Fiscal Illiterate or a Liar?


    Ask the Governor if you don’t pay your bills but have money in hand at the end of the month if that’s a surplus. His answer must be “yes” because that’s how he’s claiming a state budget surplus. Better yet, the improving economy “that isn’t” helped exaggerate the “surplus.”

    Finance Secretary Richard D. Brown announced that June revenue figures show a larger-than-expected year-end balance resulting mostly from collections of individual and corporate income taxes. That would mean that the economy is strengthening, although there was an accounting slight of hand on sales tax collections from businesses too. That administration trick on its own cannot fully explain the increase in corporate income tax receipts. The remainder of the 25% increase in collections year over year can only be explained by more robust economic conditions.

    It is a tough position to be in. The only authentic good news in this story is on the economy. That would not serve political purposes, so this is the way the story turns, completely ignoring unfunded obligations and any other nasty things called facts.  

    • dgjudy

      Any announcement of some small surplus right now is simply chicanery.  In the last GA session the Governor pushed to temporarily reduce contributions to the VRS.

      This may or may not have been good policy, but to ignore it now is to ignore economic reality.  Retirement pensions are financial obligations of the state.  Deferring the cost of those obligations is economically identical to borrowing from future taxpayers – unless the state were to renege on its obligation, in which case it’s a confiscation from retirees.

      As that story indicates, the GA is likely to need more than what was held back in 2010, to make up the difference in 2011.  This “surplus” is for one budget year only, and is not sustainable: it’s a brief moment in the black that McDonnell just hopes will pay a more lasting political dividend.