State budget surplus tops $585 million for last fiscal year
RICHMOND—Gov. Bob McDonnell on Monday announced that the state ended fiscal year 2013 with a surplus of about $585 million.
But most of it is already earmarked for the state’s rainy day fund, the Water Quality Improvement Fund and other priorities, he said.
McDonnell was making the annual August revenue report to the General Assembly money committees.
He noted that the state budget posted a surplus every year of his four-year term, adding up to about $2 billion over four years.
This year’s total in “surplus” comes from $264 million in revenues over collection estimates, and $321 million in agency savings and balances.
McDonnell said a large chunk of the extra money—$314 million—will go to the rainy day fund during the 2015 and 2016 budget years, which will help put that fund at about $1 billion by 2016. That fund is the state’s reserve fund. Lawmakers are required to make deposits to it in flush times and can tap it in years when revenue losses met certain conditions.
The Water Quality Improvement Fund is due to get $32 million in surplus money. Another $21.7 million will go to the Transportation Trust Fund to help phase out accelerated sales tax payments from retailers. McDonnell said $34.5 million will go to “cover the state’s obligations” from natural disasters, and he wants to put $22.5 million into the “FACT” fund he created to try to help mitigate the effect of federal budget cuts.
“Not much is unallocated,” he told reporters after the presentation.
McDonnell will be writing one last budget, to be presented in December, before he leaves office in January.
He warned lawmakers that continuing federal government instability—the difficulty Congress has faced in passing budgets, the ongoing threat of sequestration cuts, etc.—makes state budgeting more difficult.
“How we deal with this federal uncertainty becomes the number one factor that guides budget development,” McDonnell said.
He also said the state and localities are going to be required to put more money into the Virginia Retirement System’s pension fund for state workers, which could add up to “hundreds of millions of dollars of additional employer contributions.”
The state has chronically underfunded the VRS system, leaving it with increasing unfunded liabilities, and is still repaying money “borrowed” from VRS to help balance the budget several years ago.
To help fix the system, state lawmakers agreed to budget for a lower rate of return in the VRS system, which means they must put more state dollars into the system.
That could be about $160 million a year in state dollars, McDonnell’s staff said.
Chelyen Davis: 540/368-5028