Virginia state budget (2009-2010)

Virginia lawmakers had approved the $37.3 billion operating budget for FY2011 and $37.7 billion operating budget for FY2012.

The economy in Virginia appears to be improving. Gov. Bob McDonnell predicted that Virginia announced that the state finished FY2010 with a $403 million surplus. This comes after he previously predicted a $4 billion shortfall. As a result of the recession, the state's Revenue Stabilization Fund had shrunken from $1.19 billion in 2006 to $295 million in 2010.

Virginia would receive approximately $540 million from the federal government under HR 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.

Virginia had a total state debt of $22,294,831,033 when calculated by adding the total of outstanding debt, pension and OPEB UAAL’s, unemployment trust funds and the 2010 budget gap as of July 2010.

2011 State spending & deficit in billions

Total spending	Health and HR	Education	Protection	Transport	Commerce	Other
$38.8	$11.3	$14.8	$2.9	$4.1	$1.3	$3.5

2011 Local spending & deficit in billions

Total spending	Pension	Healthcare	Education	Welfare	Protection	Transport	Deficit
$40.3	$0.9	$1.2	$15.7	$2.4	$4.3	$2.4	$47.2

Fiscal Year State Budget FY2009-10

See also: Archived Virginia state budgets

Surplus

Virginia ended FY2010 with a $403 million surplus. In spite of eight months of revenue decreased 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. 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 were the single largest source of general tax collections and make up two thirds of general fund collections.

McDonnell said of the surplus money, "Most of it was already obligated in statute or in the budget to meet various needs."

Where the surplus money would go

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

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 included:

• 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 were achieved through targeted strategies that would 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 would 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 would 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 were 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:

• 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 had 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:

• 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 were 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 had 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.

Agency spending

A recent Virginia audit revealed that the Virginia Department of Transportation (VDOT) revealed that the department had $877 million to spend, which was would begin doing immediately for construction projects.

Budget background

See also: Virginia state budget and finances

• Virginia had 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 had 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 had 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."

The Budget Process

• The biennial budget was enacted into law in even-numbered years, and amendments to it were 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 was presented in the form of a bill.
• After being reviewed by committees in both the state House and Senates, amendments were 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 was sent back to the General Assembly during the spring session.
• The final passed budget was 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.

The 2008-2010 Budget The 2008-2010 biennial budget was composed of two types of revenue, the General fund, and the Non-General fund.

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

Source of Revenue	Percentage of Overall General Funds Revenue
Sales and Use Tax	19.9%
Individual and Corporate Income Tax	71.5%
Other Taxes	9.8%

Non-General Funds Non-General Funds account for the other 54.7% of the state revenue. These funds were typically ear-marked by law for specific uses.

Source of Revenue	Percentage of Overall General Funds Revenue
Federal Grants and Contracts	38.2%
Other Revenues	24.1%
Transportation	13.1%
Institutional Revenue	24.6%

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

Accounting principles

See also: Virginia government accounting principles

The Auditor of Public Accounts, Walter J. Kucharski, was the independent auditor serving the Commonwealth of Virginia. The state's audit reports were published on their Web site. The Auditor of Public Accounts was part of the legislative branch of Virginia government and reports through the Joint Legislative Audit and Review Commission (JLARC) of the Virginia General Assembly. This structure provided 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.

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 did 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 did not included significant liabilities for the pension plans and for other post employment benefits, such as health care. Virginia's CAFRs were publications of 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), was responsible for:

• 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.

Credit Rating	Fitch	Moody's	S&P
Virginia	AAA	Aaa	AAA

Budget transparency

Virginia had partial spending transparency through its website, Open.Virginia.gov, which included Commonwealth Data Point. However, as noted in the chart below, Virginia's database falls short of certain transparency standards. Greater transparency would 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 HB 2285. SB 936 "provided 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." 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.

The following table was 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	Y	N	N	N	Y	N
ARRA Virginia	P	Y	N	N	N	N

Commonwealth Data Point's expenditure area was only searchable by vendor (there were "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 was being spent on. Same problem with the small purchase card charge sector. It gives the amount and vendor, but never said 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."

In August of 2010, Virginia launched ARRA Virginia to show how the states $5.5 billion in stimulus dollars were being spent.

Federal Stimulus Transparency

• Virginia would receive approximately $540 million from the federal government under HR 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.

• Virginia was to receive $4,546,666,340 in federal funding from the American Recovery and Reinvestment Plan of 2009.

• Virginia established economic recovery website.

See also

• Virginia government sector lobbying
• Evaluation of Virginia state website
• Virginia state government salary
• Virginia state budget and finances

External links

• State Budget Solutions, Virginia
• Model transparency legislation from the American Legislative Exchange Council was available at this link.
• Thomas Jefferson Institute
• Virginia Institute for Public Policy
• Commonweatlh Data Point
• Virginia Department of Planning and Budget
• Virginia General Assembly
• Virginia government spending
• Senator Cuccinelli talks about Virginia's level of transparency. Listen here.

Footnotes

[[Category:2010 archived state budgets