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By Michael Sluss
RICHMOND
Gov. Bob McDonnell told state lawmakers Thursday that most of Virginia's budget surplus has been spoken for and urged caution as the state deals with fiscal and economic uncertainty.
Virginia finished the last fiscal year with a surplus of $403.2 million because of stronger-than-expected tax collections and spending restraint by state agencies. McDonnell hailed the "slight economic growth" that helped generate the surplus and credited leaders in both parties, including former Gov. Timothy M. Kaine, for making budget cuts to balance the state's books.
"This modest surplus and fiscal turnaround was achieved by two administrations, two houses of the General Assembly and two political parties," the Republican governor said to the legislature's key money committees.
All but $71.2 million of the surplus has been obligated to satisfy legal requirements and provisions in the two-year state budget that took effect July 1. State employees, who have not received a raise in nearly three years, will get a one-time bonus of 3 percent in December that will cost $82.2 million. Surplus money also will be distributed to public schools, the transportation trust fund and the state's water-quality improvement fund, McDonnell said.
McDonnell attributed part of the surplus to a slight improvement in the economy, which pushed state tax collections $228.5 million beyond the forecast. State agencies also generated nearly $175 million in unanticipated savings.
The $14.2 billion in general fund tax collections represent a decline of 0.7 percent from the previous fiscal year, less severe than the 2.3 percent decline that was expected.
McDonnell tempered his celebration of the surplus with a call for caution. He said the economy "will continue to be tough and uncertain." He voiced concern about unfunded federal mandates, exploding Medicaid costs and unmet needs in transportation and higher education and called for more investments in economic development.
McDonnell reiterated his opposition to the plan to close the Joint Forces Command in Norfolk and Suffolk, calling it a "short-sighted action" that will cost thousands of jobs. About 6,000 are employed at the command locally.
Several lawmakers said the surplus is misleading because it came after the state adopted a budget that was balanced with deep spending cuts, short-term accounting maneuvers and an infusion of federal stimulus dollars. Similar steps were taken to balance a $4.2 billion shortfall in the current two-year budget, which reduced general fund spending to 2006 levels.
"It's really not a surplus in the true sense of the word," said Senate Majority Leader Richard Saslaw, D-Fairfax County.
"We wouldn't even be talking about the surplus if it weren't for the stimulus," said Sen. Roscoe Reynolds, D-Henry County, referring to federal assistance that helped the state avert deeper cuts to schools, public safety and health care.
Lawmakers in both parties echoed McDonnell's call for caution.
Del. Ben Cline, R-Rockbridge County, said the state should take steps to reverse two accounting maneuvers used to balance the budget: requiring certain businesses to pay July sales taxes a month early, and deferring about $620 million in payments to the state employee pension plan.
"These creative accounting maneuvers may have helped to technically balance the budget, but they have frustrated taxpayers and slowed business growth," Cline said.
McDonnell plans to phase out the accelerated sales tax during his term and said Thursday that pension solvency "is a top concern and priority for me."
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Budget
Virgnia needs to explore adding advertisements to school buses to bring in revenue. Dallas County was in the news on this and it appears to be a viable option.
Repeal The Radar Detector Ban
As you may know, Virginia is the only state that bans the use and sale of detectors. There is no evidence that the detector ban increases highway safety. Our nation’s fatality rates have fallen consistently for almost two decades. Virginia’s fatality rate has also fallen, but not any more dramatically than it has nationwide. Research has even shown that radar detector owners have a lower accident rate than motorists who do not own a detector.
Maintaining the ban is not in the best interest of Virginians or visitors to the state. I know and know of people that will not drive in Virginia due to this ban. Unjust enforcement practices are not unheard of, and radar detectors can keep safe motorists from being exploited by abusive speed traps. Likewise, the ban has a negative impact on Virginia’s business community. Electronic distributors lose business to neighboring states and Virginia misses out on valuable sales tax revenue.
