State Needs to Catch Up, Godwin Says
Mr. Speaker, Mr. President, members of the General Assembly, distinguished guests and my fellow Virginians:
Once more, I extend to the members of the House of Delegates and the Senate of Virginia the warmest of welcomes to this historic capitol, and to your labors on behalf of Virginia.
The familiar faces I see among you stir old memories, and rekindle friendships forged in the heat of debate, and tempered in the cool of the evening.
Some of you have yet to savor the traditions of this body. You will find that they become very much a part of your lives, the more so because they are so willingly shared by the more seased members.
You have come here, freshman and veteran alike, at a time of crucial decision for Virginia.
Two years ago, as a new governor with the expectations of the electorate still ringing in my ears, I urged upon this body a series of new dimensions for this commonwealth.
You responded with the first major new tax in more than a century, making possible unprecedented commitments to education, to highways and to every phase of public service.
Wise as you are in the ways of Virginia and of her government, you realized then that these were long-range commitments, that they were, in effect, a down payment on Virginia’s future.
Willingly, our people accepted the new burden you imposed because they could see immediate returns; an increase in teachers’ salaries twice as large as ever before, new millions returned to each community for public schools, new community colleges already overflowing, a record number of new buildings on our college campuses, new help for hard-pressed summer schools and the promise of state aid to kindergartens.
They could drive the new four-lane highways. They could see new mental health clinics and new mental hospital buildings. They could look forward to three times as many state parks. On every front, they could see that Virginia was moving, and they approved of what they saw.
In normal times, these new beginnings would have been handsome laurels on which you could rest. But for Virginia these are not normal times.
Must Catch Up
Our people are restless with change, impatient with things are they once were. As events have unfolded, it has become clear to them and to you that much of what you have done has been a catching up. Now comparisons with other states tell us unmistakably that even this is not fully accomplished.
Two years ago, you made possible the largest salary increase in history for our public school teachers, but today these salaries still are below the national average.
You supported the national average as a benchmark for our colleges and universities have been hard put to maintain even this standard.
Great as they were, your increased general fund appropriations for public schools have not attained for Virginia her rightful place among the states, and the pace continues to quicken. The disparity between one school district and another across Virginia still persists.
In spite of a completely new system of community colleges, and vast expansions at our four-year colleges, Virginia is still in the lower echelon of the South and of the nation in the percentage of her college age population actually in college. Surely in this respect, our people would have us do more.
For Virginia, the community college program was a major innovation, but today every state except one has publicly supported two-year colleges. California has 78, New York has 35, Florida has 25, North Carolina has 23, Alabama has 14, Virginia has 8.
Realizing that this state will never have a great system of higher education until we improve and expand our graduate programs, you provided a million dollar graduate incentive fund two years ago. But again, other states were ahead of us, and in the interim, Virginia has actually slipped back among the states in the number of graduate degrees awarded.
Even with new highway taxes and reduced diversions from the highway fund, 40 per cent of the interstate system and sixty per cent of the arterial system remain to be completed. Meanwhile, the need for urban throughways becomes every more pressing.
Despite new buildings at every mental hospital site and new community clinics added every year, Virginia’s rank is low among the states in expenditures behind each mental patient.
Despite a beginning on seven new state parks, we turned thousands away last year, and we will again, until we realize you commitment to triple their number.
In the fields of public health and welfare, we must make a beginning on the new federal program of Medicaid at a cost to the commonwealth of some $20,000,000 in the last year of the next biennium alone, or lose all federal funds for medical care payments in public assistance programs. This cost to Virginia will certainly multiply drastically in the years ahead.
But if we are confronted with new dimensions of need, we can count also on new dimensions of ability to meet those needs. Incomes are rising with virtually full employment. New Industry, commerce, world trade, continue to flow in our direction.
Most important of all, our people are ready. Time and time again in the past two years, they have let it be known that they would have you continue what you have begun.
With a minimum of complaint, they have accepted the sales tax because they knew it would bring better state and local services.
Many of them, including some of our soundest financial thinkers, are now asking why Virginia should not pledge her credit to house her institutions.
But our immediate concern is that these new dimensions in the thinking of our people are dramatically reflected in state agency budget requests for the coming biennium.
The general fund budget two years ago included operating funds from all sources totaling $978,000,000 in round figures. Comparable requests for the next two years total $1,483,000,000.
Where you provided $103,000,000 in capital outlays two years ago, these agencies have requested nearly $250,000,000 for the next biennium.
These requests are not visions of sugar plums. They are no more than the honest attempts our state administrators always make to reach the levels of service demanded of them by our people.
