Undermining The Constitution A HISTORY OF LAWLESS GOVERNMENT (Part 3)

The United States Supreme Court. (Photo credit: Wikipedia)

By Thomas James Norton

IN FAVOR TO POLITICIANS AND TO LABOR UNIONS, CONGRESS PURSUED ANOTHER METHOD OF ATTACK ON THE COORDINATE JUDICIAL DEPARTMENT

Another form of attack by Congress on the courts of the Constitution was in legislation directing them how to try cases.

In 1910 it passed an act forbidding the issue of an injunction against the operation of a law of a State except in a specified way.

In 1913 it passed a similar law forbidding the restraint by injunction of an order of the Interstate Commerce Commission except on conditions laid down.

And in 1932 Congress enacted the Norris-LaGuardia Act for denying injunctive relief to an employer, except under annoying conditions which might deny relief, where a labor question is involved.

Those invasions of the rights of litigants and the liberties of the American will be examined.

Constitutional Convention forbade Congressional dictation to courts

Prefatory to a discussion of the three intrusive acts of Congress mentioned, a quotation should be made from

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the record of the Constitutional Convention (Formation of the Union, p. 625) of August 27, 1787, only twenty-three days before the signing, when there was under consideration "the Judicial power":
"The following motion was disagreed to, to wit, to insert 'In all other cases before mentioned the Judicial power shall be exercised in such manner as the Legislature [The Congress] shall direct.'"
So the Constitutional Convention explicitly refused to authorize the Congress to "direct" the judicial power in any respect whatever. How Congress haslawlessly directed it, nevertheless, and how the courts have lawlessly submitted to the forbidden dictation, are to be seen.
The act of 1910 forbade the courts of the United States to grant an interlocutory injunction "restraining the enforcement ... of any statute law of a State," or of any order made thereunder by a board, "upon the ground of the unconstitutionality" of such statute, "unless the application" be "heard and determined by three judges, of whom at least one shall be a justice of the Supreme Court or a Circuit Judge, and the other two may be circuit or district judges, and unless a majority of the said three judges shall concur in granting such application."
States objected to constitutional restraints
Some of the States had felt wounds in their dignity when a citizen who believed a tax law, for example, was intended to effect what President Coolidge later termed "legalized larceny," went into a court of the United States asking a restraining order upon the officers executing the law until there could be a full hearing on evidence. In addition to that, those were field days for the alien minded

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who omitted no opportunity to "go after" the Judiciary, which Von Holst rightly called the keystone of the American arch.
Of course, the Fourteenth Amendment forbids the State to "deprive any person of life, liberty or property without due process of law." That is, he must have a hearing when he asks it before his property is taken by taxation or otherwise. It was the constitutional intent that the legislature should not take property by fiat. And that was imbedded in the Constitution 46 years before the confiscation of private property was begun by Government through the "graduated" income taxes of Communism.
Article III, establishing the Judiciary, "extends" the "judicial power" to all cases arising under the Constitution, under the laws of the United States, under treaties; to cases affecting ambassadors, other public ministers, consuls; to controversies between two or more States, between a State and citizens of another State, between citizens of different States, between a State or the citizens thereof and foreign states, citizens or subjects.
Thus, ample provision was made for the States to use the courts of the Nation. But in the foregoing recital the States are ranked as litigants on the level with ambassadors, consuls, and citizens. No thought was entertained that a State as a litigant should be regarded as any higher than a man. Why should the creature, the State, be above the man, who created it?
Preference of State against Man not authorized
Since the Constitution left the State as a litigant on a level with the man, as it clearly did, where did Congress get the power to change that arrangement of the Consti-

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tution and put the State above the man? Only the people, by amendment, could make that change. Yet the courts submitted to the lawless dictation. The first judge appealed to under the meddling act should have refused to call two other judges, should have heard the application, granted or denied a restraining order or injunction, and let the losing party make a test of the law in the Supreme Court of the United States, which would then be in a position to sustain the Judiciary "in all its dignity and vigor," as President Cleveland sustained the Executive Department against encroachment by the Senate, and as Hamilton said in The Federalist that each Department would take pride in maintaining its prerogatives against one or both of the others.
Act of Congress interference with procedure
The act forbade that the application for a restraining order or injunction "be heard or determined before at least five days' notice of the hearing has been given to the Governor and to the Attorney General of the State, and such other persons as may be defendants in the suit." But if it should appear that irreparable loss or damage would result unless a temporary restraining order be granted, then one judge should give that relief.
As Article III set up the Supreme Court and then authorized Congress to "ordain and establish" such "inferior courts" as might be necessary, it was within the competence of the Legislative Department, probably, to establish a three-judge court. In 1891, to take from the Supreme Court part of its load, Congress established nine (now eleven) Circuit Courts of Appeals of three judges each. But to establish courts to meet the needs of the people is

