Thursday, August 19, 2010
McDonnell to state lawmakers: 'Budget conservatively' despite surplus
While Virginia finished the last fiscal year in the black, the development hardly marks the end of the state's fiscal challenges.
RICHMOND -- Gov. Bob McDonnell told state lawmakers this morning that Virginia finished the last fiscal year with a surplus of $403.2 million, but cautioned that the state must continue to "budget conservatively going forward."
The year-end balance nearly doubled an initial projection the administration issued last month based on general fund tax collections for the 12-month period ending June 30. Tax collections exceeded the state's budgeted projection by $228 million, and unspent balances by state agencies added another $175 million to the bottom line.
Most of the excess revenue is obligated under the new state budget that took effect July 1. State workers, who have not had a raise in nearly three years, will receive a 3 percent pay bonus in December that will cost $82.2 million. Some of the surplus also will be allocated to public schools, transportation and the state's water quality improvement fund.
In a speech to the General Assembly's tax and budget-writing committees, McDonnell applauded his predecessor, Democrat Tim Kaine for proposing "some very tough budget cuts" to balance the budget. And he said lawmakers in both parties can share credit for forging an agreement on a balanced budget.
While the state finished the last fiscal year in the black, the development hardly marks the end of the state's fiscal challenges. The expired budget was balanced with a combination of spending cuts, an infusion of federal stimulus funds and accounting maneuvers that included deferring payments to the state employee pension plan. Lawmakers and McDonnell also approved deep spending cuts to offset a $4.2 billion shortfall in the current two-year budget cycle.
"In this tough environment we must remain fiscally conservative, embrace government reform, and look for more cost effective ways to deliver government services," McDonnell said.
The year-end balance nearly doubled an initial projection the administration issued last month based on general fund tax collections for the 12-month period ending June 30. Tax collections exceeded the state's budgeted projection by $228 million, and unspent balances by state agencies added another $175 million to the bottom line.
Most of the excess revenue is obligated under the new state budget that took effect July 1. State workers, who have not had a raise in nearly three years, will receive a 3 percent pay bonus in December that will cost $82.2 million. Some of the surplus also will be allocated to public schools, transportation and the state's water quality improvement fund.
In a speech to the General Assembly's tax and budget-writing committees, McDonnell applauded his predecessor, Democrat Tim Kaine for proposing "some very tough budget cuts" to balance the budget. And he said lawmakers in both parties can share credit for forging an agreement on a balanced budget.
While the state finished the last fiscal year in the black, the development hardly marks the end of the state's fiscal challenges. The expired budget was balanced with a combination of spending cuts, an infusion of federal stimulus funds and accounting maneuvers that included deferring payments to the state employee pension plan. Lawmakers and McDonnell also approved deep spending cuts to offset a $4.2 billion shortfall in the current two-year budget cycle.
"In this tough environment we must remain fiscally conservative, embrace government reform, and look for more cost effective ways to deliver government services," McDonnell said.