To meet minimum essentials, I am recommending to you a total from the general fund of approximately $1,304,000,000 for operating expenses. Even this figure is more than $179,000,000 short of requests for this purpose.
Excluding revenue bonds and certain other special funds. I am recommending approximately $107,000,000 for new buildings and equipment, or considerably less than half of the total capital outlay requests from the general fund.
Your first question will be, where will Virginia get that kind of money? My answer is that it will take the full use of every tax law now on the books, and in addition the only constitutional provision available to us in the coming biennium.
If this is a sobering thought, let me give you further pause. Excluding capital outlay, the minimum needs over the next two years will exceed the most generous estimates of total revenue from all existing tax sources, including the additional one per cent sales tax. In fact, it will exceed those estimates by some $24,000,000.
Your next question will be, where then is the money for new buildings? My answer has to be that as our revenues now stand, there is nothing left for capital outlay.
At this point and time in her history, Virginia simply cannot live within these bounds. You cannot go back to the people and tell them they must partake of state services with a roof over their heads. I would be derelict in my own duty if I suggested that you try.
Tax Law Changes
I therefore propose that you take two major steps.
The first is that you continue the modernization of Virginia’s tax laws by requiring our major corporations to remit their tax obligations earlier and more frequently.
Specifically, I suggest that employers now collecting more than $100 a month in state withholding taxes from their employees, be required to submit them to the commonwealth on a monthly basis instead of quarterly.
I suggest further that firms with net incomes of $100,000 a year or more, pay their corporate income taxes to Virginia quarterly instead of annually.
In order to treat all our corporate citizens alike, I suggest still further that the taxes on our public services corporations and on our insurance company premiums also be paid quarterly instead of annually.
In these suggestions, I am supported in principle by the recommendations of the Income Tax Study Commission, headed by the able delegate from Culpeper.
These changes would affect only our larger firms. The net result is that they would be paying their state taxes at the same time they pay their federal taxes.
Bear in mind that this program is not a tax increase. No individual taxpaying citizen of Virginia would be affected.
But for you as budget makers, it will result in a one-time tax windfall of approximately $61,500,000.
From this amount, you can cover the $24,000,000 gap I mentioned earlier between our expected tax receipts including the additional one per cent sales tax, and our minimum needs for operating funds.
You will be able to reappropriate $10,000,000 to capital outlays authorized in this biennium, but still not under contract, and another $10,000,000 to complete the new college buildings which had to get curtailed in part over the past two years, in order to bring construction expenditures in line with appropriations.
These obligations will utilize approximately $44,000,000 of the windfall funds. With approximately $16,230,000 of the remainder, you can construct and equip vitally needed new buildings at our correctional, health, welfare and other institutions. The balance of $1,270,000 will be available for other necessities.
But the windfall will not begin to meet the major capital outlay needs for mental health, and especially for our community colleges and our four-year institutions of higher learning. For these, we must take the next step.
Traditionally, we have financed capital outlays largely from accumulated surplus, but come next June 30, we cannot count on a surplus.
The one-time windfall I have described to you is the last lonely rabbit that the magic of our distinguished tax commissioner, Judge C. H. Morrisett, can produce.
I have examined every avenue and every alternative, but the ultimate question remains.
Unless we are willing to say to the families of those afflicted with mental illness there is no room in our state hospitals and clinics;
Unless we can say to the parents of high school seniors, there is no room for your sons and daughters in our colleges and universities;
Unless we are prepared to say to our bright young undergraduate scholars and scientists and to the industries crying for their talents, we are sorry, but Virginia cannot afford good graduate schools;
Unless we say to our people in need of medical attention, we cannot meet your need for more nurses, technicians, doctors and dentists;
Unless we can in good conscience say all of these things, we must make a hard choice. We must raise taxes, or we must borrow the necessary funds.
Needs Can’t Wait
Faced with such a choice, your initial reaction may be, as mine way, that there is surely some less painful means, that perhaps by patching and shoring up the present capital outlay program, or by juggling the figures, we may be able to put off the fateful day.
I suggest then that you look at the future capital outlay needs as they are projected by our state agencies, and ask yourselves how long they can wait.
My own conclusion is that they can wait no longer. Recognizing that the final decision is yours, I recommend that you make use now of the limited borrowing authority contained in Section 184-a of the Constitution of Virginia.
If this seems a drastic step, I remind you that various instrumentalities of the Commonwealth have already incurred approximately $400,000,000 in bonded indebtedness, secured by revenues. As a similar safeguard, the Constitution requires that borrowings under Section 184-a be secured by a sinking fund.