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quite another thing from trying, or partially trying, cases in them.
"The judicial power of the United States" to try and adjudge cases, the Constitution put in "one Supreme Court and such inferior courts" as might be needed. That forever fixed judicial power until the people determine that it should be withdrawn from the courts and vested in the Congress or elsewhere.
No judicial power possessed by Congress
Congress may prescribe the jurisdiction of a court which it establishes (like the Court of Claims and the Court of Customs and Patent Appeals), but not thepower. "The judicial power," says section 2 of Article III, "shall extend to all cases in law and equity." This power is poured into the courts by the people through their Constitution. Congress has no judicial power to confer.
Apparently emboldened by the success -- or lack of opposition -- which attended the act of 1910, Congress again dictated to the Judicial Department, in 1913, setting up a three-judge court and laying down with the fullest particularity the steps which the court would be permitted to take in injunction proceedings arising out of orders entered against citizens by the Interstate Commerce Commission.
Congress unduly magnified Interstate Commerce Commission
Again, why should the Interstate Commerce Commission, a bureau of Congress, have a court of three judges, when a court of one judge must meet the needs of the American, who created all that there is in and under

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government? This question is particularly pertinent in view of the fact that during the 63 years of the Commission no President has ever appointed to it a railroad man of standing in the field of transportation, finance or traffic, or a shipper of prominence, in the world of commerce. The body never has been what the President and the Senate should have made it -- what the commerce of the country and those engaged in it were entitled to have to serve them. Then, why should its decisions be made so nearly immutable by restrictions on judicial procedure withholding from the American his liberty to seek justice?
Why put Interstate Commerce Commission above American?
As a specimen of the work of the Commission which the Congress was so desirous of making nearly immune to attack by aggrieved citizens, the reorganization of the Chicago, Milwaukee, St. Paul and Pacific Railroad Company will be stated.
Owing to the unemployment of 9,935,000 in the United States, there was a great shortage of production, which means that the railroads lacked freight tonnage and passenger travel, which means that many of them could not pay their way. In 1935, the Milwaukee Company filed a petition for reorganization with the Interstate Commerce Commission in pursuance of an act of Congress. Evidence was received in the year named and in 1936 and 1937. While the case was on trial the number of unemployed rose to 10,932,583, as reported by the American Federation of Labor.
The plan of reorganization approved by the Commission

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wiped out all the preferred and common stock. On March 15, 1943, the Supreme Court of the United States upheld the finding of the Commission.
A year before that, in 1942, the net profits of the Milwaukee after interest and taxes were $12,174,831. In 1943 the net profits were $29,413,623.
Interstate Commerce Commission failed to see point
That shows that the railroad was in fit condition to handle traffic when the United States should be in condition to provide it. The United States needed reorganizing, not the railroads.
Shortly after the investments of the holders of preferred and common stock had been wiped out, the Company paid off a large volume of its old bonds. That is only one of many like cases of railroad reorganization in destruction of investments. The grossness of the injustice caused talk by members of Congress of impeachment.
It was decisions of that sort that Congress did not want the damaged American citizen to attack in court except under annoying difficulty and delay!
In 1932 Congress revamped a line of legislation respecting labor and told the Judicial Department of the Constitution just what it could do and what it could not do about the issuing of injunctions in cases affecting labor.
Norris-LaGuardia Act denial of justice
The minority report of the committee of Congress on the bill said that in practice it would amount to a denial of the rights of the employer. He was virtually outlawed. To be sure, that was the intention -- that is what a powerful

