Once again we find that tax revenues are surging in Virginia. A front-page graphic in The Wall Street Journal this morning notes that Virginia revenues so far are running 14.9 percent ahead of last year — exceeding the national average of 9.5 percent by a hefty margin. That amounts to 9.03 billion for the first three quarters of the fiscal year.
Actually, the WSJ’s numbers, based on only nine months of results, are a tad low. Says Finance Secretary John Bennett in his latest revenue report, based on 11 months: “Through May, revenues have grown 15.2 percent above the same period last year — substantially ahead of the forecast of 10.3 percent.”
Readers may recall the justification for raising taxes. Gov. Warner and his allies in the state senate warned of a long-term “structural” budget deficit in state finances. Now we’re facing the opposite problem, a long-term “structural” surplus. Last year the General Assembly found ways to spend nearly all of that surplus. The one saving grace was that legislators devoted most of the money to one-time uses that would not add to the state’s programmatic overhead. It will be interesting to see if they can resist the temptation in 2006, when the surplus recurs–bigger than ever–to crank up the spending machine.
The massive surplus is an embarrassment to Virginia’s political class, which would prefer to sweep it under the rug. But voters (those few who bother to go to the polls) should remember the budget surplus when they cast their ballots. The citizenry needs to chastise incumbents who panicked in 2004 and voted for a tax increase that many warned then was not needed, and, in retrospect, is even more clearly not needed now.