Gubernatorial race focuses on state’s financial health

"I am able to report to you, our state government’s financial house now stands on solid ground," said Gov. Neil Abercrombie.

Although that was the sound-bite line from Abercrombie’s 2014 State of the State speech, it also was the opening trumpet call for the 2014 governor’s race.

Abercrombie has drawnan unusual opponent in the Democratic primary: state Sen. David Ige, chairman of the Senate Ways and Means Committee.

Ige is as studious as Abercrombie is fiery. Ige is as reflective as Abercrombie is prone to outbursts. Both are dedicated to public service and both will have to now prove which of their ideas and leadership have the most merit.

The state budget appears to be the first battleground.

This is great news because although much of the state spending plan details projections of future check writing, there is a history of what the two men have already done.

Saying that "we have strategically managed our resources," Abercrombie told lawmakers the state now has a general fund balance of $844 million.

If the state has money today, says Ige, it came not from any Abercrombie strategy, but from the budget cuts ordered by legislative leaders, including Ige’s own Ways and Means Committee.

"In the past three years, I have worked with my colleagues in the Legislature to make tough decisions to build a responsible financial plan," Ige said. "The $844 million surplus is a direct result of the nearly $800 million in cuts that the Legislature has made from the governor’s proposed budgets during his tenure."

Figures produced by WAM show that the 2011 Legislature cut the Abercrombie budget by $619 million and last year it sliced another $254 million from Abercrombie’s spending plan.

Indeed, Ige said Abercrombie should be thinking more about ways for the state to encourage the economy.

"I am disappointed that growing the state’s economy is not a priority of the governor," said Ige.

As this legislative session starts, there is one budget prescription that both Ige and Abercrombie appear to be ignoring: planning for the bad years.

While Abercrombie’s budget calls for rebuilding the state’s rainy day fund, that had already been anticipated by the spending directions of past state budgets.

But, national budget experts are advising using good times to start planning for bad times.

Governing Magazine’s Susan K. Urahn writes in the current issue that while 46 states have rainy day funds, few have automatic ways to adjust when state tax collections go up and down.

"Virginia compares current-year tax collections to historical trends. When revenue growth is unusually robust, lawmakers must place a larger portion of the surplus in reserves. Arizona, Indiana, Massachusetts, Michigan and Texas impose similar conditions on the use of a surplus," she writes.

Wishing and hoping for more tax collections when the state economy shrinks doesn’t work; we already went through five years of that.

Ige appears cautious in his budget approach, saying, "We must address the unfunded liabilities of public employees before we can truly begin talking about a surplus in the budget."

Abercrombie has said that he is already working on that in a "sustainable" manner, but there is still much in the budget that both Ige and his House counterpart, state Rep. Sylvia Luke, question.

Watch for this year’s political interpretation of how much of the state’s money is saved, and how its spent, to be the first flash point in the race for governor.