If we must break precedent and pledge the full faith and credit of the commonwealth, this section places upon us the limitation of one per cent of the assessed value of all taxable real estate in the commonwealth. The 1967 assessment sets this figure at approximately $81,00,000.
From the reading of constitutional history, it appears that the framers of Section 184-a had in mind the situation in which the commonwealth now finds herself.
The section provides that borrowing may be only “for some single purpose constituting new capital outlay” to be authorized by law and that each such law must be separately presented to the voters in a referendum.
The mechanics of this section makes it possible to have in hand the necessary capital outlay funds before the end of this calendar year, instead of more than two years hence. With proper advance planning by the institutions concerned, the actual delays in construction will not be burdensome.
The categories of higher education and mental health are the most appropriate ones for bond financing. Their capital outlay requests are by far the largest. Their needs typify graphically Virginia’s growth and change.
In a referendum, they would offer the voters a clear, uncluttered choice. If our people will not pledge the full faith and credit of the commonwealth for these purposes, then the issue will have been settled for some time to come.
My own conviction is that they will consent to this limited borrowing, because they will agree that something must be done, and this means would be their preference.
I therefore recommended that you enact the necessary statues to authorize a statewide referendum next November on the question of borrowing of Section 184-a, in order to provide the necessary new buildings at our two-year and four-year colleges, and our mental hospitals and clinics.
The total of these will come to approximately $70,000,000. Itemized amounts to match these borrowings are included in the capital outlay budget you will receive shortly.
Let me underline one vital point. Section 184-a is safety valve built into the constitution itself. Its use requires no constitutional change.
The sum of these recommended general obligation bonds, of college revenue bonds and of general fund commitments will give Virginia the means of meeting the heaviest capital outlay needs in her history. Current anticipated tax revenues plus the one-time windfall will make a possible a record budget for perating expenses.
I offer these recommendations to you with the conviction that to do less is to bring this state and its progress to a grinding halt at the very time when new and unprecedented opportunities are opening on every front for all our people.
Before you apply your own judgment to them, you are entitled to know what the total budgetary package will buy in the way of public services. Let us begin where Virginia’s future begins, with education.
The recommended budget will provide approximately $139,000,000 more for public schools from the general fund than the budget for the current biennium. It will provide $20,000,000 in state aid for kindergartens, with a local option of applying the proceeds to a nine-month program or one of shorter duration.
It will raise the State scale for teacher salaries to a minimum of $5,000 during the biennium, with accompanying increases in retirement and insurance benefits for which the state pays the entire employer contribution.
It will provide state support to localities for one hundred more guidance counselors and two hundred more special education teachers than in the current year.
As an assist to localities, the number of teaching positions to which the state contributes will be increased by 1,779.
Teaching scholarships will be increased in number by more than 1,700, for a total of almost 13,000.
There are included additional funds to help localties with libraries, with summer school costs, with transportation and to extend the reach of educational television among our public schools.
In distributing state aid to public schools, I am proposing an increase from $100 for each pupil in average daily attendance to $110 the first year and $115 the second year.
To strengthen our post high school program, the budget will build seven new community colleges. I wish this figure could be higher, but I felt constrained to balance the distribution of the funds available as equitably as possible across the spectrum of education.
In this light, the budget will provide a total of nearly $64,000,000 from the general obligation bonds for new buildings at our four-year colleges, plus more than $53,000,000 from revenue bonds.
You placed in the current budget an item of one million dollars as a graduate incentive fund. Already it has attracted far greater sums in private endowments, and the combination has provided both new offerings and new facilities.
This time, the one million dollars has been included in the individual budgets of the respective colleges and universities, and a new item of $500,000 has been added for graduate scholarships, as an incentive to the students themselves.
My hope is that when the impact of both these programs is fully felt, we will see a substantial improvement in Virginia’s low rank among the states in the number of her graduate students.
Apart from the institutional appropriations themselves, I have recommended a lump sum of $5,000,000 to maintain the relationship of our college faculty salaries to the national average. Another lump sum of $2,500,000 has been added to upgrade college libraries, where needed.
The eminent scholars incentive program has been expanded in the budget by increasing from $100,000 to $400,000 the state funds to match private endowment income for this prupose.
A smaller item will help to launch pioneer experiments in recording entire college credit courses on video tape for use in collegiate educational television.
An entirely new dimension in education awaits your consideration in the report of the Wayne Commission, headed by a distinguished Virginian, with its prospect of a great new university for Central Virginia by welding together two institutions which now complement each other separately.
