Virginia finished the fiscal year with a $448.5 million surplus, putting the state far enough in the black to give state workers their first pay boost in five years, Gov. Robert F. McDonnell (R) announced Wednesday.
A combination of higher-than-projected revenues and agency savings led to the surplus, McDonnell said at the annual meeting of General Assembly money committees in Richmond.
The state’s performance “stands in stark contrast to the difficult times facing most other states and our national finances,” McDonnell said.
His remarks drew criticism from both the left and right. Some liberal lawmakers suggested that the revenue figures were based on anemic forecasts that were not hard to exceed and that the agency savings amounted to a shell game, because some of those funds will return to the agencies. Some conservatives argued that the existence of a surplus means tax rates are too high.
But there were those who cheered McDonnell’s news, even though it included a warning that the looming federal spending cuts known as sequestration could dramatically change the fiscal picture in defense-heavy Virginia.
“It's good news, sure,” said Sen. Charles J. Colgan (D-Prince William), who voted with Republicans on the budget this year. “It’s better news than we’re used to. ... But, of course, he also let us know it could be pretty bleak with the Defense Department cuts.”
McDonnell announced in July that the state ended the fiscal year with a revenue surplus of more than $130 million, with revenues returning to 2008 levels for the first time since the recession began that year. On Wednesday, he announced operational savings that brought the total surplus to $448.5 million.
State law requires that the majority of the surplus go to the rainy day fund, Chesapeake Bay cleanup and roads.