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crisis facing the Old Dominion’s new chief executive will not be abortion or campaign style. It will be the state’s looming fiscal crisis. What the commission, established by Coleman and headed by former Congressman Caldwell Butler, found out was that the state is essentially broke.
Over the past seven years, the state budget of Virginia has nearly doubled; in real terms it has increased by approximately one-half. The revenues to finance that increase have come basically from two sources. First, the economy of Virginia has boomed, generating a substantial, increasing flow into the state treasury. Second, state taxes have been raised.
The bad news is that the boost in Virginia’s economy came in major part from the Reagan-Bush administration’s defense build-up (especially helpful in the Tidewater area) and the emphasis on research and development (Northern Virginia). But those halcyon days are over. Virginia’s economy may continue to grow, but it won’t get the “national dividend” it has gotten in the past. The flow of state revenues will attenuate as a result.
Also, Virginia has pretty much priced itself out of the market when it comes to making the state an attractive place for economic development. Property taxes are soaring, especially in Northern Virginia. New licensing fees abound. The state tax on gasoline is the 12th highest in the country. And its income tax rate is second only to Maryland’s, among its neighbors. Few people are aware that Virginia has a higher marginal income tax rate than California! Thus, additio
96.7%