To hear some folks tell it, budget cuts in Virginia over the past three to four years have been so savage it’s a miracle there’s any state government left. We long ago cut out all the fat and hacked through the muscle; now we’re sawing deep into bone. Localities are scared stiff that the state will stiff them come January. And it’s only going to get worse. Gov. Bob McDonnell has had state agencies prepare plans cutting 2 percent, 4 percent, and 6 percent from their budgets. The stories have grown numbingly familiar.

Still: The general fund has grown roughly $1 billion from last fiscal year to this one. That represents about a 6 percent hike. So why is the governor asking agencies to plan for cuts?

… For example: From fiscal 2008 to fiscal 2012, general-fund outlays for the Department of Medical Assistance Services (that’s the one responsible for administering Medicaid and the state’s Children’s Health Insurance Program) have grown 35 percent. General-fund revenue hasn’t grown anything like that, so the difference has to come from the pockets of other programs.

Huh. Maybe we really should talk about reforming Medicaid.

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Education used to make up a bigger share of state spending. When the association first began compiling the report in 1987, elementary and secondary education made up the biggest share of state spending, and higher education the second-biggest share. Medicaid surpassed higher education as the second-biggest state program in 1990, and in 2003 it became largest state program for the first time. Since then it has vied with schools for the biggest share of state spending, but for the past three years it has been in the lead, with an increasing margin.

Maybe it’s time to consider reforming Medicaid? Before it eats up state budgets completely? And maybe we could do it without demonizing the one party that’s willing to talk about it? (Hello, Congressman Paul Ryan.)

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All highways wear out over time, despite ongoing maintenance. Over the next 30 years, most of Wisconsin’s Interstate system will exceed its nominal 50-to 60-year design life and will need complete reconstruction. When that point is reached, it makes sense to update designs to current safety and operational standards, as was done recently in the reconstruction of the Marquette interchange. And in corridors where demand is projected to exceed capacity, resulting in heavy congestion, it makes sense to add lanes.

Wisconsin already has a $1 billion per year highway funding gap. The total $26.2 billion cost of this Interstate program is far beyond the ability of current transportation funding sources to handle. Federal and state fuel tax revenues, the largest source of transportation funding, are in long-term decline in real, or inflation-adjusted, terms, and a portion of Wisconsin’s vehicle registration fee revenue is now committed for several decades to paying debt service on transportation revenue bonds issued since2003 to cover funding shortfalls. General obligation bonds, with general fund debt service, were also issued to make up for recent diversion of transportation fund revenue to the state’s general fund. To rebuild the rural Interstate and southeastern freeway system in a timely manner will require an additional source of transportation revenue.

This study explores the feasibility of using toll revenue financing to pay for this $26.2 billion reconstruction and modernization program. Under the principle of value-added tolling, tolls would not be charged on a corridor until it was reconstructed and modernized. All toll revenues would be dedicated to the rural Interstate and southeastern freeway system corridors, as pure user fees. Based on a 30-year program of reconstruction and assuming moderate toll rates comparable to those on other toll road systems, the study estimates that the entire rural Interstate program could be financed by toll revenue bonds. For the southeastern freeway system, one option is to toll only the new lanes, operating them as express toll lanes. Doing so would produce enough revenue to cover about 17% of the cost of the entire freeway system reconstruction. Tolling would be all electronic, with no toll booths or toll plazas to impede traffic. If political support could be garnered to price all lanes on the southeastern freeway system instead, our analysis estimates that the revenues would cover 71% of the cost of reconstruction.

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For the Tea Party Republicans who make up a significant part of the House GOP caucus, Boehner’s proposal is a significant retreat from “Cut, Cap and Balance.” Those who support the Boehner proposal, which is formally known as the Budget Control Act, consider it a major compromise — something they are backing only after being convinced that their first choice could never pass the Senate.

… While Obama preaches the virtues of compromise, his Democratic allies and surrogates are bashing Republicans for rejecting what the White House characterizes as earnest, good-faith efforts to find common ground. “I hope that Speaker Boehner and [Minority] Leader McConnell will reconsider their intransigence,” Senate Majority Leader Harry Reid said a few days ago. “Their unwillingness to compromise is pushing us to the brink of a default.” (At the same time, Reid has been issuing absolute, inflexible statements like, “I will not support any short-term agreement.”)

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I still support “Cut, Cap, and Balance” as the best long-term plan. While I’d love to see it enacted, I don’t see it happening with this Senate and this President. I’d initially been disposed to strongly dislike the McConnell plan. I actually changed my mind after reading his explanation. I now, reluctantly, support it as the best plan that we’re likely to get past this President and this Congress.