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voting group demanded that Congress give it. And Congress responded to the demand, just as it bowed to the same group five years later and passed the National Labor Relations Act, to the appalling hurt of the States whose Congressmen enacted it.^[1]
Those three acts of Congress were definitely lawless and against the liberty of the American. The courts were lawless when they submitted to the intimidations, and the organized Bar maintained a masterful inactivity while the undermining of constitutional government was in open progress.
Historic relief by injunction made clear
The "judicial power" which was poured into the courts by the Constitution was that inherent in the courts of England in 1787. It was brought to America by the colonists. What it was is plain.
Blackstone, whose lectures were taught in the College of William and Mary to Virginians who helped write the Constitution, told the youth at the University of Oxford a quarter of a century or more before 1787 just what were the inherent powers of a court of equity with respect to the restraining order, or the temporary injunction, and the permanent injunction:
"But if an injunction be wanted to stay waste, or other injuries of an equally urgent nature, then upon the filing of the bill [called application in the acts of Congress reviewed], and a proper case supported by affidavits, the
1. The Norris-LaGuardia Injunction Bill of 1932 passed the Senate by a vote of 75 to 5. The House passed it by 363 to 13. The employers of the country whose equipment for production and transportation had won the first World War were all but friendless in the Government which had been saved.

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court will grant an injunction immediately, to continue until the defendant has put in his answer, and till the court shall make some further order concerning it; and when the answer comes in, whether it shall then be dissolved or continued till the hearing of the case, is determined by the court upon argument, drawn from considering the answer and the affidavit together." -- 4 "Commentaries on the Laws of England," 443.
That language defined the power of a court of equity with respect to the injunction when the Constitution was written. Consequently that is what the Convention put into the Constitution when it provided:
"The judicial power shall extend to all cases in law and equity."
Congress powerless to defeat constitutional injunction
What a court of equity could do then it can do now. That is constitutional. Being constitutional, it can be taken out of the Constitution only by amendment. Congress can no more change or control the judicial power than it could wipe away the Bill of Rights. Indeed, this provision extending the judicial power to cases in equity is one of the many bills of right written in the body of the Constitution.
The court of equity established by the Constitution having had the power, as Blackstone shows, "to grant an injunction immediately," without notice, upon the filing of an application with affidavits proving that, if it be not granted without delay, irreparable damage will be sustained by the applicant, that power cannot be withdrawn or modified by Congress.

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Rule of Supreme Court protected all
By Equity Rule 73 of the Supreme Court of the United States, governing the lower courts also, long in effect, meticulous care was taken to prescribe procedure in injunction cases -- not alone in cases affecting the powerful group unconstitutionally favored by the Act of 1932, known as the Norris-LaGuardia Act, but in suits of all Americans.
The Rule directs (1) that no preliminary injunction issue without notice; (2) that no temporary restraining order be granted without notice unless it clearly appear from specific facts presented, under oath, that immediate and irreparable damage will otherwise result, and (3) that the temporary restraining order mentioned be brought to hearing "at the earliest possible time, and in no event later than 10 days."
That rule required notice to interested persons and parties -- to States and to the Interstate Commerce Commission. It required the oath for the temporary restraining order, as described by Blackstone. It required speedy hearing. It gave to defendants complete protection, and the acts of Congress were as needless as they were invalid.
Judiciary in need of protection
On the Judiciary's being the weakest of the three Departments to defend itself, and on the need therefore of its receiving protection, Hamilton wrote in No. 78 of The Federalist:
"The Judiciary, from the nature of its functions, will always be the least dangerous to the political rights of the Constitution, because it will be least in capacity to

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annoy or injure them. The Executive not only dispenses the honors, but holds the sword of the community. The Legislature [Congress] not only commands the purse, but prescribes the rules by which the duties and rights of every citizen are to be regulated. The Judiciary, on the contrary, has no influence over either the sword or the purse; no direction either of the strength or of the wealth of the society; and can take no active resolution whatever. It may be truly said to have neither force nor will, but only judgment; and must ultimately depend upon the aid of the Executive arm even for the efficacy of its judgments. ... It can never attack with success either of the other two; and all possible care is requisite to enable it to defend itself against their attacks."
But government by the educated is in prospect
In June, 1947, the Governor of Missouri signed a bill to require the teaching of the Constitution in all schools from the Seventh Grade up and in colleges and universities, and to forbid a degree of graduation to be given to any student until a rigid examination in the Constitution has been passed.
In the same month the dispatches reported that a similar step had been taken by the Legislature of California.

