January 2009
The Virginia Business Council (VBC) supports state fiscal policies that are consistent with four fundamental principles:
Appropriate fiscal policy should enhance free enterprise and economic development, supporting the creation of a robust economy with economic opportunity and prosperity. The overall tax burden should be low and commensurate with the provision of efficient and necessary services. The Commonwealth’s fiscal policy should result in taxes that are broad based and should not unfairly burden any single industry or segment of the economy.
Appropriate fiscal policy should adequately address the Commonwealth's critical infrastructure needs particularly in the areas of education and transportation. The VBC has called attention to the need to increase the Commonwealth’s support for education and transportation which are the building blocks for economic growth, opportunity and prosperity.
Substantial new revenue is needed in order to achieve the necessary investments to meet Virginia’s K-12 education Standards of Quality, maintain excellence in Virginia’s higher education system, and create a functional transportation system that allows for the efficient movement of people and commerce. Numerous citizen and government task forces have concluded that Virginia’s tax structure does not produce the necessary amount of revenue at the appropriate level of government for the desired level of services.
Some new revenue may be available from the Federal Economic Stimulus package under consideration in the U.S. Congress. The VBC supports the development of a transparent process that allows federal economic stimulus revenue to be invested in critical infrastructure priorities. Investment in key priorities can be a strong catalyst for improved economic growth in the Commonwealth.
Appropriate fiscal policy should maintain the Commonwealth’s AAA bond rating which has been an important symbol of Virginia's economic health and strength. Actions to address Virginia’s serious budget shortfall should not increase debt to a level that would jeopardize the AAA bond rating and cause the loss of this important indicator of the highest level of fiscal responsibility. Loss of the AAA rating would damage Virginia’s fiscal reputation and result in increased interest costs, adding to the already serious fiscal challenges.
The VBC urges a thorough dialogue and debate on the solutions to Virginia’s fiscal and infrastructure challenges. However, the discussion must result in decisive action to create and implement policies consistent with the stated fundamental principles.