Radar detector bans do not work. Research and experience show that radar detector bans do not result in lower accident rates, improved speed-limit compliance or reduce auto insurance expenditures.
• The Virginia radar detector ban is difficult an
Doing what is right for Virginia
My main concern is that the focus on the operating budget ignores the necessity of maintaining our assets; that is, our infrastructure, in this case, buildings, roads, highways, tunnels, and bridges, not to mention the condition of state parks, etc. Frankly, it is not too hard to "run a surplus" by ignoring the decay and deterioration of our state's capital assets. That has occured under democrats and republicans. All the hoopala over a surplus ignores the absolute dereliction of duty by the House of Delegates in maintaining and sustaining our infrastructure. The failure of this administration to move forward on this strategic issue is a sad commentary on "doing what is right for Virginia."
All agreed but...
I agree with you on the dismal state of our infrastructure and the dereliction of duty by the legislature to allow this to happen, but we have to start somewhere. A government budget deficit is difficult to fix. Especially in an economic downturn, many difficult decisions must be made in order to change the the direction towards viability. A balanced budget, or better yet, a budget surplus is the beginning of that change. Once we plug the holes in the bucket, we can put more water on the fire. Once the fire is out, we can rebuild. Unless the economy snaps back quickly, which I appears unlikely, we will need to be patient and proceed one step at a time.
The future is clear
Regretfully, no. It could be a stimulus to change, but it will not be in this administration. McDonnell was elected in a landslide, and his manadate is to "cut the arms and legs off of government so it can be drowned in a bathtub." Frankly, that is what the Governor and his allies in the House will continue to do until the dearth and quality of public services and the condition of the state's infrastructure becomes so deplorable that the voters elect delegates who will balance revenue and services. Until then, the Governor and Legislature will do exactly what we, the voters, told them to do, and that means no tax cut is too much, no program is safe, no disaster will be sufficient enough to prove our infrastructure is dangerous, and no city, county, or town is immune to the continuing budget cuts that will come from this administration. If he adopts the recommendations of his commission, and drops the BPOL and machinery and tool tax, and the corporate income tax, local governments may essentially become bankrupt.
Gloom and doom?
And you talk about everyone else. Mike, you won't be happy until every Virginian turns over his bank account to the tax man. Talk about despicable.
small government can be efficient too
The only thing a financial stimulus is good for is to fund liberal boondoggles while raping the taxpayer. It is nothing but wealth redistribution on steroids. With the pending year end tax increases, Obamacare costs, trickle down FinReg taxes, the Obama war on business and success, my finances have had it. Anyone in my house that brings up another stimulus program gets shown the door.
After decades of wear and tear, our infrastructure needs substantial repairs or replacement. Many of our bridges and tunnels were built close to the same time and all have operated beyond the designed capacity for their entire life. They do not last forever. They are no longer efficient, they all need repair and some need replacement. It will cost tens of billions to overhaul the infrastructure. The money is not there.
McDonnell is cutting the fat, both the republicans and democrats created. Who knows? If it is cut enough, there may be money for our infrastructure needs. There certainly won't be any money if we continually overspend.
YEAH
BONUS...this is just crazy how the State of Virginia keep finding OUR money...already spended...good story bad vibes.
No Surplus
There is no surplus. $620 million owed to the retirement fund equals a deficit of $620 million, not a surplus of $400 million. That money has to come from somewhere eventually.
Final Kaine Budget Shows Surplus
Yes after cutting and slashing programs and benefits, taking a holiday on pension contributions and aid to cities,schools and public safety, then accelerating tax collections, we have a surplus. So I guess when the budget tricks fade, and next years budget shows a deficit what will the McDonnell administration blame it on? Obama, of course, because he didn't put together a 2011-12 stimulus package. The next act is to blame those golden state employee pensions on the state's budget problems, no matter that they have failed to properly fund them for years, taking "loans" from the system, then they'll cry that it's too expensive to catch up. Where did that money go?