When the legislatures of all the other States follow those wise examples it will soon be impossible to draw from the population weak Congresses or Courts or Legislatures or Executives.

Special Thanks to Barefoot's world.
http://www.barefootsworld.net

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Anti Federalist Papers No. 38 – Some Reactions To Federalist Arguments

I have read with a degree of attention several publications which have lately appeared in favor of the new Constitution; and as far as I am able to discern, the arguments (if they can be so termed) of most weight, which are urged in its favor, may be reduced to the two following:

1st. That the men who formed it, were wise and experienced; that they were an illustrious band of patriots, and had the happiness of their country at heart; that they were four months deliberating on the subject, and therefore, it must be a perfect system.

2nd. That if the system be not received, this country will be without any government, and of consequence, will be reduced to a state of anarchy and confusion, and involved in bloodshed and carnage; and in the end, a government will be imposed upon us, not the result of reason and reflection, but of force and usurpation.

As I do not find that either Cato or the Centinel, Brutus, or the Old Whig, or any other writer against this constitution, have undertaken a particular refutation of this new species of reasoning, I take the liberty of offering to the public, through the channel of your paper, the few following animadversions on the subject; and, the rather, because I have discovered, that some of my fellow citizens have been imposed upon by it.

With respect to the first, it will be readily perceived that it precludes all investigation of the merits of the proposed constitution, and leads to an adoption of the plan without inquiring whether it be good or bad. For if we are to infer the perfection of this system from the characters and abilities of the men who formed it, we may as well determine to accept it without any inquiry as with. A number of persons in this [New York] as well as the other states, have, upon this principle, determined to submit to it without even reading or knowing its contents.

But supposing the premises from which this conclusion is drawn to be just, it then becomes essential in order to give validity to the argument, to inquire into the characters of those who composed this body, that we may determine whether we can be justified in placing such unbounded confidence in them.

It is an invidious task, to call in question the characters of individuals, especially of such as are placed in illustrious stations. But when we are required implicitly to submit our opinions to those of others, from a consideration that they are so wise and good as not to be liable to err, and that too in an affair which involves in it the happiness of ourselves and our posterity, every honest man will justify a decent investigation of characters in plain language.

It is readily admitted that many individuals who composed this body were men of the first talents and integrity in the union. It is at the same time, well known to every man, who is but moderately acquainted with the characters of the members, that many of them are possessed of high aristocratic ideas, and the most sovereign contempt of the common people; that not a few were strongly disposed in favor of monarchy; that there were some of no small talents and of great influence, of consummate cunning and masters of intrigue, whom the war found poor or in embarrassed circumstances, and left with princely fortunes acquired in public employment. . . . that there were others who were young, ardent, and ambitious, who wished for a government corresponding with their feelings, while they were destitute of experience . . . in political researches; that there were not a few who were gaping for posts of honor and emolument - these we find exulting in the idea of a change which will divert places of honor, influence and emolument, into a different channel, where the confidence of the people will not be necessary to their acquirement. It is not to be wondered at, that an assembly thus composed should produce a system liable to well founded objections, and which will require very essential alterations. We are told by one of themselves (Mr. [James] Wilson of Philadelphia) the plan was [a] matter of accommodation, and it is not unreasonable to suppose, that in this accommodation, principles might be introduced which would render the liberties of the people very insecure.

I confess I think it of no importance what are the characters of the framers of this government, and therefore should not have called them in question, if they had not been so often urged in print, and in conversation, in its favor. It ought to rest on its own intrinsic merit. If it is good, it is capable of being vindicated; if it is bad, it ought not to be supported. It is degrading to a freeman, and humiliating to a rational one, to pin his faith on the sleeve of any man, or body of men, in an affair of such momentous importance.

In answer to the second argument, I deny that we are in immediate danger of anarchy and commotions. Nothing but the passions of wicked and ambitious men will put us in the least danger on this head. Those who are anxious to precipitate a measure will always tell us that the present is the critical moment; now is the time, the crisis is arrived, and the present minute must be seized. Tyrants have always made use of this plea; but nothing in our circumstances can justify it.

