Last Monday, along with other members of the House Appropriations Committee, I went to Richmond to receive an update from Secretary of Finance Ric Brown on the status of the Commonwealth’s 2011-2012 biennial budget. Virginia operates on a July to June 30 budgetary year.
The Committee will meet monthly for rest of the calendar year, typically the third Monday of the month. In December the House and Senate Finance Committees, along with the House Appropriations Committee, will meet to hear the Governor present his recommendations for amendments to the biennial budget. The 2010-2011 biennium officially ends on June 30 2012.
This month there is some good news, although it is nowhere near as good as most of us would like to see. As reported recently in the national press, the recession is officially over, and Virginia is in the envious position of having a budget surplus, albeit a small one. Secretary Brown also reported that net individual income tax revenues, normally approximately 66% of general fund revenues, grew 5.3% in the first two months of this fiscal year, slightly less than the 5.5% estimated.
On the other hand sales tax collections fell on a year-to-date fell 30.7%, which was due to a budget action that required sales taxes to be remitted early-in the previous fiscal year. Adjusting for that, the collections grew, according to the Secretary’s analysis 6.2% –and ahead of the forecast. On the other hand corporate income taxes fell significantly.
While September revenues will help clarify the picture, probably, we will probably need the additional time to clarify the revenue picture before the Governor presents his December budget recommendations.
Of course, the big news is that the national recession is officially over. In addition, Secretary Brown reported that unemployment claims fell slightly during August. Inflation is low, and the Federal Reserve indicated it would keep the Federal funds target unchanged at 0.0 to 0.25 percent. Brown also reported that net income tax revenues to the Commonwealth rose 5.3 % from the same time last year, just slightly less than projected.
With some good news about a reviving economy, we still have a long way to go to return to the kind of budget stabilization that a significant and stable “rainy day fund” can produce. And of course a larger fund than we accumulated during the Kaine administration-which was the largest previously achieved-will be hard to achieve without additional sources of revenues.
Delegate Scott represents the 53rd District in the Virginia House of Delegates. He may be emailed at [email protected]