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Virginia state budget

Virginia lawmakers have approved the $37.3 billion operating budget for FY2011 and $37.7 billion operating budget for FY2012.^[1]

Gov. Bob McDonnell announced that Virginia that finished FY2010 with a $403 million surplus.^{[2] [3]} This comes after he previously predicted a $4 billion shortfall.^[3] As a result of the recession, the state's Revenue Stabilization Fund has shrunken from $1.19 billion in 2006 to $295 million in 2010.^[4]

Virginia has a total state debt of approximately $65,105,037,000 when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the budget gap. ^[5]

See also: The Virginia State Budget on State Budget Solutions

[edit] Fiscal Years 2013-14 Biennial State Budget

On March 9, 2012, the day before the regular legislative session was scheduled to adjourn, lawmakers voted unanimously in both the House of Delegates and Virginia Senate to allow the legislature to continue consideration of the spending plan in a special session.^[8] A conference committee reached an agreement on April 5, 2012.^[9] The Senate approved the budget on April 18, 2012 by a vote of 21-19.^[10]

The governor proposed 100 amendments to the budget agreement, 72 of which the legislature approved. The legislature rejected those amendments considered most "key" to the governor's plan, including one permitting the governor to divert surplus general funds for transportation. Lawmakers did approve the governor's amendment that appropriates $2 million to lure filmmakers to Virginia.^[11]

Special Session

The General Assembly began the special session on March 21, 2012, with 12 negotiators — Republicans and Democrats, delegates and senators — meeting Richmond to try to draft the $85 billion biennial budget.^[12] The two parties reached a deal on the second day of the special session. Republicans and Democrats agreed to move $60 million to schools, Medicare and toll relief, which were priorities for Democrats. The deal included plans to borrow $300 million for the Metro-to-Dulles rail project.^[13] The budget also restores $1 million to poison-control centers, $455,000 for teen pregnancy prevention across the state, a 2 percent raise for state employees, and it restores $500,000 in funding that had been cut to public broadcasting..^[14]

On March 22, 2012, the Senate Finance Committee approved the $85 billion plan and sent it to the full Senate for consideration.^[13] The full Senate approved the budget with a vote of 35-4 on March 26, 2012.^[14]

A conference committee convened to hammer out the differences between the Senate and House budgets, and then all 140 legislators will vote on the budget.^[13][14] On April 5, 2012, the committee reached an agreement. It does not include the $300 million for the Metrorail line to Dulles International Airport as well as $125 million in toll relief for Hampton Roads that the Senate had sought. The governor had opposed the additional funds for rail to Dulles. The negotiated budget also included $40 million in the budget for cost-of-competing fund to help Northern Virginia schools attract staff in an expensive market, with $28 million of that devoted to the first year; the Senate had sought $60 million.^[9]

The Senate initially rejected the conference committee's bill on April 17, 2012.^[15] The following day, Sen. Charles Colgan, a Democrat broke ranks and voted with Republicans. The Senate approved the budget by a vote of 21-19 on April 18, 2012.^[16]

Legislative Proposed Budget

On March 1, 2012, the House of Delegates introduced its third version of the state's $85 billion biennial budget after the Senate failed to approve its first two attempts. The chamber permitted the budget to be re-introduced by unanimous consent. The full House is to debate the budget March 2 and it would head to the Senate on March 5, 2012.^[17]

Democrats in the Virginia Senate's $85 billion biennial state budget rejected the proposed budget on Feb. 23, 2012, after they were rebuffed in their bid for a share of power in the evenly divided chamber. Democrats had sought more seats on committees and co-chairmanship of the powerful Finance Committee. The budget needed 21 votes to pass, but was defeated 20-17, with 3 Democrats not voting.^[18]

The Senate deadlocked on Feb. 28, 2012 when Senate voted to approve the biennial budget bill, House Bill 30, with a vote of only 20-19. Twenty-one votes are needed for approval, and the Lieutenant Governor per the state constitution cannot vote on revenue or appropriation bills. Options remain for introducing a new budget, but senior lawmakers say it would be futile without a truce between Senate Democrats and Republicans.^[19]

