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.