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The key to understanding this bill is that it focuses on government spending, rather than on taxes or deficits. The bill would achieve significant deficit reduction through cutting and limiting spending, and all of its mechanisms use spending rather than deficit targets.

Surprise, surprise: the bill consists of three parts.

1. Cut – The bill provides specific numbers to limit both discretionary and mandatory spending for FY12. These numbers would drive further Congressional action this year or else force a Presidential sequester. (I explain a sequester below.) The intent of this section is to force Congress and the President to cut spending immediately.
2. Cap – The bill would establish a new enforceable limit on total federal spending as a share of the economy. The new caps are designed to phase federal spending down to just below 20% of GDP by FY17 and then hold it there through the end of a 10-year budget window in FY21. Put more simply, this is a new enforceable aggregate spending cap.
3. Balance – The bill would increase the debt limit by $2.4 trillion after the House and Senate have passed a Balanced Budget Amendment (of a certain type).

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1. If a deal is not reached by August 2, the U.S. will default on its debt.
2. If the debt ceiling isn’t raised the government won’t be able to pay Social Security benefits.
3. The Treasury cannot use the Social Security Trust Fund to delay a default past August 2.

You can either read her explanations or watch her explanation on video.

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When Gov. Mark Dayton and state lawmakers announced that the outlines of a new budget deal were in place, the Minnesota Vikings were hoping that the door was finally open to discuss their plan for a new $1 billion stadium in the Twin Cities suburbs.

It may not be quite that simple.

Vikings owner Zygi Wilf spoke with Dayton on Friday, telling him in a phone conversation that the team wants a stadium bill to be considered in a special legislative session expected to begin next week, according to Vikings vice president for stadium affairs Lester Bagley.

“He made the case that now is the time,” Bagley said. “We’ve done everything that has been asked of us. It’s time to do it. We’re down to months left on our lease and every day that goes by, the cost of the project goes up.”

… Arden Hills is about 10 miles north of the Metrodome in downtown Minneapolis. The new facility would be located at the site of a former Army ammunition plant with plans to open in spring 2015.

Wilf and the Vikings have pledged more than $400 million to the project, which also calls for a half-cent sales tax in Ramsey County that would contribute another $350 million and $300 million in state money.

This is just disgusting. Depending on where you Google, Zygi Wilf is worth somewhere around $300 million and the Vikings franchise itself is worth around $700 million. If he wants a new stadium, he has several options:

1. invest more of his own fortune and the team’s worth into the new facility
2. ask the team’s fans to invest into the facility in exchange for benefits (priority access to available tickets? special access to memorabilia?)
3. Get banks or investors to loan or invest the needed funds

The Vikings are a cash generating franchise. If a new stadium is a good investment, Wilf shouldn’t have any problems obtaining the funding he needs. If a new stadium isn’t a good investment, Wilf shouldn’t be demanding that the Minnesota taxpayers fund his boondoggle.

It’s disgusting the way that he’s demanding that a state that’s struggled to close a $5 billion budget hole turn around and give $300 million in state money and $350 million in county money to his privately owned business. I hope the state legislature smacks him down and shuts the door on his demands.

As changes to collective bargaining powers for public workers take effect today, the Kaukauna Area School District is poised to swing from a projected $400,000 budget shortfall next year to a $1.5 million surplus due to health care and retirement savings.

“These impacts will allow the district to hire additional teachers (and) reduce projected class sizes,” School Board President Todd Arnoldussen wrote in a statement Monday. “In addition, time will be available for staff to identify and support students needing individual assistance through individual and small group experiences.”

The district anticipates that elementary class size projections for next year will shrink from 26 students to 23 students. Class sizes for River View Middle School are expected to fall from 28 students to 26 students.

Kaukauna High School classes could be reduced from 31 students to 25 students.

Huh. That’s certainly … unexpected.

(Hat tip to Glenn Reynolds, Ann Althouse, and the Milwaukee Journal Sentinal.)

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1) Tax revenues have fluctuated largely with the economy, dropping precipitously in the aftermath of the 2008 recession, but are projected to remain close to historical norms with or without expiration of the Bush tax cuts in 2012.

2) Entitlement spending has roughly doubled in the last 40 years as a percentage of GDP and is projected to remain there through 2021, pushing total spending well above any historical precedent. Thus, the CBO projects deficits as far as the eye can see.

Should we blame Bush (or rather, all that happened during his presidency) for this? In a sense, yes, but not for the reason the CBPP would have us believe; the role of Bush-era policies in the projected deficits is mainly on the spending side of the equation, not the tax side.

We have a spending problem, not a revenue problem.

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