Governor's Proposed Budget

Gov. Bob McDonnell's proposed state budget for FY2013-14 can be found here. All together, the spending plan totals $85 billion. It does not include tax increases but includes a $10 million in fee hikes for Department of Motor Vehicle services.^[20] The general fund from state taxes spent on core services such as public safety, health care and public schools totals $34.5 billion, approximately the same as FY2008.^[21]

Spending increases include:

• $2.2 billion previously announced boost in employer contributions to the underfunded Virginia Retirement System, about half of which comes from city and county governments,
• $650 million for increased use of Medicaid,
• $438 million net increase for public education, most of it to meet revised minimum curriculum benchmarks under state law including classroom staffing ratios and teacher salaries,
• $230 million previously announced for higher education to offset rising tuition rates, and much of that support to math, science, engineering, technology and healthcare curricula at colleges where state support has declined over the years. That commitment follows passage this year of higher education reform legislation backed by the administration,^[20]
• $100 million for economic development, including about $60 million for commitments already made to businesses in years past and $40 million for new, ongoing efforts to recruit business,
• $30 million for more community-based mental health care.^[21]

The governor made nearly $900 million in spending cuts^[20] and found savings for the budget, including:

• $258.6 million saved by not funding inflation costs for hospital rates under Medicaid,
• $65 million from not allowing Medicaid inflation increases for nursing homes,
• $109 million from eliminating the allowance for inflation growth in non-classroom public school support services,
• $108 million in expiring federal stimulus money for public schools that the state will not replace,
• $81 million saved by limiting Virginia Preschool Initiative,
• $65 million cut from the state stipend that helped school districts retain non-instructional support and administrative employees from poaching by rival school systems,
• $29.9 million continues reductions for indigent care at state-supported teaching hospitals,
• $18.2 million cut in the Department of Medical Assistance Services by lowering income limits for eligibility for long-term care.^[21]

The governor also offered an investor tax credit to provide working capital to small businesses.^[22]

Gov. McDonnell asked state agency heads to suggest cuts for FY2013-14 equal to two, four and six percent of their 2012-14 general fund appropriation. The governor told the heads of the agencies, "Do not hesitate to suggest program or service eliminations even if they are required by current state law."^[23]

The governor's $2.2 proposed pension payment falls $600 million short of what state retirement officials say is needed to address a multi-billion hole. The governor assume higher stock market gains than the pension professionals^[24]

[edit] Fiscal Years 2011-12 Biennial State Budget

In August 2011, Gov. McDonnell announced that the state ended FY2011 with a surplus of $544.8 million. The governor had original said that the state had a surplus of around $310 million, but in a speech to legislators he said his administration had saved an additional $234 million. Virginia law calls for the bulk of the money to be put into the state’s rainy day fund and spent on K-12 education, transportation and Chesapeake Bay cleanup.^[25] The surplus announcement, however, did not mention that the commonwealth still needs to pay back the money it borrowed from the retirement fund for state workers or that the state has not repaid half a billion that it borrowed from the fedearl government for unemployment insurance.^[26]

Income taxes constitute two-thirds of Virginia’s total general revenues.^[27]

[edit] Budget Amendments for FY2012

In Jan. 2011 when the legislature reconvenes, the General Assembly will consider changes to the state's two-year budget.^[28] Gov. McDonnell asked legislators to approve $191 million in cuts and savings to the state budget in his annual speech to the General Assembly's financial committees.^[28] Overall, the governor proposes cutting $2 million in FY2012 and $2 million in FY2013.^[28] His amendments to the budget are outlined in this document form the Governor's office.

Some of the cuts and savings include:^[28]

• $92 million in savings in K-12 education
• $5.4 million in savings at the Lottery
• $5 million in cuts for programs to help at-risk youth and families through the Comprehensives Services Act
• $32,000 for the State Fair
• $420,000 by eliminating four vacant positions in the Department of Forestry
• $1.4 million by continuing agency-wide restrictions in the Department of Health on discretionary spending, travel and hiring
• $1 million in administrative savings at the Department of Social Services
• ending state taxpayer funding of public broadcasting in Virginia.