The country is in profound peace, and we are not threatened by invasions from any quarter. The governments of the respective states are in the full exercise of their powers; and the lives, the liberty, and property of individuals are protected. All present exigencies are answered by them. It is true, the regulation of trade and a competent provision for the payment of the interest of the public debt is wanting; but no immediate commotion will arise from these; time may be taken for calm discussion and deliberate conclusions. Individuals are just recovering from the losses and embarrassment sustained by the late war. Industry and frugality are taking their station, and banishing from the community, idleness and prodigality. Individuals are lessening their private debts, and several millions of the public debt is discharged by the sale of the western territory. There is no reason, therefore, why we should precipitately and rashly adopt a system, which is imperfect or insecure. We may securely deliberate and propose amendments and alterations. I know it is said we cannot change for the worse; but if we act the part of wise men, we shall take care that we change for the better. It will be labor lost, if after all our pains we are in no better circumstances than we were before.

I have seen enough to convince me very fully, that the new constitution is a very bad one, and a hundred-fold worse than our present government. And I do not perceive that any of the writers in favor of it (although some of them use a vast many fine words, and show a great deal of learning) are able to remove any of the objections which are made against it. Mr. [James] Wilson, indeed, speaks very highly of it, but we have only his word for its goodness; and nothing is more natural than for a mother to speak well of her own bantling, however ordinary it may be. He seems, however, to be pretty honest in one thing - where he says, "It is the nature of man to pursue his own interest, in preference to the public good" for they tell me he is a lawyer, and his interest then makes him for the new government, for it will be a noble thing for lawyers. Besides, he appears to have an eye to some high place under it, since he speaks with great pleasure of the places of honor and emolument being diverted to a new channel by this change of system. As to Mr. Publius [The Federalist], I have read a great many of his papers, and I really cannot find out what he would be at. He seems to me as if he was going to write a history, so I have concluded to wait and buy one of his books, when they come out. The only thing I can understand from him, as far as I have read, is that it is better to be united than divided - that a great many people are stronger than a few - and that Scotland is better off since the union with England than before.

And I think, he proves too, very clearly, that the fewer nations there are in the world, the fewer disputes [there] will be about the law of nations - and the greater number that are joined in one government, the abler will they be to raise ships and soldiers, and the less need for fighting. But I do not learn that any body denies these matters, or that they have any thing to do with the new constitution, Indeed I am at a loss to know, whether Mr. Publius means to persuade us to return back to the old government, and make ourselves as happy as Scotland has by its union, or to accept of the new constitution, and get all the world to join with us, so as to make one large government. It would certainly, if what he says is true, be very convenient for Nova-Scotia and Canada, and, for ought I know, his advice will have great weight with them. I have also read several other of the pieces, which appear to be wrote by some other little authors, and by people of little consequence, though they seem to think themselves men of importance, and take upon them grand names such as . . . Caesar,' . . . Now Mr. Caesar do[es] not depend so much on reasoning as upon bullying. He abuses the people very much, and if he spoke in our neighborhood as impudently as he writes in the newspapers, I question whether he would come off with whole bones. From the manner he talks of the people, he certainly cannot be one of them himself. I imagine he has lately come over from some old country, where they are all Lords and no common people. If so, it would be as well for him to go back again as to meddle himself with our business, since he holds such a bad opinion of us.

A COUNTRYMAN

Learn More About US History:  Visit Jamestown, Williamsburg and Yorktown , Virginia Living Museums.

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Gerald Celente - Gary Null Show - February 13, 2013

National emblem of the People's Republic of China (Photo credit: Wikipedia)

Winter Trends -- rise in popular protests and against government and austerity around the world, China's buying up of the US, and the need for a Boomer renaissance.

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Even Knowing About This Law Might Prevent You From Serving On A Jury

Jury Duty (film) (Photo credit: Wikipedia)

Guilty or not guilty? Well, there's a third option you might not know about.  In the United States, if you are called to jury duty, (SSHHH!) you have the right to override the judge on what you want to hear from either side irregardless of what the judge may say.  (It's in the handbook that you do not get a copy of).  You have the right as a juror to bypass any order of suppressed information or evidence.  But that's Constitutional law, and we all know that the Constitution is nothing more than a piece of paper except when it can be used against us. 

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State Agencies Respond to Ongoing Winter Storm

 (Photo credit: Wikipedia)

Virginians urged to stay home due to hazardous road conditions

RICHMOND, Va. – During the latest winter storm to affect the Commonwealth, the Virginia Emergency Operations Center, the Virginia Department of Transportation and other state agencies continue to assist Virginians by processing requests from local governments and matching them with the appropriate state agencies and utilities for response.