Here is an opportunity unique in Virginia, and one with virtually unlimited potential. I earnestly recommended to you the commission’s general concept.
Finally in the field of education, I have recommended that you extend the benefits of the wider perspective we have gained from Virginia’s membership on the Southern Regional Education Board to include its new national counterpart, the Education Commission of the States.
The Hahn Report
There are other new dimensions, aside from education. To one of these the Metropolitan Areas Study Commission, under the able chairmanship of Dr. T. Marshall Hahn Jr., has devoted nearly two years of study, exploring virgin territory with creative diligence.
I recommend that you take the initial step suggested in the report and authorize the establishment of regional planning districts and reconstitute the State’s Division of Planning into the Division of Planning and Community Affairs. I also commend to you the commission’s Service District concept, which can be provided on a voluntary basis, subject to approval by each affected jurisdiction.
These two phases can logically be separated from the interlocking package outlined in the commission’s report. The others raise constitutional questions, which should be resolved before legislative action is taken.
These first steps taken now can pave the way for calm, cooperative action in the future on the vexing problems surrounding Virginia’s rapid urban growth.
There are new developments also in Virginia’s cultural and artistic life. These have been inventoried in detail and plotted graphically for us by the Cultural Development Study Commission, under the chairmanship of a man who spent many fruitful years in this body. I commend the report to you for your study and consideration.
A more specific and more tragic new dimension cries for your attention in the rising death and accident toll on our highways. To this threat, the Traffic Safety Study Commission, chaired by a distinguished member of the General Assembly, has devoted the most thorough study that this state, or perhaps any other, has yet undertaken.
Its recommendations are numerous and vary widely in their implications and importance. I will not try to discuss them individually, but I commend the entire report to your consideration, together with the caution from my own observation, together with the caution from my own observation that there is a growing frustration among our people and an increasing impatience with half-way measures.
One other hazard darkens Virginia’s horizon, the rising tempo of studied lawlessness across our nation.
I am gratified, as I know you are, that this virus of violence has not seriously infected Virginia, that the innate respect for law and order among our people has so far prevailed, but I am not so naïve as to believe it could not happen here.
As a consequence, both our state and local enforcement agencies of every kind are now prepared to contain violence wherever it may erupt, just as they are aware that the responsibility for preventing the first spark from igniting rides in every squad car and walks with every policeman on the beat.
Every local official across Virginia knows that the full resources of the commonwealth are available if they are really needed, and he knows too that this governor of Virginia will not hesitate to use them.
The report of the Crime Study Commission, led by one of your number, offers you further thoughts on this subject, especially with respect to Virginia’s riot control statutes.
In the unlikely event of an extreme emergency, I recommend for your endorsement the interstate compact covering an exchange of National Guard units, drawn up by the member states of the National Governor’s Conference.
In the course of this session, you will approach many other problem areas with the guidance of able study commission reports, among them the Marine Resources Study Commission and the Money and Interest Commission, and the many valuable recommendations of the Virginia Advisory Legislative Council.
The chairmen and members of each of these groups merit our grateful thanks, and the results of their labors deserve your careful review.
There remain the new dimensions to which you have already committed yourselves.
Critical among these is our construction program, which is already paying such handsome dividends in new industry and new travel accomodations.
Roads and Parks
Virginia’s highways are her lifelines. They carry her commerce and her casual motorists. They bring supplies to the farm, and food and fiber to market. They come to industry with raw materials and depart with its finished goods. They carry our men to work, our women on their errands and our children to school.
I feel that I reflect the strong sentiments of all our people when I say that I would oppose any reduction in highway revenues.
Another extended commitment has been made to parks and recreational facilities, with their returns in travel dollars for which no local investment is required.
Still another new dimension, and one long delayed, is the deepening of the James River channel to Richmond. Here a series of studies has assessed the benefits, and found no threat to our seafood industry.
State agencies with special interest or jurisdiction have all given their consent. The machinery for your own approval is spelled out by law, I recommend it to you.
One further and specific recommendation is that you increase unemployment benefits across Virginia from a maximum of $45 a week to $51. These are in keeping with increases in the average wage since you last met.
Within the vast framework of Virginia’s state services, there are many more items in need of your decisions. I have not tried to mention them all here, but I will have other recommendations for you before this session concludes.
In these last few turbulent years of growth and change, Virginia’s new dimensions have many times extended to the constitution itself. Now the time has come, in my judgment, for a studied and impartial analysis of its provisions in the light of today.
The constitution has not had a thorough review in more than four decades. Federal court decrees, federal law, and the inexorable passage of time all call us now to that task.
There are two ways in which the constitution can be amended. One is in open convention.