The cuts are seen as offsetting the governors proposed spending for $150 million on roads and bridges, $54 million for economic development, and $58 million in colleges and universities.^[28] McDonnell also wants to spend approximately $30 million for behavioral health and developmental services and $39 million for the environment, including nearly $33 million to clean up the Chesapeake Bay.^[28]

The governor has also increased the state's revenue forecast by $283 million -- $134 million in FY2011 and $149 million in FY2012.^[28] His proposal also included $1 million to promote OpSail 2012, a tourist event that will bring tall sailing ships to ports to commemorate the War of 1812, a $500,000 grant to help fund a new headquarters for Operation Smile and another $500,000 for Virginia's food banks.^[29]

[edit] Original FY2011-12 State Budget

Find the state’s FY2011 Comprehensive Annual Financial Report (CAFR) compiled by the state government here.

A two-year budget for FY 2011 and 2012 was drafted when the Virginia General Assembly convened January 13, 2010 and adopted that spring.^[30] Gov. McDonnell proposed 14 amendments to the bill amending the current year's budget and 96 amendments to the FY 2012 budget.^[31] The Republican-controlled House of Delegates rejected nine amendments and the Democrat-controlled state Senate rejected an additional six of the governor's proposals.^[31] In addition to some technical and language changes, McDonnell's successful amendments to the FY2011 and 2012 budget included^[31]:

• Adding $6 million to the Governor's Development Opportunity Fund, for a total of $36.8 million available for business incentives.
• Restoring $528,313 in funds for the Virginia Economic Development Partnership
• Anticipating an additional $3.6 million in funding from increased speeding ticket fines
• Allowing for an additional $1.8 million reduction in support for local social service departments.

The General Assembly rejected a 33% reduction in public television and radio funding in 2012. The stations will still receive a 15 percent funding reduction, as approved in the Legislature's originally passed budget.^[31]

Gov. McDonnell said in Oct. 2010 that his amendments to the final year of the FY2011-12 budget would not include pay raises for state workers.^[32] State workers are due to receive a 3 percent bonus in FY2011; the last time they received a raise was 2007.^[32]

[edit] Budget transparency

• See sample transparency legislation at the Sunshine Standard

Virginia currently has partial spending transparency through its website, Open.Virginia.gov, which includes Commonwealth Data Point. However, as noted in the chart below, Virginia's database falls short of certain transparency standards.

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases

State Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary
Commonwealth Data Point	Y	N	N	Y	Y	N

• Commonwealth Data Point does not provide any means of viewing state contracts or grants. While line item expenditures are provided, a 2009 article wrote that "extracting usable information from the site isn't easy. Data Point records individual transactions, but with very little if any data explaining why the state spent the funds."^[33]

In 2009 there were two transparency bills pending in the Virginia General Assembly: Virginia Senate Bill 936 and Virginia House Bill 2285. SB 936 "Provides for the Virginia Enterprise Applications Program (VEAP) within the Office of the Secretary of Technology to create and maintain a searchable database website containing information on state revenues, appropriations, and expenditures."^[34] HB 2285 mandates creation of a comprehensive, searchable database of Virginia government spending, easily accessible to members of the Commonwealth.

On February 25th, 2009, both Virginia Senate Bill 936 and HB 2285 were passed unanimously.^[35]

In August of 2010, Virginia launched ARRA Virginia to show how the states $5.5 billion in stimulus dollars are being spent.^[36]

[edit] Fiscal Year State Budget FY2009-10

[edit] Surplus

Virginia ended FY2010 with a $403 million surplus.^[2] In spite of eight months of revenue decreases in the 11 months of fiscal year 2010, Gov. McDonnell touted growth in state sales tax collections because retail sales tax increased 6.5 percent, a reflection on April purchases because of a one-month lag in merchants collecting and submitting the tax, marking the first time the sales tax showed consecutive monthly growth since November and December of 2007.^[3] Income taxes, however, were down by 1.6 percent, despite a 7.5 percent jump in tax collections withheld from wages and salaries. Income taxes are the single largest source of general tax collections and make up two thirds of general fund collections.^[3]

McDonnell said of the surplus money, "Most of it is already obligated in statute or in the budget to meet various needs."^[2]

Where the surplus money will go^[2] {class=wikitable! !Category !Amount |- |$82 million||One time 3% holiday bonus to state employees in Dec. 2010 |- |$36.4 million || Virginia's Water Quality Improvement Fund |- |$32.7 million || transportation |- |$18 million||public school districts |}