“This major winter storm has brought six to 18 inches of wet snow across Virginia, and the Virginia Department of Emergency Management, the Virginia Department of Transportation and many other agencies and private sector partners are doing great work to continue to respond and make sure people are safe” said Governor McAuliffe. “We expect this storm to continue to bring a mixture of snow, sleet and freezing rain throughout the evening, and ask we Virginians to keep themselves safe and assist our storm responders by refraining from any unnecessary travel. Many of our roads remain difficult to pass as snow and ice continue to fall, and refraining from traveling helps speed up road clearing operations.”

While most roads are open, more than 950 are in moderate to severe condition, which means they are mostly or partially covered with snow and/or ice.  People should call 511 or go towww.511Virginia.org before traveling.

Throughout the state, there are 1,400 customers without power.  Most power outages are due to fallen tree limbs. 

Here’s a list of current state agency storm response efforts and how they are assisting Virginians:

·         Virginia Department of Transportation crews are conducting road clearing operations, and their goal is to have all state-maintained roads passable within 48 hours after a winter storm ends so that people can travel safely.  For example, a VDOT crew member and plow responded to the scene of a Spotsylvania County ambulance stuck in a ditch on Salem Station Boulevard in Spotsylvania County.  The ambulance was on its way to an emergency.  The VDOT plow cleared a path for the ambulance to drive on, while county fire and rescue personnel were able to tow the ambulance from the ditch. VDOT has deployed more than 12,300 pieces of equipment including trucks and plows.

·         More than 200 Virginia National Guard personnel are staged strategically across Virginia to support state and local emergency response.  An additional 50 soldiers, airmen and members of the Virginia Defense Force are on duty to provide mission command, administrative and sustainment support for units in the field.  Virginia Guard is staged at readiness centers along the Interstate 81 corridor, in the central Virginia area along Route 29 and Interstates 64 and 95, and areas of Northern Virginia to be ready to support possible response missions. 

·         The Virginia State Police continue to respond to traffic crashes and disabled vehicles resulting from the storm and hazardous road conditions.  All available troopers have worked extended shifts throughout the night and Thursday to help people by responding, investigating and clearing crashes.  VSP has responded to at least 1,000 traffic crashes and more than 900 disabled vehicles across the Commonwealth since 4 p.m. Wednesday, Feb. 12.  The majority of crashes involved damage to vehicles and no injuries to people. 

There are a number of potentially life-saving actions that people can take, including:

·         Charge your mobile devices so you can continue to hear information from official sources if the power goes out.

·         Have emergency supplies in your vehicle.  If you are stranded you will need water, food, blankets, a flashlight and extra batteries at a minimum. 

·         Have a battery powered and/or hand-crank radio and extra batteries for emergency information.  Listen to local weather forecasts and instructions from local officials.

·         Avoid overexertion while shoveling snow and cleaning up from the storm, no matter your age or physical condition.  Shoveling snow or pushing a car can bring on a heart attack or make other medical conditions worse.

·         If you need help for an elderly or disabled person during the storm, need information on warming shelters, or are concerned about an unsheltered individual or family, call 211 or visitwww.211virginia.org.  When you call 211, a trained professional will suggest sources of help using one of the largest databases of health and human services in your community and statewide.

·         Get winter weather preparedness information at www.ReadyVirginia.gov and download the new Ready Virginia app for iPhones and Android devices.

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Governor Announces Mid-Session Revenue Reduction of $140 Million

Terry McAuliffe (Photo credit: mou-ikkai)

Governor Announces Mid-Session Revenue Reduction of $140 Million

Due to Weak January and Year-To-Date Revenue Collections;

Offers Budget Actions to Cover Reduced Revenue Growth

RICHMOND- Today, Governor Terry McAuliffe briefed House and Senate budget committee leaders on the preliminary mid-session revenue reforecast numbers. This review involves an analysis of two elements: updated economic information and actual revenue collections for the first seven months of the current fiscal year, which started July 1, 2013. The Governor offered several budget solutions to cover the reduced revenue growth that was projected.

