Despite entering office with a $4.2 billion budget deficit, Governor Bob McDonnell announced today that Virginia ended the 2010 fiscal year with a $220 million budget surplus. Governor McDonnell promised fiscal conservatism and he’s delivered on that promise.
The $220 million surplus announced today by Finance Secretary Richard D. Brown is $80 million larger than the $140 million surplus projected last month, before the final month of revenue collection was completed.
Democrats have been attacking the governor since it first appeared that there would be a surplus, calling it “smoke and mirrors” and a “sham.” Some Democrats, including delegates, have argued that the budget wasn’t balanced because of the deferrals of payments to the Virginia Retirement System and the counting of millions in federal medicare assistance that hasn’t been approved by the federal government yet. Even some Republicans have given the Governor a hard time for the fee increases that were included in the budget.
The Democratic critics ignore the fact that a surplus is a surplus – if you’ve taken care of all of the liabilities in the budget and there’s money left over, it’s a surplus. It doesn’t matter how you got there, it matters where you end up. If you want to argue that a surplus isn’t a surplus if you’ve had to reduce payments to retirement plans or other mandatory spending, then the so-called “Clinton” surpluses (brought to you by Newt Gingrich and the Republican Congress) weren’t surpluses at all because of the social security and medicare liabilities that existed. But we don’t think of the budget that way – at least, not unless we’re being hyper-partisan. This surplus is a real surplus and it’s important.
Why? Because, unless something drastic happens, it represents the rock bottom. It is unlikely that we will face a rockier two years in the Commonwealth than we have in FY 2009 and FY 2010 in the near future. Economic numbers in Virginia have been on the rebound, with unemployment dropping slightly over the last few months (although still not up to the levels it was last year). We’ve seen at least one big employer moving to Fairfax, Northrop Grumman, bringing all of its headquarters functions to the Commonwealth. We’re seeing job creation, although slight, and we’re seeing tax revenues rebounding from the winter woes.
This means we shouldn’t have to expect any more deep cuts in services like we saw during the last budget cycle. It means we probably won’t see any more “fee” increases that have so angered conservative anti-tax purists. And it means that state employees, who haven’t seen a raise in four years, will get a little something extra in the paychecks this September. Virginia public employees have faced layoffs and pay freezes during this recession – as all public employees should expect to in recessions – and now that times are better, they’ve earned their bonuses.
Regardless of what the cynics say, this is good news and the Governor deserves the credit.
And despite big budget cuts, supposedly an economic negative in the view of fiscal freespenders, Virginia remains strong, at number 2 in America’s Top States For Business. See…
http://www.cnbc.com/id/37516043/?__source=usatoday&par=usatoday
Maryland, with its liberal leadership and fiscal prolifigacy, is in the bottom half.
You must have an awfully large rug, and broom to match…
Joel, facts are stubborn things. Yes, some tax payments were moved forward, yes, some VRS payments were postponed, and yes, some fees were increased in the last budget.
Regardless of those facts, as I noted in the post, a surplus is a surplus. The Governor’s budget has resulted in a surplus. That’s a good thing. And I’d think that Democrats would like to see public employees get rewarded for what they’ve earned and what they’ve given up over the last few years.
Also, you might want to retire that rug/broom cliche. You’re overusing it.
Eh… the economy’s still in the toilet. We’re gonna have face huge shortfalls again.
Brian,
Even with the “surplus”, if you account for the VRS deferred payments, the state is running a deficit of over $500 million. Just as we can’t ignore debt when reporting our net worth, I think it’s disingenuous to not figure in these deferred payments when reporting surpluses or deficits for the state.
Where we agree is that public employees, who haven’t seen raises for quite some time, should be rewarded.
And for the record, I don’t know when the last time I used the “rug/broom cliche.” I hardly think I’m overusing it.
Joel, you used it in your piece attacking McDonnell for this “deficit.”
http://vbprogressives.com/2010/06/24/mcdonnells-shell-game/
Where are you getting that we’re running a $500 million deficit?
The finances of a state or the federal government aren’t the same as the finances of an individual. It’s not disingenuous to not factor in the deferred payments any more than its not disingenuous to ignore medicare, medicaid and social security liabilities when calculating whether we had a surplus in 1998-2000 on the federal level.
Even if the VRS payments for last year were made (which were around $140 million), there still would have been a surplus.
I know it’s hard for you guys to give any credit to Republicans, but c’mon.
Eh. I consider deferment debt, and I don’t like it when governments do it, no matter who is in charge of running them at the moment. And while I agree that governments aren’t individuals, it’s not unreasonable to make a connection. If I defer my student loans (which may not charge me interest during those periods of time, thus the debt itself does not grow) it makes no sense if I turn around at Christmas and have a bigger tree and more presents under it. I still owe the debt, and only small children who like shiny things are going to impressed with my financial wizardry.
Unfortunately, we are all too often the very children distracted by the shiniest of things.
Interesting discussion here about whether or not Virginia has a surplus. Question for you Democrats: did Clinton balance the Federal budget and generate a surplus?
If you answered “yes,” then you must admit that McDonnell has done the same thing in Virginia. The so-called Clinton Surplus was rigged by borrowing from the Social Security Trust Fund, which created future obligations that will hasten the coming bankruptcy of Social Security if we do not increase the deficit to repay those obligations.
I’ll leave it to others to decide whether or not that was a surplus, but stop and consider the significance of Clinton’s bookkeeping the next time someone tells you that Bush inherited budget surpluses that he squandered on unnecessary wars.
Brian: This surplus is in the FY 2010 budget. That would be Kaine’s budget, no? At most, McDonnell could have affected the last six months of that budget. But the major savings, including the state employee fourlough day, were already decided before he got there. Granted McDonnell got to make a few tweeks after he got in and some cash got shifted around, as it always is. And revenues were reforecast and reforecast again and did end ahead of the re-re-forecast. But the Kaine administration had already cut billions from that budget. It gives a completely eroneous picture of the state’s financial condition to claim that we have a “suplus” now. The next budget, on which he had more input, will give a better picture of McDonnell’s fiscal management of the commonwealth. I expect, by the way, that he’ll do a very competent job.
HisRoc:
All federal administrations attempt balance the budget with the Social Security Trust Fund as well as the Federal Employment Retirement System Fund. That is why Lyndon Johnson came up with the Consolidated federal budget so that he could have both butter and war. Unfortunately, the Vietnam war cost so much that he had to give up on the butter!
McDonnell was only emulating Lyndon Johnson!
The guy is playing number games. It was wrong when Clinton did it and its wrong now. I’m with Bob Marshall on this. Real conservatives would oppose these games and stand with Bob, I guess you’re all just RINOs!!