[edit] Budget cuts

For the 4th time during the 2008-2010 biennium, FY 2009 and FY 2010, then-Gov. Tim Kaine on September 8, 2009, made major budget reductions to address a total $7 billion deficit for the budget period. The Governor's latest budget announcement includes:^[37]

• Recovering over $74 million in general fund and more than $68 million in nongeneral fund balances from FY 2009
• Capturing savings of over $22 million resulting from Governor's directives to agencies in May to immediately implement cuts in discretionary spending
• Reducing agency spending by over $403 million, based primarily on the recommendations made by state agencies in their 5, 10, and 15 percent reduction strategies
• Further savings are achieved through targeted strategies that will reduce general fund spending by an additional $446 million-including more than $104 million in reduced payments to the Virginia Retirement System (VRS) for the final quarter of FY 2010. Contribution rates for the Commonwealth and its employees will be changed in July at the beginning of the next biennium to adequately fund the long-term needs of the retirement system.
• $18 million in improved business practices and efficiencies
• Nearly $235 million in the reduction or elimination of current services
• More than $170 million in reduced personnel costs
• More than $28 million in reduced discretionary expenses
• The elimination of 929 positions-including 593 layoffs
• Reductions of 13 or 15 percent to institutions of higher education
• Reductions in administrative costs that will prevent deeper cuts in direct service delivery
• Restructuring of Department of Corrections facilities, closing two older facilities and one juvenile correction facility
• A one-day furlough of all state employees on the Friday preceeding Memorial Day 2010. Agencies with critical or emergency personnel are instructed to accommodate staffing needs and make adjustments to the furlough date accordingly

Richard D. Brown, Virginia Secretary of Finance, provided a presentation to the Virginia General Assembly, Senate Finance, House Appropriations, and House Finance committees with a Review of General Fund Revenues and the Virginia Economy for Fiscal Year 2009 and Interim Economic Outlook and Revenue Forecast for Fiscal Years 2010 through 2012 on August 19, 2009. Secretary of Finance Brown's state report showed in FY 2009:^[38]

• Employment dropped 1.4% while the forecast was -0.6%
• Construction/Mining was predicted to go down 3.5%, but actual was -10.1
• Since peaking in the third quarter of 2005, home sales and average sale prices in Virginia have fallen to levels not seen since early 2002
• Growth in total General Fund revenue collections was negative 9.2% instead of the predicted negative 7.3%
• State collections declined an unprecedented eleven consecutive months
• For the second half of fiscal year 2009:
  • Payroll withholding tax collections fell 1.0 percent
  • Individual nonwithholding declined 24.8 percent
  • Individual refunds increased 17.0 percent
  • Sales tax collections declined 5.9 percent
  • Corporate income tax receipts fell 19.0 percent
  • Recordation taxes declined 16.8 percent
• FY 2009 General Fund revenue collections finished $298.8 Million, 2% below forecast at $14.7 billion instead of $15.0 billion
  • The major driver of the fiscal year 2009 revenue shortfall was unexpected growth in individual refunds to the tune of 28.8% more refunds between April and June than in 2008, with June’s total 110.2 percent above the prior year
  • Individual Income Tax refunds exceeded the official estimate by $162.4 million
  • Sales Tax collections were $57.5 Million (1.9%) below the official estimate, declining 5.6%

The August 19, 2009 report also showed for FY 2010 that:^[39]

• The first month of July 2009 continued the state revenue decline of 8.1%, 14.7% off from the anticipated 6.6% growth
• Employment and income growth are not expected to reach a low point until fiscal year 2010, compared with fiscal year 2009 in the official forecast
• Total General Fund revenue forecast was revised and reduced by $1.2 billion in August 2009 from $15.262 billion to $14.079 billion declining for the second year in a row at 1.6%