“Although our underlying economic forecast has not changed, it is clear that the current revenue receipts warrant caution,” said Governor McAuliffe. “In order to remain prudent, we must adjust our revenue estimates downward, which will help reduce future risks. After consulting with my economic team, it is my recommendation that we reduce the general fund revenue estimates for fiscal year 2014 by $125 million and the general fund revenue estimate for fiscal year 2015 by $15 million.” 

Total general fund revenue collections fell 5.9 percent in January with declines in all major sources except corporate income tax. On a year-to-date basis, total revenue collections fell 0.5 percent through January, lagging the annual forecast of 1.7 percent growth.  Total revenues are tracking behind the forecast due to declines in individual withholding, and non-withholding, and recordation taxes. In January, receipts for individual non-withholding declined by 25.3 percent and withholding (the State’s largest general fund revenue source) declined by 1.9 percent.  Recordation tax collections declined by 33.3 percent in January. 

These results are important as January is a significant month for revenue collections from individual estimated payments, sales taxes on December sales and corporate income taxes from large retailers. This combined with an analysis of the underlying economic fundamentals in the economy and revenue models forms the basis for the annual mid-session revenue reforecast presented to the 2014 General Assembly. Since December 16, the economic fundamentals on which the December forecast is based have not changed and continue to point to modest economic growth.

However, through January, fiscal-year-to-date revenue collections have declined by 0.5%  -- or 2.2% below the annual December estimate of a 1.7% increase.  The revenue sources that have underperformed the most have been individual non-withholding and the corporate income taxes  – both very volatile sources of revenue.  Given the performance to date in all sources, combined with the difficulty in forecasting individual non-withholding receipts in April and May, the Governor is recommending that the prudent step is to reduce the December forecast by $125.0 million in FY 2014 and $15.0 million in FY 2015.  General fund revenues are now expected to increase 1.0 percent in FY 2014 as compared to the 1.7 percent increase in the December forecast.

Given the timing of this mid-session reforecast, which occurs just in advance of the House and Senate money committees reporting out their respective versions of the budget on Sunday, the Governor further offered select budgetary actions to address the change in revenues. 

“It is my sincere hope that these budget actions will help the House and Senate in their respective budget deliberations in light of the timing of the lower revenue forecast I am recommending today,” said Governor McAuliffe.

There were eight budget adjustments that Governor McAuliffe proposed to address the lower revenue projections (see attachment).  None of these adjustments impact core services or entitlements. 

These adjustments include:

o   The elimination of the FY 2016 estimated payment to the revenue stabilization fund,

o   Use of additional Lottery revenues,

o   Capturing uncommitted balances across the budget, and

o   Reducing the unappropriated balance from $51 million to $11 million. 

BACKGROUND

The FY 2016 payment into the revenue stabilization fund is based upon revenue growth in FY 2014. Since the majority of the revenue decline, $125 million, is applied to FY 2014, the entire required deposit of $59.9 million in FY 2016 is eliminated and no longer needed.

While general fund revenues are being adjusted downward in FY 2014, Lottery revenues are expected to exceed the previous forecast by $15.5 million.  The Chairman of the Lottery Board notified the Governor in writing this week that due to low prize payouts and significant sales through the first half of the fiscal year, largely associated with a very high Mega-millions jackpot, the net proceeds available for public education are projected to increase by $15.5 million. This additional Lottery revenue can be used to offset general fund expenses in public education with no reduction in services.

In addition to the excess lottery balances, the Governor has also identified balances in the Literary Fund that may be used to offset general fund teacher retirement costs, balances from unclaimed accounts previously held by a former state agency that may now be deposited to the general fund, and appropriation balances in other programs that are not going to be needed. 

The other program balances that will not be needed and whose appropriations can now be reverted or deposited to the general fund including the Federal Action Contingency Trust (FACT) fund, some economic development fund balances, and some pilot education program balances.

Finally, the remainder of the gap will be closed by reducing the unappropriated balance by approximately $40 million, from $51 million as it was in the introduced budget to $11 million.  The large unappropriated balance was intended to offset potential revenue losses so this adjustment is in line with its intended purpose.

January 2014 revenue letter, State of Virginia from Chuck Thompson

January 2014 revenue data, State of Virginia from Chuck Thompson

The above PDF's are the attachments that were included with the original source of the story at the Governor's office.

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