Bacon's Rebellion

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Uh, Governor? This is How It Works

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Dick Hall-Sizemore
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by Dick Hall-Sizemore

Someone needs to tell Governor Youngkin or his Secretary of Finance how things work in the state’s financial structure.

According to a recent report in the Richmond Times-Dispatch, the Governor said that he has directed Randy McCabe, the Comptroller, or director of the Department of Accounts, to “to set aside $397 million for a taxpayer relief fund that the governor will ask the General Assembly to create in its next legislative session.”

That sounds impressive. The only problem is that it cannot be done legally. The Comptroller cannot just “set aside” general fund revenues. As Randy McCabe had to remind us in the Department of Planning and Budget on more than one occasion, there has to be some legislative authority to move general fund revenues to a special fund. Therefore, that $397 million has got to sit in the general fund, earning interest, by the way, until the General Assembly authorizes the creation of the special taxpayer relief fund.

There is another factor. There is already a Taxpayer Relief Fund on the state’s books. It was authorized by the 2019 General Assembly for the receipt of “excess” general fund tax collections resulting from the significant changes in federal tax law. The General Assembly authorized tax rebates to Virginia taxpayers from that fund. In FY 2020, more than $425 million was distributed to taxpayers.

It seems that Youngkin is planning to propose another round of tax rebates similar to those in FY 2020 and those scheduled to go out in the fall of this year.  (Obviously, the Commonwealth’s economy was not in as much of  a “rut” as he claimed during last year’s campaign.) The fact that there is an existing Taxpayer Relief Fund is pretty much a technicality. He can always propose the creation of another special fund with a different name.

Getting back to which of his agency directors he needs to be talking to… The vehicle for directing the transfer of that $397 million from the general fund to a special taxpayer relief fund would be the state budget. Also, the folks who will be developing the governor’s budget amendments are the ones to be told not to count that $397 million as revenue that can to be used for spending amendments. That agency would be the Department of Planning and Budget and the director, by the way, is Michael Maul.

To the average citizen, these details don’t matter. But, to close observers of state government, such as senior members of the General Assembly money committees and their staffs, they are a signal that the Secretary of Finance is still trying to find his way around state financial processes or, if he has done so, the Governor is not talking to him about it.

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25 responses to “Uh, Governor? This is How It Works”

  1. Virginia Gentleman Avatar
    Virginia Gentleman

    “But, to close observers of state government, such as senior members of the General Assembly money committees and their staffs, they are a signal that the Secretary of Finance is still trying to find his way around state financial processes or, if has done so, the Governor is not talking to him about it.”

    Or he doesn’t care and he is announcing all of this as a political stunt to score points so he can run for President. Thanks for sharing the details though.

    1. Nancy Naive Avatar
      Nancy Naive

      He IS running for the WH. He’s going to try the same Mr. Milquetoast act nationally to be a counter to Governor DeathSentence.

  2. James C. Sherlock Avatar
    James C. Sherlock

    Dick, what am I missing? The opining sentence of the RTD report wrote:

    “Gov. Glenn Youngkin will set aside almost $400 million for additional tax relief in the budget he will propose in December, using almost $3.2 billion in surplus revenue and unspent appropriations in the fiscal year that ended on June 30.”

    It will be in his budget proposal. What am I missing?

    1. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      It is the next paragraph in which he says that he will ask the Comptroller to “set it aside” that I am taking issue with. It is not the Comptroller he needs to be giving directions to, but DPB.

      1. Nancy Naive Avatar
        Nancy Naive

        Corporate think. Ya know, president, vice president, treasurer, lawyer or legalzoom, Delaware, and you’re in business. “At Carlyle, we just directed the comptroller…”

        But then, his 17-year old son thought he could vote, too.

    2. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      It is the next paragraph in which he says that he will ask the Comptroller to “set it aside” that I am taking issue with. It is not the Comptroller he needs to be giving directions to, but DPB.

  3. LarrytheG Avatar
    LarrytheG

    What’s the normal timeframe that a Va Gov would be announcing his “plans” along these lines and isn’t it really a proposal to the GA ?

    He might be channeling De Santis and the conservative tilt toward autocracy… these days…

    1. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      It is a little early to be revealing budget proposals, but it is not unusual to do so at some point. It is clear from his comments that he realizes that he needs the GA to go along in order for them to be implemented.

  4. Stephen Haner Avatar
    Stephen Haner

    Without question far more than $400 million of that balance can be attributed to the tax changes driven by conformity in 2018, especially on the business side. So it could be parked in that existing account code. But by the time a budget appears in December I expect concrete tax proposals will be cited (and not rebates, not that again please). That’s just a placeholder, Dick. You are talking out of your hat to claim it some sign of confusion

    My question: $400 million per year or over two years? Neither is a major tax cut, really. And while I don’t think we are in full recession now, in December-January it will be a different story.

