With the the election for the next Virginia Governor coming up next week, I have been spending time looking at campaign ads and the candidates make if they are elected.  One of the campaign ads that caught my attention was one named “Priority” by Creigh Deeds.  Take a moment and view the ad.



In this ad, Deeds is proposing his “Virginia Forward Scholarship Plan.”  This plan is designed to pay half of the tuition for in-state students if they graduated high school with a “B” average or better.  While this sounds like a good deal, I questioned the campaign and asked them how it will be funded.  I was directed to their website where they discuss the plan.  The website states:

To pay for the program, Creigh will initiate a full, comprehensive review of all state surplus sales, including state land and personal property and equipment, and sell whatever is not needed to support essential state operations. Each year, Virginia sells in excess of $10 million in state owned land and buildings, plus millions more in surplus equipment. A full review will generate approximately $28 million in annual revenue from surplus property sales that will be deposited in the Virginia Forward Scholars Trust Fund. In addition, Creigh will revamp the state’s debt collection process and redirect enhanced state debt collection, currently valued at about $12.5 million per year, to the Virginia Forward Scholars Trust Fund. By streamlining the operations for debt collection and by more aggressively selling off state surplus property, Creigh will provide dedicated funding for the Virginia Forward Scholars Trust Fund without raising taxes.

The selling of surplus items is nothing new. In fact, California made news this Summer when Governor Schwarzenegger announced that he would post some of the state’s surplus items on eBay and Craigslist. So Deeds proposal to use the revenue generated for the surplus sales towards his plan is OK. Additionally, the redirecting of funds obtained through debt collection to the plan is also a decent proposal. But I do have a few problems with this proposal.

The selling of state land to fund a reoccurring education plan isn’t very smart. As the state’s population continues to grow, land will become more valuable (and scarce) to the state. Hawaii is a perfect example where land is a scare resource. This land should be retained where it can be used for future development projects, even if it is used as a land exchange when eminent domain transactions are necessary for key road projects or other service projects. Additionally, the quantity of land for sale will vary from year to year, so it is an unreliable source of income.

On the same note, the campaign projects that the plan will cost $40 Million. The campaign is assuming that the state will earn $28 Million from the sales of surplus land and supplies plus another $12 Million from debt collection on an annual basis. While they don’t state how many students they project for this to cover each year, it is fair to say that over time, the number of students qualifying for this plan will increase. According to their website, they cite a 4-year period – being the length of time it will take for four graduation classes to populate the university system. But what happens after four years?

If the cost of the plan rises due to increased tuition rates and eligible students, and the proposed revenue streams remain constant, there will be another source of funding required to offset the plans deficit. And if the “streamlining the operations for debt collection” becomes too efficient, then the proposed revenue from that streamlining will decrease, widening the revenue shortfall for the plan. This wouldn’t be an issue for Deeds though, since Virginia Governors are limited to a single term of four years. That means, he will be out of office when the fiscal problems begin.

Even if all of the financial models for this plan were to be true, there is one overwhelming problem that this plan doesn’t address. Virginia faces a significant bugetary shortfall in their transportation funding. Deeds has made a series of proposals to pay for this shortfall to include raising taxes to generate the needed income. According to the Deeds website, there will be a projected “$100 billion shortfall over the next two decades, or an average of $5 Billion per year. Why would you establish an open-ended “entitlement” program such as the Virginia Forward Scholarship Plan that the campaign anticipates to cost $40 Million a year when the state would need to generate an additional $5 Billion on top of that to pay for necessary road improvements?

Like most domestic proposals made during a campaign, the promises made are more about enticing people to vote the candidate. Many of these campaign promises never come to fruition, such as President Bush’s urban-recreational development projects that he cited during his 2004 campaign. But if the plans are enacted, the impacts the plans have well into the future are not a worry to the candidate since they will be out of the office when problems arise. This reckless practice leads to open-ended obligations that become bloated and a financial burden on the tax payers.

I think if Deeds were to win the election, he should get his priorities in order. A 50% educational subsidy is not an necessity to the state, especially if the transportation shortfall is the most important issue in the campaign (as stated by the Washington Post). Making campaign promises with disregard to the economic fallout associated with them is not the sign of an effective manager of the states’ budget.

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