Virginia state budget

From Sunshine Review

National Taxpayers Union
Transparency in your state Public employee salary States with spending online Collaborative transparency projects Model transparency legislation #statebooks on Twitter SMTS on Twitter
Action center
Sign up for e-updates Take action

Virginia faces an estimated $3.6 billion revenue shortfall at the end of FY 2010, the current budget year that ends June 30, 2010. According to Gov.-elect Bob McDonnell, who takes office January 16, 2010, his top priorities for the state include job creation and economic development.^[1]

For the 4th time during the 2008-2010 biennium, FY 2009 and FY 2010, 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:^[2]

• 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:^[3]

• 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 evenue 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:^[4]

• 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%

A new two-year budget for FY 2011 and 2012 will begin being drafted when the Virginia General Assembly convenes January 13, 2010.^[5]

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.^[6]

[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."^[7]

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.^[8]

The 2008-2010 Budget The 2008-2010 biennial budget is composed of two types of revenue, the General fund, and the Non-General fund.^[9]

General Funds General Funds account for 45.3% of the 2008-2010 budget revenue. The revenues collected for the general fund are spent for a large variety of purposes at the discretion of the Governor and other state agencies. These funds are mostly comprised of three main sources:

Non-General Funds Non-General Funds account for the other 54.7% of the state revenue. These funds are typically ear-marked by law for specific uses. ^[10]

See Virginia state budget (2008-2009) for more information.

[edit] 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.^[11]

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.^[12] 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:^[13]

• 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] Accounting transparency checklist

Comprehensive Balanced budget Timeliness Usability

[edit] The good

• The website has Comprehensive Annual Financial Reports (CAFR) dating back to 2002.^[15]
• An independent auditor’s report is published on page 24 of the document.^[16]
• It provides supplements to the budget workup, starting on page 164.
• The budget is posted using organized and consistent methods of financial reporting.
• Virginia law requires a balanced budget and a deficit is forbidden.^[17]
• It includes all costs incurred by the government, including long-term liabilities, starting on page 258 of the document.^[16]
• The CAFR compares estimated and actual budgetary numbers, such as on page 190 of the document.^[16]
• The Virginia office was timely in submitting the budget.

[edit] The bad

• The CAFR is posted in a PDF format, so it’s not searchable online.

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. Greater transparency will characterize state spending soon, given the passage of legislation in 2009:

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."^[18] 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.^[19]

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
Open.Virginia.gov

Commonwealth Data Point's expenditure area is only searchable by vendor (there are "drop down" searches for agency, object code, and fiscal year). Most average citizens wouldn't know the necessary vendors to search for to get to relevant information. Users should be able to search by keyword.

Users can "drill down" into the spending information to a certain point, but at the end of the day, you still can't really tell what they're spending the money on. It might say $624.57 paid to GE Capital Finance on August 2, 2007 for agricultural supplies for the Central Region Correctional Field Unit, but you still don't really know what the money is being spent on. Same problem with the small purchase card charge sector. It gives the amount and vendor, but never says what was purchased. We need that information if we want to help identify waste. To cite a recent article, "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."^[20]

[edit] Budget transparency

[edit] Website evaluation

Budget Usability Elected Officials Administrative Officials Ethics Audits Contracts Lobbying Public records Taxes

Virginia.gov is the website for the state of Virginia.

• Main article: Evaluation of state websites

[edit] The good

• Budget is published.^[21]
• Elected officials are listed with contact information under respective office.^[22]
• Employee contact information is available in a searchable database if you know the employee you are looking for.^[23]
• Current state contracts are available.^[24]
• Annual financial audits are published.^[25]
• Tax information is posted.^[26]
• Provides information on the Virginia Freedom of Information Act and forms to request records.^[27]
• Includes database of registered lobbyists and disclosure statements.^[28]

[edit] The bad

• Site has a search function but is somewhat difficult to navigate.
• Does not provide information on ethics.
• Does not provide information on state-paid lobbying and agency lobbying contracts.

[edit] Error in ARRP

On November 16 and 17, 2009, many errors were found in the $747 billion plan that showed the plan set aside money for districts that do not exist. According to Recovery.gov, the plan shows its funds will go to 884 Congressional Districts, though there are only 435.^[29][30]

Virginia’s 12th District was written off at the start of the Civil War, but it received more than $2 million, according to ARRP’s website.

• The American Recovery and Reinvestment Plan of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.^[31]

• It is estimated that Virginia will receive $4,546,666,340 in federal funding.^[32]

• The economic recovery website for Virginia is available here.

[edit] References

v • d • e State Budgets Cost of state transparency websites • State budget issues, 2009-2010 • Pubic employee salaries • States with spending online • Glossary of state budget terms Alabama • Alaska • Arizona • Arkansas • California • Colorado • Connecticut • Delaware • Florida • Georgia • Hawaii • Idaho • Illinois • Indiana • Iowa • Kansas • Kentucky • Louisiana • Maine • Maryland • Massachusetts • Michigan • Minnesota • Mississippi • Missouri • Montana • Nebraska • Nevada • New Hampshire • New Jersey • New Mexico • New York • North Carolina • North Dakota • Ohio • Oklahoma • Oregon • Pennsylvania • Rhode Island • South Carolina • South Dakota • Tennessee • Texas • Utah • Vermont • Virginia • Washington • West Virginia • Wisconsin • Wyoming •

	v • d • e State of Virginia Richmond (capital)
Transparency	Freedom of Information Act | Transparency Checklist | Government corruption reports | Transparency Legislation | Open Records procedures | Transparency Advocates | Transparency blogs | State budget | Taxpayer-funded lobbying associations |
Divisions	State | List of Counties | List of Cities | List of Towns | List of School Districts | Evaluation of county websites | Evaluation of city websites | Evaluation of township websites | Evaluation of school district websites |
Government	Virginia State Constitution | Executive | House of Representatives | Senate |
Judiciary	Virginia Supreme Court | Court of Appeals | Circuit Court | Judicial nomination process | Judicial news | Judicial activist organizations |
Ballot Measures	Ballot measures | Amending the constitution | History of direct democracy | Campaign finance requirements |