* A Two-Year Guess: The budget is the state's best guess about how much money it will need and how much money it will raise. The General Assembly passes a budget every two years during its winter session. In the alternate years, it can make adjustments to account for increased costs or declining revenue. The state spends about $25 billion a year.

* Revenue: More than half of state revenue is non-general funds, which are receipts set aside for specific purposes. These include motor vehicle and gas taxes set aside for transportation programs and student tuition and fees earmarked to support higher education. Federal grants also are designated for specific activities.General fund revenue comes mainly from individual income taxes, corporate income taxes and sales and use taxes. This is the money that the governor and the General Assembly have the most discretion to spend.

* Spending: Most of the money is spent on operating expenses and the rest on the one-time costs of building or improving government facilities. Most of the operating money in the general fund is for education (45 percent), health and human resources (23 percent), and public safety (11 percent). Of the non-general fund money, most is set aside for education (31 percent), health and human resources (30 percent) and transportation (25 percent).

* Local Aid: About a third of the state's operating money goes directly to localities to support their services or is spent by the state on behalf of localities for specific programs. Most of the local aid goes to operate public schools.

SOURCE: Virginia Department of Planning and Budget