Virginia Gov. Bob McDonnell announced Wednesday that better-than-expected revenues and unspent appropriations helped create a general fund budget surplus of nearly $450 million for the fiscal year that ended June 30, bringing the total surpluses during Mr. McDonnell’s tenure to nearly $1.4 billion.
“I’d say this is a bipartisan accomplishment, and looking at other states, not bad for any state in this economy,” Mr. McDonnell, a Republican, said in an address to the General Assembly’s money committees Wednesday.
The total comes from $129.2 million in better-than-expected revenues announced last month, plus $187 million in unspent general fund monies, and $132.3 million in higher education and other unspent nongeneral funds.
About $78 million is constitutionally obligated to go to the state’s rainy day fund, and the Virginia budget dictates that $30 million go to a contingency fund to steel for potential federal budget cuts. About $132.3 million will be returned to higher education and other nongeneral fund accounts such as the Virginia Health Care Fund, which is comprised of proceeds from the state tobacco tax and other sources.
The agency savings of $187 million, which largely comes from unspent general fund appropriations, is enough to put $77.2 million toward a 3 percent bonus on Dec. 1 for all state employees — except Mr. McDonnell, Lt. Gov. Bill Bolling, Attorney General Kenneth T. Cuccinelli II and state legislators. Mr. McDonnell had said earlier in the week he was confident there would be enough money for the bonus, which was contingent on agency savings of about $80 million.
“After five years with no pay raise, I am pleased that we’re able to reward our employees with this performance incentive bonus while simultaneously preserving our core services and building up the commonwealth cash reserves,” Mr. McDonnell said.
The state’s Revenue Stabilization Fund, or rainy day fund, automatically received an additional $78.3 million under state law. The fund, which can be tapped when general revenues drop to less than 2 percent below projections, now stands at nearly $700 million.
Another $16.9 million will be allocated to the Virginia Water Quality Improvement Fund to go toward cleaning up the Chesapeake Bay, and the state will deposit $20.9 million into the Transportation Trust Fund. An additional $17.2 million will be set aside to cover the state’s share of costs from several natural disasters that occurred last year.
Mr. McDonnell, who also is chairman of the Republican Governors Association and a top surrogate for presumptive GOP presidential nominee Mitt Romney, also took a few shots at politicians who work on the other side of the Potomac in his address.
“Together we are proving that, unlike Washington, we can regularly balance a budget, actually spend less and deliver good customer service for our people,” he said.
Nevertheless, Mr. McDonnell also warned of potentially cloudy skies on the horizon, namely the looming half-trillion dollars in federal defense cuts as part of the deal last summer to increase the country’s debt ceiling.
The so-called “sequestration” process automatically cuts about a trillion dollars — half from defense and half from other programs — and will go into effect early next year without action from Congress. The defense cuts would disproportionately affect Virginia, home to many military employees and defense contractors.