Only twice in the past century has Virginia’s basic law been rewritten by this means, once in 1867 and 1868 to impose the federal will upon a prostrate people, and again in 1901 and 1902 to restore to that people an organic law of their own making.
It is worth noting that the second convention remained in session for more than 12 months before agreement could be reached. Thereafter, the resulting document was proclaimed to be the law of the land, without ratification by the people.
I would approach constitutional revision by more thorough and deliberate means. No matter how time and passing storms may have eroded its bricks and mortar, it is still the foundation of this commonwealth.
Before the General Assembly approaches a general
overhaul, wisdom dictates that you have in hand a set of blueprints from which to work. I therefore recommend that you authorize the governor to appoint forthwith a small Commission on Constitutional Revision.
It should be comprised of impartial and eminently qualified citizens, whose stature is commensurate with the task to be performed, and whose recommendations would command the respect and thoughtful consideration of the General Assembly and the people of Virginia.
Moreover, it should not be restricted in any way as to scope of its study. Its members should have free rein in approaching the sensitive areas of bond financing, of voting requirements, of annual legislative sessions and the recommendations of the Metropolitan Areas Study Commission.
Asks Prompt Action
The necessary resolution will be placed before you today, and I urge its prompt enactment. The commission will be appointed without delay, and will be requested to submit its report by Jan. 1, 1969.
Reasonably soon after receiving its report, I propose to call you to a special session. You will then have the options of approving the commission’s report, rejecting that report, amending its provisions, or of taking such other action as is your pleasure.
With this timetable, a carefully reviewed and properly revised Constitution of Virginia could be considered and approved for the second time by this body at its next regular session, and submitted to the people of Virginia for their ratification by the summer of 1970.
Minful of the mounting needs projected for the future by our state agencies, and of the constitutional borrowing question with which you will eventually wrestle, I have directed the Office of Administration to begin an independent, long-range study of our budgetary requirements, in order that you may have these clearly in mind for subsequent sessions.
I have spelled out for you today in some detail the new dimensions I propose for Virginia. I ask you now to look at them again as a whole, and at some of their implications.
All Sources Tapped
In order to finance the commonwealth during the coming two years, I have tapped every source of revenue available to us in this biennium.
With full knowledge that Virginia’s future was thereby mortgaged, I have gone further, and recommended that you use large portions of a one-time windfall for recurring expenses. I did so because the only alternative was to raise taxes.
I feel constrained to add that it is highly unlikely the next governor of Virginia will have that option.
I have recommended that you commit virtually all of the one-time borrowing authorized by the constitution, within the limitation and with the safeguards provided by that document.
Again, I am acutely aware, as you must be, of the consequences you will face at future sessions.
In the meanwhile, I have assigned the one-time general obligation bonds exclusively to mental health and higher education. I feel strongly that on the critical issue of pledging the full faith and credit of the commonwealth, we owe our people a choice as precise and as unclouded by extraneous matter as we can possibly devise.
Finally, as a solution to a sea of troubles, financial and otherwise, I have proposed a procedure for a general revision of the constitution itself, separate and distinct from the complex and far-reaching the considerations facing you at this session.
If you accept these means of meeting Virginia’s needs, you will do so, as I did, with the knowledge that you have committed yourselves to continue in subsequent sessions the momentum they will generate during the next two years.
But you will at the same time have pledged to the people of Virginia that you intend to carry out the wishes they have so often and so urgently expressed.
Having offered such a program, I now remind you that this is no visionary who speaks to you.
To this chamber, 20 years ago almost to the day, I came as a country lawyer from a farm in Southeastern Virginia, deeply imbued with a philosophy that only a closeness to the land can instill. That philosophy remains with me. It is still my guide.
Believe me when I say that whatever your initial reaction to what I have proposed, obstacles of law or of precedent, whatever the reservations of mind or of principle, I, too, have experienced each one.
For days and nights on end, I have pored over the figures, and weighed alternatives. I have tested the public sentiment from one end of Virginia to the other. I have probed the convictions of others. I have searched the depths of my own conscience.
But to every question I could raise, the answer was always the same, that to do less than this was to break faith with the people of Virginia. I offer you now the final product of that refining process.
In the aftermath of our great effort two years ago, some of you may yearn instead for a breathing spell. Others may be inspired to more precipitous adventures.
I remind all of you that as you assemble here, you take on a new dimension of your own, one that encompasses the whole of this commonwealth.
I trust that you have come prepared for just such an hour, for in all of Virginia’s long, proud and treasured history, few indeed have been given greater opportunity to fashion her destiny.