Bacon's Rebellion

Democracy Thrives in Sunlight

Virginia Ekes Out Budget Surplus

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by

James A. Bacon
in

Virginia eked out a $129 million surplus for its $41 billion budget in Fiscal Year 2o12, Governor Bob McDonnell reported in a press release this afternoon. It’s the third straight year with a surplus, although the sum is smaller than the $228 million recorded in FY 2010 and $403 million in FY 2011.

There won’t be much money for the politicians to play with. The surplus is all spoken for: $78.6 million for the Rainy Day Fund, $12.3 million for the Water Quality Fund, $20.2 million for transportation, and the rest toward payment of a state employee bonus.

The press release attributed the surplus primarily to stronger-than-expected revenues. Collections rose 5.4% compared to 4.5% forecast.

McDonnell took the opportunity to praise Virginia’s conservative fiscal management while taking a swipe at the spending culture in Washington, D.C. “For too long, elected officials from both parties have over-promised and overspent, and the result is the fiscal crisis we see unfolding in Washington D.C. Here in Richmond, we are committed to a culture of fiscal responsibility and restraint in state government. We have made some very tough choices. We have reduced spending, not raised taxes and focused government on its core functions. Virginia continues to live within its means.”

All true.

Virginia spending in FY 2012 has rebounded since the recession to 2008 levels. With economic growth expected to slow over the next two quarters, there will be no let-up for the budget hawks. Then the threat of sequestration, which would result in massive cutbacks to federal spending in Virginia, looms in 2013. Fortunately, the General Fund budget calls for only 1.1% in spending this fiscal year.

— JAB

Special thanks to personal injury lawyer Thomas Soldan for supporting Bacon’s Rebellion.

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Comments

  1. larryg Avatar
    larryg

    just curious – how is the unfunded liabilities represented in the budget?

    We are told the Fed budget is on the verge of disaster because of it’s unfunded liabilities AND that States cannot do that – that by law they must balance their budgets.

    so what about this unfunded liability stuff?

  2. bosun Avatar
    bosun

    Part of the ‘surplus’ came from making counties and cities sending back to the state $60 million of the state aid to localities. The localities call it local aid to the Commonwealth. Bosun

  3. larryg Avatar
    larryg

    Interesting title at JLARC: Review of State Spending 2011 Update

    slide 19: Ten Highest Growth Programs (FYs 2002-2011)

    MedicAid is number one but number two is “hidden” because it’s been broken up into sub categories but if you put them all under one category – Education – it has increased as much or more than MedicAid.

    but I still ask how we can have a balanced budget if we owe money to the pension plan.

  4. TMT Avatar
    TMT

    Bosun, given the amount of state aid paid by Fairfax County taxpayers, I like the idea of reducing it. RoVA start raising your property taxes.

  5. bosun Avatar
    bosun

    To be sure, RoVA appreciates Fairfax County’s bountiful gift, but local aid to the Commonwealth has nothing to do with local taxes. It’s what the state is suppose to reimburse localities for running state mandated programs.
    Fortunately for all, local aid to the Commonwealth is reduced this fiscal year from $60 million to $50 million, but it still represents another accounting trick to balance the budget and keep the General Assembly from raising taxes.
    As to raising local taxes, several localities in RoVA did this year. And when they proposed to do so, at least two were targeted by Americans for [my, not your] Prosperity, and the citizens in those localities received robo calls opposing the effort. Pretty soon, candidates for local office will be required to sign the Norquest death to taxes pledge in order to run for office. Bosun

  6. larryg Avatar
    larryg

    Where does the State get it’s revenues that it gives as local aid?

    Doesn’t it actually get it from individuals who pay sales and income taxes ?

    FYI:

    states without income taxes:

    Alaska
    Florida
    Nevada
    South Dakota
    Texas
    Washington
    Wyoming

    States without Sales Taxes:

    Alaska
    Delaware
    Montana
    New Hampshire
    Oregon

  7. TMT Avatar
    TMT

    Larry, that’s my point. The quarterly estimated tax payment checks I write to the Commonwealth get sent around the state. I’d rather state aid be cut to all but the poorest jurisdictions where a real tax effort is insufficient to operate schools that meet state standards. Then NoVA can write smaller checks to Richmond and larger checks to local government. But the latter will stay here. People who live in the middle would neither contribute money to, or receive money from, the state. They would just pay real estate taxes to run the schools they want.

  8. larryg Avatar
    larryg

    TMT -how do you know it’s your income taxes that are being sent to RoVa?

    My impression is that it’s the sales taxes.

  9. TMT Avatar
    TMT

    Larry, look at the addresses where Virginians pay their personal income tax liability. In most of the jurisdictions, you send the check to the local tax official, but in donor jurisdictions, your check goes to the state for “further handling.” See http://www.tax.virginia.gov/taxforms/Individual/Income%20Tax/2011/760Instr.pdf at page 47.

  10. larryg Avatar
    larryg

    TMT – I think you may have that wrong:

    ” Use e-File to electronically file your federal and state tax returns at the same time. Software programs are available online and for purchase in stores that provide e-File capability.
    ……
    To file by mail, use the mailing address listed on the back cover of this book and look up the city or county where you live or file directly with the Virginia Department of Taxation”

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