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McAuliffe’s $109 Billion Budget is a Fiscally Reckless Shell Game

Bearing Drift is exposing McAuliffe’s fiscally reckless shell game of a budget. Read on for the details of his budgetary trap and reactions from Republicans who aren’t falling for it.

Governor Terry McAuliffe has unveiled his proposed biennial budget, which to nobody’s surprise, weighs in at a whopping $109 billion and comes packed with new taxes, new spending, and McAuliffe’s familiar call to expand Medicaid under Obamacare.

With billions in new spending, McAuliffe’s proposal would be the first to cross the $100 billion threshold, representing a 12.4% increase over the $97 billion biennial budget adopted in two years ago following a bitterly partisan fight precipitated by McAuliffe’s threats to shut down the government [1] if his demands for Medicaid expansion were not met. Crisis was averted at the last minute when McAullife rescinded his demands.

McAuliffe’s tax hikes and out of control spending are dead out of the gate. Republican leaders from across Virginia have forcefully stated their opposition, while no serious commentators expect Medicaid expansion to pass the 66-member Republican majority in Virginia’s House.

Inevitable defeat hasn’t stopped McAuliffe from engineering a fiscally reckless shell game with this budget in an attempt to mislead and confuse voters with his laughably unserious and unbalanced straw man of a “compromise.” Rather than work with Republicans to find common ground, McAuliffe has taken the low road, choosing to put his partisan politics and talking points ahead of serious efforts to produce the fiscally responsible and balanced budget Virginians need.

While McAuliffe has yet to rule out another government shutdown, this year’s approach appears more conciliatory on its surface than the hard-line position he’s adopted in years past. Included in McAuliffe’s proposal are a number of tax cuts intended to appeal to the GOP, however Republican support remains unlikely given McAuliffe’s proposal for a new tax on hospital patients and residents of Virginia’s nursing homes amounting to 3% of each facility’s revenue.

Revenue from this “bed tax” – as it has become known – would be used to fund the ongoing increases in state costs connected with Medicaid expansion under Obamacare.

While McAuliffe’s bed tax would be paid by hospitals and nursing homes, the costs from this new tax will ultimately be passed along to sick patients and elderly Virginians, resulting in higher health care costs across the Commonwealth.

In his annoucement, McAuliffe shamelessly stated, “…I wish I could have included funds for every one of your requests, but as you know, I’m CUTTING taxes, not raising them” – despite McAuliffe himself proposing a new tax on the sick and elderly to fund his plans for Medicaid expansion.

As in years past, Terry McAuliffe, the consummate Washington insider, has resorted to playing fast and loose with the truth in his unending quest to grow Virginia’s government and saddle future generations with a fiscally irresponsible expansion of Medicaid in the face of rapidly increasing program costs [2] which threaten present budgets with $956 million in additional spending, while foreshadowing further growth to come.

Rather than work in a bipartisan manner to produce a fiscally responsible and balanced budget, or contain the unchecked growth in Medicaid expenses by rooting out waste, fraud, and abuse, McAuliffe has engineered a fiscally reckless shell game designed to distract from his Washington-style effort to mislead taxpayers into supporting a 12.4% increase over Virginia’s prior biennial budget.

In promoting his fiscally reckless shell game, McAuliffe is attempting to lure Republicans into his trap with a 0.25% reduction in the corporate tax rate, a move estimated to cost just $64 million over the budget’s two-year horizon, along with other minor tax reductions, such as a new $15 million tax credit incentivizing research and development investment, or a $70 increase to Virginia’s personal and dependent annual income tax exemption.

In return, McAuliffe expects to receive a $12 billion increase in spending alongside a tax-fueled expansion of Medicaid under Obamacare.

McAuliffe’s extremely unbalanced straw man of a “compromise” does not constitute a serious effort at bipartisan cooperation and will be dead on arrival. Despite knowing full well that Medicaid expansion has zero chance of passing Virginia’s House of Delegates, McAuliffe is cynically attempting to mislead voters into believing he’s proposed a serious compromise – which he hasn’t.

Furthermore, McAuliffe’s proposal for new taxes on the sick and elderly constitutes a tacit admission that Medicaid expansion will indeed increase the Commonwealth’s spending on the program, undermining his prior claims that Medicaid expansion would be revenue positive.

Governor McAuliffe’s fiscally irresponsible budget does nothing to rein in the out-of-control spending which has brought Washington to the point of fiscal crisis and now threatens to swell expenditures in the Commonwealth, to the long-term detriment of taxpayers and job creators who have for years relocated to Virginia for its business-friendly climate.

