We’re in the money,
We’re in the money;
We’ve got a lot of what it takes to get along!
– 42nd Street Soundtrack, “We’re In The Money”
All right…that’s probably a bit of an overstatement – although the news is much better than it was one year ago when I sent out an e-mail with subject line “Busted” as the Commonwealth was facing a $2.4 billion shortfall.
Governor McAuliffe announced yesterday that, based on preliminary budget figures, it looks like we will end fiscal year 2015 with about $553.3 million more in revenue collections than budgeted. This represents the largest fiscal year-end surplus in the Commonwealth’s history. It is also an indication that the Governor’s efforts to grow and diversify our economy are working.
Where Will The Surplus Go?
That’s the good news. The bad news is, under Virginia law, the Revenue Stabilization Fund and the Virginia Water Quality Fund will claim approximately $533 million or 96 percent of the total revenue surplus before any other allocations are made. This is only fair because we borrowed heavily against the rainy day fund to close the $2.4 billion shortfall just one year ago.
So, while revenue collections rose by 8.1 percent in FY2015, ahead of the revenue forecast of 4.7 percent growth, most of that money is already spent. It’s sort of like getting a tax refund check in April, and finally being able to pay off the holiday shopping you put on your credit card.
Growth in individual income tax receipts from non-withholding payments, payroll withholding, and lower-than-expected individual income tax refunds drove the revenue increase. On August 27th, the Governor will present the final FY2015 surplus tally, to the General Assembly Joint Money Committee meeting.
This surplus is positive for state employees. State employees will receive the 2 percent raise that was added to the biennial budget during this year’s legislative session. The increase will kick in this September for full-time state employees, faculty at public universities, judges and justices of the Judicial Department, state-supported locally elected Constitutional officers and their full time staffs, such as deputy sheriffs, local health departments and social services offices, full-time community services boards’ staff and other eligible state-supported employees. Additionally, local school divisions will receive funding to provide the state share of a 1.5 percent pay increase for all public school positions required by the Standards of Quality.
What This Means For The Next Budget
While this surplus is certainly good news, we should maintain a positive, yet cautious outlook for the next biennial state budget. We need to continue investing in progressive priorities that make Virginia an attractive place for new businesses and lay the foundation for a stable economy.
The recent budget shortfalls that we have experienced in Virginia stemmed from decreased revenues driven mainly by changes in federal tax law and sequestration-driven cuts to the defense industry that is so critical to the local economy, particularly here in Northern Virginia. As a result, we had to address this shortfall responsibly, prioritizing our core economic priorities like education, transportation, healthcare, and public safety.
For the next two-year budget (FY2016-FY2018), we must continue to invest and improve the Commonwealth in a way that makes it attractive to new businesses. This includes workforce development, updating the Code to reflect SCOTUS’s recent ruling on same-sex marriage, investing in higher education, and promoting environmentally sustainable practices.
It is also imperative that we immediately accept the $5 million dollars per day that are available through the Affordable Care Act to close our health care coverage gap. In the current fiscal year, Virginia will spend $232 million in state revenues on health-care services that otherwise would’ve been covered by federal taxes we’ve already paid – if we had expanded Medicaid in some form or fashion.
Delegate Simon represents the 53rd District in the Virginia House of Delegates. He may be emailed at [email protected]