I suppose I shouldn't have been surprised. Last year, I visited legislators in Richmond with some fellow travelers to advance the cause of school choice. One of our number suggested to a powerful member of the Finance Committee that the money the state would return to parents (who would qualify for a tax credit for sending their child to an alternative school) would cost the state less money than if the funds were used in the public schools. The distinguished legislator remarked loudly and worrisomely, "Well, if we give back all that money, how will we buy what we want?" We indeed.

Any person who loves government spending, must - like the legislator above - be euphoric. Even after the car tax cut, the legislature had $400 million more this year to spend than last year. Since 1997, spending on education increased by 35 percent, or $1.2 billion. Transportation spending jumped 47 percent statewide and 70 percent in Northern Virginia this year alone. State general fund spending has exploded an astonishing 41 percent since 1997 (from $17 billion to more than $24 billion). If ever there was a need for tax reform to stem the tide of burgeoning budgets, it's now. But we need to understand some realities.

First, vast surpluses held by government - beyond inviting spending sprees - hold hostage the economic power that could be used by individuals and businesses today to produce enough revenue for rational spending tomorrow. Federal Reserve Board Chairman Alan Greenspan recently testified to Congress that vast surpluses aren't good for the economy precisely because they pose an enormous temptation to increase spending. Indeed, he suggested that tax cuts would be more helpful to a sagging economy than quickly paying off the national debt.
In Virginia, HB1934 and SB 883 would have refunded to taxpayers any surplus revenues when they exceed the amount required for Virginia's "rainy day fund" by at least $50 million. However, both were voted down, along with a similar effort in January to accomplish this goal by constitutional amendment.

Second, eliminating categories of income or types of property from taxation would limit the options politicians have to increase taxes. The reason it's so hard to go back on the car tax cut is precisely because it is a highly visible form of taxation. By limiting the scope of taxable income and property, we make it harder for politicians to "mask" tax increases across a broad range of tax options.

Legislators had an opportunity to narrow tax options with HB 2288, which would have granted significant tax relief to retired military personnel living in Virginia by letting them subtract from taxable income two percent multiplied by the number of years of active duty service on the first $30,000 of military retirement income. And the verdict? It died in the Finance Committee 20 to 3.

Third, closing tax loopholes is essential. The integrity of the tax system depends on everyone assuming a share of the burden. Moreover, politicians shouldn't be permitted to use the tax code to curry favor with certain voter groups. Consider this: of the 248 tax bills introduced in this session of the General Assembly, 81 - nearly one-third - dealt with property or sales tax exemptions. Among my favorites are property tax relief for the Carolanne Farm Swim Club, the Hopewell Optimist Club and the Ocean View Democratic and Social Club (I'm not making this up). Sales tax exemptions include equipment used to produce software, the Museum of the Confederacy and the American Society of Military Comptrollers. If we believe that all non-profits should be exempt from property or sales taxes, fine. But one can't help but see how these exemptions are simply another form of political pork.

Finally, smart spending is necessary. To be sure, technological innovation will help. But, sooner or later, we must recognize that there are alternatives to the administration of government services and programs that will better insure that our tax dollars are wisely spent. Out-sourcing of services to private industry around the country has been a glowing success story with very few exceptions. President Bush's modest suggestion that the government permit faith-based organizations - groups with an unblemished record of success - to apply for federal money to serve those in need is a great step forward. Virginia would do well to consider similar approaches.

No amount of structural reform will help, however, unless we have political reform to accompany it. And, from my vantage point, we don't have a surplus of that.

L. Scott Lingamfelter is vice-chairman of the Prince William-Manassas Family Alliance, and has a bachelor's degree in history from VMI and a master's degree in government from UVa. He lives with his family in Lake Ridge.