heat is continuing to be applied.

Editorial writers have stressed that “silence is not golden” in chiding the actions of the previous administration in not reporting these errors to the proper legislative authorities.

The Charlottesville Daily Progress concluded its editorial by stating, “Our government leaders need to be open about that government – not just with each other, not just with incoming governors, not just with the legislature, but ultimately with us, the people.  Mr. Bennett and Mr. Brown failed to do that, and apparently failed to consider that such transparency was important.”

“And that is the biggest failure of all!” 

Other’s had even harsher words for both the Governor and his administration.  An article from the Roanoke Times noted, “Kaine took full responsibility for the mistake when he spoke to legislative-budget writers last week.  But Griffith (Delegate Morgan Griffith, The House Majority Floor Leader) said Kaine should take action against officials who knew about the error, and left the Governor and lawmakers in the dark.”

“Griffith singled out Richard Brown, the Director of the Department of Planning and Budget under Warner and Kaine.  Griffith stopped short of calling for Brown’s dismissal.  But, in an interview, Griffith said, “I’d like to hear something other than, ‘I have full confidence in the people who were responsible for the error.’ ”

The Majority Leader feels that the Kaine Administration should use harsh measures for what really amounts to a “bookkeeping error.”  Not because of the error, but because they did not reveal the mistake in the first place.  Governor Kaine’s response has been, “let’s fix the problem and move ahead.”  It still remains to be seen how the people will react to this type of tough politics.

 

Links to Previous Giesen Perspectives:

August 23, 2006 June 30, 2006 June 1, 2006 May 24, 2006 April 10, 2006 March 30, 2006 March 20, 2006 March 6, 2006 Feb. 27, 2006 Feb. 17 and 19 2006 Feb. 10, 2006 Feb. 3, 2006 Jan. 27, 2006 Jan. 23, 2006 Jan. 16, 2006 Dec. 21, 2005 Nov. 9, 2005 Oct. 21, 2005 Sept. 16, 2005 Aug. 26, 2005 Aug. 19, 2005 July 7, 2005 June 8, 2005 May 27, 2005 April 7, 2005 March 10, 2005 February 21, 2005 February 14, 2005 February 8, 2005 January 31, 2005 January 15, 2005 December 23, 2004 November 19, 2004

 

 

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