Virginia's Joint Legislative Audit and Review Commission released a report titled Review of State Spending 2009 Update in November of 2009 showing state spending has jumped 28% when adjusted to account for inflation and population growth from FY 2000 to FY 2009. The annual operating budget grew from nearly $21.4 billion for spending during the year that began July 1, 1999, to slightly more than $37 billion for the budget year that ended June 30, 2009. Areas of state spending that grew the most were funding for health care services and public education. Appropriations for the Department of Medical Assistance Services' and direct aid to local school systems through the Department of Education both grew by 20%, or slightly more than $3 billion. The most rapid growth according to the report came in what's known within state government as non-general funds, which involves spending required under state law and federal mandates, making it the hard for legislators to control. While the general fund budget grew from $11 billion in fiscal 2000 to $16.2 billion in 2009, a 46 percent increase, non-general spending more than doubled over the same time, from $10.3 billion to nearly $20.9 billion.^[40]

[edit] Agency spending

A recent Virginia audit revealed that the Virginia Department of Transportation (VDOT) revealed that the department has $877 million to spend, which is will begin doing immediately for construction projects.^[41]

[edit] Budget Background

• Virginia has operated under a biennial system since the Constitution of 1851 provided for biennial Sessions.
• In 1870, the Constitution was amended to require annual sessions, only to have biennial sessions restored in 1876.
• In 1976, the Commission on State Governmental Management voted on a study of the structure and processes of state government. Their findings caused them to reject (14 to 1) proposed legislation to remove the biennial process due to the fact that "the budget formulation process has been compacted into too short a times period in the past resulting in an inability of executive branch management to undertake the in-depth analysis necessary to focus on alternative solutions to the problems facing the state."^[42]

The Budget Process

• The biennial budget is enacted into law in even-numbered years, and amendments to it are enacted in odd-numbered years.
• Agencies evaluate and estimate their future costs and submit a potential budget to the Department of Planning and Budget(DBP).
• The DBP analyzes the various agency requests, and then pass along the resulting findings to the governor for him and his cabinet to prepare the proposed state budget for the General Assembly's approval.
• The General Assembly convenes each year on the second Wednesday of January, where the Governor's prepared budget is presented in the form of a bill.
• After being reviewed by committees in both the state House and Senates, amendments are added and voted on in each chamber.
• Each house sends their version of the amended budget bill to the other for consideration and another vote.
• A conference committee resolves any differences between the two versions of the bill, and sends the resulting single version to the Governor for his signature.
• The Governor reviews the bill passed by the General Assembly, and may either sign it, veto it entirely, or use the power of the 'line-item veto,' or recommend further amendments.
• If the Governor vetoes the bill, or any item on it, it is sent back to the General Assembly during the spring session.
• The final passed budget is then enacted into law and goes into effect on July 1 in even-numbered years and on the date of passage in odd-numbered years.^[43]

[edit] Accounting Principles

Main article: Virginia government accounting principles

The Auditor of Public Accounts, Walter J. Kucharski, is the independent auditor serving the Commonwealth of Virginia. The state's audit reports are published on their Web site. The Auditor of Public Accounts is part of the legislative branch of Virginia government and reports through the Joint Legislative Audit and Review Commission (JLARC) of the General Assembly. This structure provides independence from the executive and judicial branch agencies we audit. Article IV Section 18 of the Constitution of Virginia established the Auditor of Public Accounts and Code of Virginia §30-130 through §30-142 sets forth the requirements of the Office.^[44]

The Institute for Truth in Accounting (IFTA) rates Virginia “Timely” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Virginia's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[45] Virginia's CAFRs are publications of the The Virginia Department of Accounts in accordance with Section 2.2-813 of the Code of Virginia. The Department, under the direction of the State Comptroller (David A. Von Moll), is responsible for:^[46]

• Providing a unified financial accounting and control system for state funds
• Developing a comprehensive system of checks and balances between state agencies entrusted with the collection, receipt and disbursement of state revenues
• Maintaining a central accounting system for all state agencies and institutions.

[edit] Stimulus

Virginia has received $3.3 billion in federal funding.^[48]

The state received approximately $540 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.^[49]

[edit] Public Employees

According to 2008 Census data, the state of Virginia and local governments in the state employed a total of 526,602 people.^[50] Of those employees, 402,487 were full-time employees receiving a net pay of $1,577,251,433 per month and 124,115 were part-time employees paid $131,107,597 per month.^[50] More than 59% of those employees, or 312,402 employees, were in education or higher education.^[50] Since 2009, the number of local government employees has decreased approximately 12,000.^[51]

[edit] External links

[edit] References

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