Virginia Gov. Bob McDonnell had the grace to call this week's good news -- the commonwealth's $448.5 million budget -- "a bipartisan accomplishment." But make no mistake: The Republican's frugal spending policies are the real reason Virginia racked up nearly $1.4 billion in total surpluses during the first three years on his watch.
When he was elected in 2009, McDonnell promised voters he would streamline state government and make it more efficient, and he has fulfilled that pledge. About a quarter ($129.2 million) of this year's surplus in Virginia comes from higher-than-predicted revenue -- a result of economic growth in this business-friendly state, not higher taxes. But most of it ($319.3 million) is unspent money from general and nongeneral funds.
The argument that Virginia was able to live well within its means during the Great Recession without a major tax increase only by starving education, health care, transportation and other critical public services is hogwash. State spending has more than quadrupled over the last four administrations, from $18 billion in 1998 to $85 billion in 2012, increasing far beyond the rate of population growth plus inflation. Virginia's surplus is the result of a deliberate policy to reduce spending instead of raising taxes.
McDonnell's decision to use $77.2 million of the surplus to give a performance bonus to state employees, who have not received a pay hike for five years, is consistent with his conservative bona fides. The bonus money will come directly out of the $187 million that state agencies didn't spend -- a reward for a job well done, not a demanded entitlement.
While McDonnell, chairman of the Republican Governors Association, was holding the line on spending, his counterpart in Maryland was doing exactly the opposite. Gov. Martin O'Malley, chairman of the Democratic Governors Association, spent Marylanders' tax dollars as fast as he got them and balanced the budget by imposing the largest tax increase package ($264 million) in state history.
Tens of thousands of productive Maryland citizens have already fled to Virginia, Pennsylvania and North Carolina to escape the punitive confiscation of their hard-earned wealth. O'Malley's "solution" to replace the lost revenue is to bring in another casino.
The long-term economic outlook of these two neighboring Mid-Atlantic states is now as different as their chief executives' governing philosophies. While the frugal McDonnell welcomes new employers to Virginia, the free-spending O'Malley is gambling Maryland's future away.