Home Budget, Economy Message to Media: Virginia Budget Is NOT In Surplus!

Message to Media: Virginia Budget Is NOT In Surplus!


I was talking to a Democratic delegate this weekend, and he gave me an earful about how the traditional media is completely missing a huge Virginia story. Actually, it’s worse than just “missing” the story, they’re actively distorting and misleading, by repeating an untruth over and over again. Namely, that Virginia has a “budget surplus.” That is simply false. Not true. A lie.

First off, here are a few examples of reporters repeating that lie.

1. The normally excellent Robert McCartney writes this howler: “The economic reality is that Virginia, unlike most states, is enjoying a budget surplus ($403 million). That means McDonnell has public dollars to invest in projects that will help the state in the long term.” FALSE!

2. The normally excellent Jeff Schapiro says that Virginia had a “surplus of about $400 million for the spending year that ended this past June.” FALSE!

3. Ros Helderman, a fine reporter, “Virginia finished the fiscal year with a $400 million surplus.” FALSE!

According to the Democratic delegate I spoke with, and according to the facts, that is simply not true (although it is certainly the spin being put out by the McDonnell administration). In fact, the State Senate Finance Committee estimates that “a general fund budget shortfall of under $200 million is likely for the amended 2010-12 budget.”  The committee adds that, for the 2010-12 budget, “Due to the one-time nature of certain prior year actions, projected revenues for the two-year period fell short of the biennial ‘base budget’ by  $1.6 billion.” Added to that was $2.9 billion in “required spending,” resulting in a $4.5 billion budget gap for 2010-2012.

How this was $4.5 billion gap was supposedly “closed” is fascinating, but definitely nothing to brag about, as it involved some serious sleight of hand: “[deferring] approximately $620

million of the usual VRS retirement contributions
for the biennium;” $773 million in one-time federal “stimulus” funds; and around $1 billion each in cuts to K-12 education and to Health and Human Services. Also, there was this slick maneuver, accelerating payment of taxes worth $227 million from 1,000 of the state’s largest merchants. There was other monkey business as well, but that’s enough to give you an idea of what we’re talking about here.

The bottom line is this. Bob McDonnell claims that Virginia’s in “surplus,” but in fact we’re not even close. In fact, we’re facing an approximately $200 million deficit for the 2010-12 budget, NOT counting the $620 million “borrowed” from the state retirement system(and that has to be paid back!), NOT counting the one-time federal “stimulus” money (which will run out soon enough), and NOT counting the accelerated tax payments of $227 million (and that should be subtracted). That adds up to a DEFICIT of around $1 billion for 2010-12, even after huge cuts to Virginia’s budget (particularly education and health and human services) the past few years.

If that’s Bob McDonnell’s – and the media’s – definition of a “surplus,” I’d hate to see what their definition of a “deficit” might look like!


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