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Posted January 10, 2013 | comments Leave a comment

Gilbert: State, localities rely too much on fed money

Lawmaker files resolution directing Joint Legislative Audit and Review Commission to study Va. funds

By Alex Bridges

Virginia and its localities' reliance on federal money may cost them the horse race if those sources dry up, a state legislator warns.

Del. C. Todd Gilbert, R-Woodstock, filed a resolution in the current General Assembly directing the Joint Legislative Audit and Review Commission to study the amount of federal revenue that Virginia receives annually at the state and local level by functional area and to determine the funds' importance and impact.

"I think that anybody who's paying the least bit of attention to what is going on in Washington understands that our federal financial situation is a house of cards," Gilbert said by phone Wednesday. "Both the state and localities have come to rely far too much on free money that magically appears from Washington.

"Much of that funding is debt and my concern is that unless we get our financial house in order in Washington that one day that will all come tumbling down and the federal government won't be able to keep pumping everybody up with more printed money, and if that happens obviously our ability to govern Virginia and provide services that are currently relied upon is put into jeopardy," Gilbert added.

Virginia and all states should prepare to become self reliant, Gilbert warned.

Local governments, law enforcement and school divisions, to name a few recipients, rely on federal money.

"There are all manner of types of federal financial contributions that would be put in peril if it all came crashing down and those services may well cease to exist," Gilbert said. "Part of my intention is of course to reinforce the point that we are all betting on a losing horse if the federal financial picture doesn't change and we really need to fundamentally change the way we do business if Washington isn't going to fundamentally change the way it does business."

Virginia received $118.5 billion in federal money as grants, wages and salaries, direct payments to individuals and procurement expenditures in 2008, according to the resolution.

In addition to direct funding to the state, Gilbert noted that jobs created through the federal government could disappear without that source of money.

Gov. Bob McDonnell's proposed budget introduced in the legislative session includes $6.7 billion and $7 billion for each year of the biennium, according to the resolution.

Gilbert cites in his resolution that Virginia serves as home to major military installations, such as the Pentagon and the naval port in Hampton Roads. Likewise, tens of thousands of federal government employees who work in the Washington, D.C., metropolitan area reside in Virginia. Many private sector jobs in the state rely on companies with federal government contracts.

Virginia ranks 12th in population, 11th in gross domestic product and 10th when measured by per capita gross domestic product, according to Gilbert's resolution.

As Gilbert explained, the federal government hands down mandates to the state and the impact of which localities ultimately feel. Schools must follow certain federal education guidelines, Gilbert noted. Likewise, localities must adhere to wastewater regulations imposed by the U.S. Environmental Protection Agency, he added.

"What I intend with this study is to be armed with information and maybe we need a comprehensive look at all of that," Gilbert said.

"Who knows what would be left if the federal financial picture became so dire that it couldn't pay its bills anymore," Gilbert said. "But I think the bigger issue is the degree to which everyone has come to just rely on this money being part of the equation."

Gilbert recalled that he warned officials with the Shenandoah County Public Schools from relying too heavily on federal stimulus money to cover certain budgetary needs.

"I cautioned them against doing that because that money was going to be fleeting and not be there after that, and sure enough that was the case," Gilbert said.

In fact, Superintendent B. Keith Rowland at a Board of Supervisors meeting Tuesday reported to its members the levels of federal funding took a nosedive after the stimulus money dried up. However, Rowland also used that report to show that state funding for operating expenses for the school system has fallen over the past several years, even as the General Assembly has increased allocations for the county that come with strings attached.

The resolution requests that JLARC review all sources of Virginia revenue from federal government spending. The resolution adds that state agencies shall provide assistance to JLARC for the study as requested.

The resolution also directs JLARC to complete its meetings related to the study by Nov. 30, and that the chairman submit an executive summary of the commission's findings and recommendations to the Division of Legislative Automated Systems no later than the first day of the 2014 regular session of the General Assembly.

But as Gilbert noted, just asking for such a study doesn't mean his fellow legislators might side with his request.

"It really opens up a can of worms," Gilbert said. "I don't know that everybody wants to know the hard answers that we may have to grapple with. But I'm tired of watching people kick the can down the road and I want to start preparing for the inevitable if they keep doing that.

"But that doesn't mean everybody will agree with me," Gilbert added. "Not everyone may want to know those answers."

Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or abridges@nvdaily.com

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