“I inherited the largest budget deficit in the history of the state from the Republicans.”
There’s a theme as the former governor — who under Virginia law was not able to hold consecutive terms — seeks to win his old job back. The Democratic primary winner says he knows how to build back an economy and turn things around, frequently claiming that he inherited the largest budget deficit in Virginia’s history from his GOP predecessor.
There’s a big problem with this claim: It has been fact-checked as false not once but three times by our colleagues at PolitiFact. In 2015 and 2019, PolitiFact dinged McAuliffe for saying he inherited a budget deficit from the Republicans. In 2015, PolitiFact also faulted him for saying it was the biggest budget deficit ever — a statement that his spokesman at the time explained as an inadvertent flub.
“When you talk to the public all day, sometimes you have a slip of the tongue,” the spokesman said.
Well, McAuliffe’s tongue has been slipping a lot lately. He has ventured into recidivism.
Let’s divide this in two parts. First, did McAuliffe inherit a budget deficit left behind by Republicans?
The short answer is no. Virginia requires a balanced budget, so that’s what former governor Bob McDonnell (R) left behind.
Under Virginia’s two-year budget cycle, the legislature and governor settle on a plan at the beginning and then make amendments going forward depending on economic circumstances. The governor proposes a budget in December, the General Assembly debates it and votes in March or April, and the budget takes effect in July.
At the end of two years, the state constitution says, the governor “shall ensure that no expenses of the Commonwealth be incurred which exceed total revenues on hand.”
One quirk in Virginia’s budget cycle is that the outgoing governor leaves a budget proposal for the incoming governor and legislature — who may radically change it before it goes into effect.
Before departing office, McDonnell in December 2013 sent two budget bills to the General Assembly — one for the budget period ending June 30, 2014, and the other for the period beginning July 1, 2014. They both showed slightly more revenue than expenses.
In other words, the GOP governor left behind a balanced budget.
A review of news reports at the time finds that there was little controversy over the revenue estimates in McDonnell’s proposal for 2014-2016. “McDonnell premised his budget on dour revenue projections; it assumes revenue growth of 1.7 percent in the budget’s first year and 4.2 percent in the second,” The Washington Post noted, adding that “McAuliffe issued a statement praising certain aspects of the proposal, including investments in mental health, higher education and the retirement system.”
So how does McAuliffe claim McDonnell left behind a deficit?
McAuliffe is basing his claim on the fact that the revenue projections in December began to be affected in 2014 by two factors. First, federal spending cuts under the budget deal reached between President Barack Obama and the GOP-led Congress began to pinch businesses in Northern Virginia. Second, there had been a flood of tax revenue in late 2013 because the expiration of certain tax cuts that year led investors to cash in capital gains. That resulted in an unanticipated plunge in state tax revenue in 2014.
“At the beginning of his time as governor, Terry McAuliffe faced a state budget prepared by his Republican predecessor that did not end up having enough revenue to cover the operating expenses,” Renzo Olivari, a campaign spokesman, said in a statement. “Not having enough revenues to cover expenses is the definition of a deficit.”
Note, however, that McAuliffe has been claiming he “inherited” a deficit. Instead, he inherited a balanced budget — and then faced a deteriorating financial picture that got worse over time.
McAuliffe in February cut McDonell’s revenue projections by $140 million, but that was too little. The shortfall increased to $1.5 billion by May, forcing McAuliffe and the legislature to cut spending by $800 million and take $700 million out of the state’s rainy day fund.
In August 2014, McAuliffe said the gap was $2.4 billion, and so he and the legislature again adjusted the budget. But that estimate turned out to be too pessimistic, so the state ended up with a surplus in 2015.
Economic forecasting is a tricky business. One could argue that McDonnell may have been too optimistic at the end of 2013 and McAuliffe was too pessimistic midway through 2014. But you cannot say McDonnell left behind a budget deficit.
Second, McAuliffe claims he faced the largest budget deficit in the state’s history. Not so, as his spokesman admitted at the time.
Instead, the record appears to go to McDonnell, who PolitiFact says faced almost a $4.5 billion shortfall at the start of 2010 during the Great Recession. But by August, after steep spending cuts, that also had turned into a surplus, largely because of $2.5 billion in federal stimulus funding received by the state.
In his statement to The Fact Checker, Olivari did not address questions about this aspect of McAuliffe’s false claim.
The Pinocchio Test
McAuliffe did not inherit a budget deficit from his Republican predecessor. Moreover, the budget gap was not the largest in Virginia history.
McAuliffe could have touted how he handled a budget gap he faced early in his tenure without pinning the blame on Republicans or making grandiose claims about its size. Instead, he chose to double down on claims already fact-checked as false. McAuliffe even repeats a false claim that a previous McAuliffe spokesman had acknowledged was wrong but explained that McAuliffe simply misspoke. So McAuliffe has little excuse to repeat it over and over again.
McAuliffe earns Four Pinocchios.
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