McAuliffe’s patently false claims are worthy of attention from political fact checkers.

Grover Norquist’s Americans for Tax Reform came out swinging against McAuliffe’s tax hikes and out of control spending.

“Unfortunately, Gov. McAuliffe’s budget does nothing to rein in out of control spending in Virginia and only seeks to make it far worse,” wrote ATR’s Paul Blair [3], in calling McAuliffe’s budget “full of costly gimmicks and shell games.”

“As North Carolina readies for another reduction in their corporate rate, down to 3 percent, the best McAuliffe has to offer is a quarter percent reduction promise contingent on an expansion of Obamacare in the state.”

Virginia’s Republican leaders aren’t fooled by McAuliffe’s fiscal shell game and won’t be falling into his trap.

Ed Gillespie, one of two declared contenders for the GOP’s 2017 gubernatorial nomination, quickly shot down McAuliffe’s celebration of Washington-style growth in government.

“I guess we disagree on what we should celebrate in Virginia. I believe we should celebrate job creation and a stronger economy, not growth in government,” responded Gillespie. “What we need are new jobs, not bigger government. Drop Medicaid expansion, grow our economy.”

Technology entrepreneur Pete Snyder had even harsher words for McAuliffe’s budget.

“We always knew Terry McAuliffe was a creature of Washington, and now that he’s served up the fattest budget in the history of Virginia, we know Terry gets his spending discipline from there as well,” said Snyder, in a statement to Bearing Drift. “Virginia’s economy has flatlined under the Governor’s leadership and saddling our next generation with a massive expansion of Obamacare and billions of dollars of government spending simply isn’t fiscally sound.”

State Senator Tom Garrett (R-Buckingham) was most forceful of all in his condemnation of McAuliffe’s bloated budget.

“Today I was stunned by Governor McAuliffe’s giddy announcement regarding the first $100,000,000,000 budget in Virginia history,” said Senator Garrett, in a statement to Bearing Drift. “It is shameful that the Chief Executive of the Commonwealth of Virginia would trumpet that he is proposing to set a record for the most money spent. Every penny in this mammoth spending plan was earned by the hard working taxpayers of Virginia. Governor McAuliffe is proudly planning to set a record spending your hard earned money.”

Garrett continued:

“While government is required to spend money on core essential functions, this $100 billion budget is brought to you by the same administration that opted to spend $1.5 million in last year’s off year budget on tents and recreational items rather than give 3000 teachers a $500 raise [4]. That budget was a fraction of this upcoming $100 billion full budget and it was replete with items wholly inappropriate for state spending, especially in a time of a major projected shortfall.  That is why I was the only member of the Virginia Senate to vote against it. I will not condone or sit idly while this administration gleefully shovels your hard earned dollars into the void. My office will scour the budget and work tirelessly to thwart all frivolous spending measures listed therein. Please call your legislator and ask them to follow suit.”

Senator Garrett is widely rumored to be a contender for Virginia’s gubernatorial nomination in 2017. Though he has yet to announce, the conservative stalwart’s two-night hospitality suite at RPV’s annual Advance [5] drew scores of supporters, many of whom expressed enthusiasm for a potential run.

In a joint statement issued by Virginia House of Delegates Speaker William J. Howell (R-Stafford), Majority Leader Kirk Cox (R-Colonial Heights), Caucus Chairman Timothy D. Hugo (R-Fairfax), Majority Whip Jackson H. Miller (R-Manassas) and House Appropriations Committee Chairman S. Chris Jones (R-Suffolk), House Republican leaders expressed their dismay with McAuliffe’s counterproductive proposal, declaring:

“The Governor has raised expectations and over promised. It is unfortunate to see Governor McAuliffe include Medicaid expansion in his budget again, which he knows the General Assembly does not support. Predicating economic development priorities and tax cuts on assumptions related to expansion is counterproductive and only makes it more difficult to produce a budget on time. Developing the budget is a collaborative process between the Governor and the General Assembly, and we are much more productive when we emphasize areas of common ground.”

Republican opposition against McAuliffe’s fiscally reckless shell game promises to stop the Governor’s unserious proposal in its tracks. Once McAuliffe has finished playing politics, Virginia’s leaders will need to sit down and draw up plans for an actual budget and get down to the business of governing.

Hopefully the forthcoming biennial budget can be crafted by adults, avoiding a repeat of McAuliffe’s previously threatened government shutdown, along with the risks it brought to Virginia’s economy, alongside important public safety and educational priorities.