Allen says he reined in state spending as governor

Republican George Allen is promising his unrelenting effort to curb federal spending if he’s elected to the U.S. Senate next year.

He says he’ll bring to Washington the same kind of "sweeping reform" he brought to Virginia as governor from 1994 to 1998. His campaign web site says that when Allen was governor, "He challenged critics and sentiment that suggested it couldn’t be done, reining in government spending and substantially reducing the size of the state workforce."

Last week, we looked at Allen’s claim he "substantially reduced" the state workforce and rated it Mostly True. Although there was a 9 percent drop in the number of bureaucrats during Allen’s administration, the state’s reliance on private contractors grew.  

In this fact check, we’ll examine Allen’s assertion that he reined in state spending. The claim runs into instant trouble because, by any measure, overall state spending increased significantly during his administration. Allen’s major effort to slash the budget and offer a tax cut was thwarted by Democrats who controlled the General Assembly.

When Allen took office in January 1994, he inherited an overall  $14.7 billion budget for the state fiscal year that started the previous July 1. At the end of his term in January 1998, he left behind a $20.7 billion proposed budget for the fiscal year that started the following July 1.

That means Allen endorsed $6 billion in additional spending when he was governor -- a 40.7 percent increase.

But looking at overall spending may be unfair. Slightly more than half of outlays during Allen’s years came from the non-general fund, over which a governor has limited control. The fund consists of earmarked revenues such as college tuition and federal highway grants.

A better gauge comes from examining the general fund, which supports public education, health programs and public safety. It’s mostly supported by state income and sales taxes.

The general fund was almost $6.8 billion when Allen took office. At the end of his term, he proposed a $9.9 billion general fund budget for the fiscal year beginning July 1, 1998.

That means Allen endorsed $3.1 billion in additional general fund spending when he was governor -- a 45.6.percent rise.

How does Allen square the increase with his claim that he reined in state spending?

Allen’s advisers say the claim does not imply that bottom-line spending went down during his term or that the former governor even slowed an historic pattern of general fund budget growth. They say the statement simply means Allen streamlined specific parts of Virginia’s government. They point to his reduction of the workforce, his repeal of many regulations and his successful initiative to reduce welfare rolls by requiring recipients to find work.

"When you look at spending, you can’t just look at the bottom line because the economy improved so much when he was governor," said Bill Riggs, Allen’s campaign spokesman. "What you need to do is look at specific reforms."

Mike Thomas, Allen’s campaign manager, offered a similar view. "I can’t recall a single time when George Allen said he was going to cut the state budget," he said. "He said he was going to eliminate unnecessary and wasteful spending."

Although 45.6 percent general fund growth under Allen may sound gigantic, in reality, it’s about average for a Virginia governor. The general fund budget has grown by 479 percent over the last 30 years, from almost $2.7 billion in 1981 to almost $15.5 billion this fiscal year.

Many factors explain the expansion: population has grown, creating greater revenues and a greater demand for services; Medicaid costs have increased dramatically, often by 10 percent a year; and inflation.

Allen tried to slow the growth by proposing a $2.1 billion tax cut in early 1995. The measure was opposed by the business community and defeated by the Democrat-controlled General Assembly. After that point, Allen had little choice but to spend the revenues coming in.

Thomas noted that a number of general fund expenditures during Allen’s administration did not expand the reach of Virginia’s government. For example:

*A settlement with federal employees who were unfairly taxed by the state cost roughly $300 million.

*The cost of the state’s mandated share of funding public education rose by more than $1 billion.

*Medicaid costs rose by $244 million.

*Allen was required to deposit $214 million in the state’s Rainy Day Fund.

Thomas also pointed out that in Allen’s final budget proposal, he left a $260 million down payment to help his successor, Republican Jim Gilmore, keep a campaign pledge to phase out the car tax.

Allen’s major spending initiative was a $400 million prison building program to keep his campaign promises to abolish parole and lengthen criminal sentencing.

Our ruling:

Allen takes credit for "reining in state spending" when he was governor. In fact, general fund spending grew by 46.8 percent from the budget Allen inherited when he was inaugurated in January 1994, and the budget he recommended before leaving office in January 1998. Even if you subtract about $1.75 billion in spending increases Allen aides say he was required to authorize, the general fund budget would have increased 20 percent under Allen’s watch.

Allen’s advisers says the statement does not imply that the former governor reduced the budget’s bottom line or slowed its historic growth pattern. They say it simply means that Allen streamlined certain programs.

Sure, Allen’s attempt to pass an historic tax cut in 1995 was thwarted by rival Democrats who controlled the General Assembly that year. Allen could accurately say he fought to curb spending.

But Allen says he reined it in. That creates an impression the bottom line shrank or was stunted in growth. We rate the statement False.

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