    1. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      I am just going with what the Governor is saying. You are right–$400 million is not much of a tax cut. Tax cuts affect future state revenue, not surpluses from the prior biennium. You don’t need a “taxpayer relief fund” for taxpayers to benefit from tax cuts–they just pay less tax. So, if you are going to “give back” $400 million or more, then you are talking about rebates. Either that, or the governor is even more confused that I thought. (In other administrations, these presentations by the Governor are reviewed by the Secretary of Finance and the heads of other finance agencies for any errors. Therefore, I am assuming the Governor meant what he said.)

      1. Nancy Naive Avatar
        Nancy Naive

        That’ll assuming SecFin knows what he’s doing too. Blind, blind, ditch.

        1. LarrytheG Avatar
          LarrytheG

          Virginia still has some unmet needs in things like k12 education, affordable housing, opiods, mental health and transportation ( hundreds of unfunded projects including deficient bridges).

          The Coastal Areas of Virginia have issues with flooding.

          VITA, VEC, VDH also seem to have some issues.

          I’d like to see Youngkin address BOTH the surplus AND the needs.

          1. Dick Hall-Sizemore Avatar
            Dick Hall-Sizemore

            He may address some of these needs. We will have to wait until December when he releases his proposed amendments to the biennial budget.

  5. Nancy Naive Avatar
    Nancy Naive

    ” (Obviously, the Commonwealth’s economy was not in as much of a “rut” as he claimed during last year’s campaign.) ”

    Oh, don’t worry, it’s easily claimed as the result of brilliant changes instituted in his first 6 months.

    1. Stephen Haner Avatar
      Stephen Haner

      Virginia employment remains 100K below pre-pandemic levels. The U.S . overall is back to the old level, many states have blown past 2020, but we lag. Despite the federal government presence. So yes, we were in a rut and haven’t climbed out. Details in yesterday’s presentation.

      There is nothing untoward with the Governor stating his intention to bake some additional tax relief into his future budget, and announcing how much of the surplus he has set aside for this. As part of the state government mandarin class, Dick has his nose out of joint because the new SecFin was not chosen from among the elect, but came in from the business world and thus doesn’t dance the steps exactly as Dick and his friends are used to. Who the F cares, Dick? The bottom line is, the state is embarrassingly fat with cash and more tax cuts are in order. If the economy were firing on all cylinders, it would be even more flush.

      1. LarrytheG Avatar
        LarrytheG

        how can we “lag” when the revenues are overflowing?

        There seems to be conflicting data and viewpoints, eh?

        1. Stephen Haner Avatar
          Stephen Haner

          http://hac.virginia.gov/Committee/files/2022/8-19-22/JMC%20FINAL%20AUG%202022.pdf

          Slides 20-23, if you want facts and not Dem Party talking points…

      2. Dick Hall-Sizemore Avatar
        Dick Hall-Sizemore

        As I said initially, most citizens don’t care about the details. And his announcements may be a shorthand way of signalling more tax relief. But, when he doesn’t seem to know which agency as the statutory responsibility of preparing the budget, that is a signal to the GA money committees. The Secretary of Finance may not dance the steps exactly as has been done in the past, but the world of government finance is different from the business world and those who know the rules, such as Hunter Andrews, Chris Jones, Ric Brown, and John Bennett, are the ones who get things done. By the way, I have heard that Youngkin has spent some time in DPB, getting to know the personnel there and what they do. That is a good sign and it makes his announcement all the more puzzling.

        1. Stephen Haner Avatar
          Stephen Haner

          OMG he was reading a prepared speech. Of course he knows that DPB is, what it does, who runs it, and so does Secretary Cummings. This is a nothing burger, Dick. He is entering his first of four budget prep seasons and he’s about to get the deep lesson. Nobody is dissing your favorite agency!

          1. Nancy Naive Avatar
            Nancy Naive

            How do you know what he knows? Further, why would he know it? Twelfth-grade government class in 1978?

            OTOH, is it really important that he know it? The fact that the Sun revolves around the Earth affects your efforts as a lobbyist how, exactly?

        2. Nancy Naive Avatar
          Nancy Naive

          He’s also spent time in Kansas within spitting distance of Iowa.

  6. Nancy Naive Avatar
    Nancy Naive

    Steve, seriously. US elections, and Virginia by inclusion, are popularity contests. We don’t elect people who actually know anything about government, and Youngkin is a prime example. I’m not saying they’re incompetent or incapable, just ignorant — at first.

    Maybe an unpaid internship program is in order?

  7. Nancy Naive Avatar
    Nancy Naive

    $400 million, eh? Don’t give it all back. Contact every mayor, county supervisor and PD, and ask, “What’s the most dangerous intersection or stretch of road, and how much would it cost to improve it?”

    Sort by TCs, injuries, and deaths and start fixing them until the money is gone or they’re all fix. You know there are 100s of small jobs — maybe just signage– that will save millions in insurance claims, lost time, and death out there.

    1. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      That is actually a good idea. The Governor could get a lot of good PR out of it, as well.

      1. Nancy Naive Avatar
        Nancy Naive

        Well, it ain’t a social issue. It’s widespread, statewide. Everybody gets to see something done in their neighborhood instead of a $50 rebate.

        And unless you’re the love child of Grover Norquist with a poll tax (we all know who I mean), who could object?

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