The FY2005 Numbers Are In

Well, the FY 2005 numbers are in. The final budget surplus: $544.4 million. That’s over and above the $900 million or so surplus anticipated earlier this year, which the General Assembly allocated to the Rainy Day Fund, road projects, Chesapeake Bay clean-up and other causes.

In a press release issued by the Governor’s Office, the Warner administration downplayed the long-term significance of the surplus, implying that it may not be replicable. Stated the press release:

More than three-fourths of the surplus was generated by quarterly non-withholding payments made by individuals who receive substantial amounts of income from stock market gains, bonuses, and other non-wage income; from unusually strong growth in corporate income taxes; and from taxes and fees paid on home and real property sales – the three most unpredictable sources of state revenues.

Gov. Mark R. Warner will allocate $436.5 million to the Rainy Day Fund, bringing that fund’s total to about $1.1 billion, or the maximum allowable by law. He will apply another $54.4 million to the Water Quality Improvement Fund, $26 million to the Transportation Trust Fund and $25 million to assist localities affected by the Base Realignment and Closure Process.

Here’s where it gets interesting. Between their actions in the 2005 session and the disposal of the year-end surplus, Warner and the General Assembly will have spent roughly $1.4 billion this year on “one-time” allocations. It will be interesting to see how Warner applies that uncommitted revenue flow to the next biennial budget, which he submits to the General Assembly as one of his last actions in office. The Rainy Day Fund has largely maxxed out, so Warner can’t divert any more money there. He will have four choices: Spend it on programmatic increases, spend it on more “one-time” allocations, give it back to taxpayers… or continue lowballing revenue forecasts.

Giving any of the surplus back to taxpayers is the last thing he’ll do, even though it is now roughly twice as large as the sum he raised through higher taxes. That would be tantamount to admitting that the 2004 tax increase — the signature accomplishment of his administration — was utterly unnecessary.

Equally interesting is what Tim Kaine and Jerry Kilgore would do with that money when one of them succeeds Warner. So far, no one has posed that question to them. But the issue will confront the winner immediately upon assuming office. Virginians should insist that both candidates focus on it.

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  1. SDH4VBT Avatar

    1. The release did not include the transportation revenues, but they have grown only 3 percent or so — they didn’t get the memo about double digit growth. Dare I suggest that the issue might not be whether we should have raised taxes, but whether we raised the right ones?

    2. As I have cautioned before, this is only the beginning. The real end of year unexpended balance also includes the transfers, money appropriated to agencies that was not spent, lots of other things you won’t see until the full report in August.

  2. Anonymous Avatar

    In today’s Roanoke Times, Kaine callS the surplus “another reminder that those who supported the historic and bipartisan budget reform (Demo-speak for “tax hike”)of 2004 were right to do so.” WHAT HAS HE BEEN SMOKING?

  3. 92% of Virginia Voters Back Assembly Funding to Clean Up State Waters
    Wednesday, July 20, 2005

    Virginia voters are willing “to put their wallet where their water is.”

    For Immediate Release

    July 20, 2005
    Contact: Chuck Epes, 804-780-1392

    RICHMOND, VA. An overwhelming majority of Virginia voters 92 percent — support the Virginia General Assembly’s $50 million investment in protecting state rivers, streams and the Chesapeake Bay, a statewide survey has found.

    The survey, conducted jointly by Democratic and Republican polling firms in April for the Chesapeake Bay Foundation (CBF), also found that more than three-quarters of the electorate back additional spending by the legislature each year on an ongoing basis to clean up Virginia’s waterways.

    Further, Virginia voters are willing “to put their wallet where their water is.” Seven out of ten Virginia voters and solid majorities in every region of the state support paying a new user fee if the revenue is dedicated to cleaning up the state’s streams, rivers and the Chesapeake Bay.

    Pollution of local Virginia rivers and the Chesapeake Bay continues to be among Virginian voters’ top concerns. The April statewide survey found that pollution of the Bay and local streams and rivers is perceived to be an “extremely” or “very serious” problem among more than half of all voters, exceeding voter concern about other such prominent issues as the economy, crime, education and taxes.

    “Virginians clearly are worried about water pollution across the state and want the legislature to continue working to fix the problem,” said Ann Jennings, CBF’s Virginia Executive Director. “Not only do voters support additional state spending each year, but 71 percent say they are willing to pay more out of their own pockets for clean water.”

    During the 2005 General Assembly session, legislators committed $50 million to upgrade sewage treatment plants to reduce nitrogen pollution, the state’s most serious water pollution problem. Legislators also created a joint study committee to identify long-term funding sources to address water pollution problems statewide. That panel, chaired by Delegate Vincent Callahan, R-McLean, has begun meeting and is to make recommendations to the legislature before the 2006 Assembly session.

    According to the Virginia Department of Environmental Quality, nearly 7,000 miles of rivers and streams in Virginia — more than half of all those monitored — are polluted and listed among the nation’s dirtiest waters. They include Virginia’s entire portion of the Chesapeake Bay and the tidal parts of its rivers, which are on the list because of excess nitrogen pollution. Nitrogen pollution causes algal blooms that close beaches, kill underwater grasses and create “dead zones” of oxygen-starved water. Portions of the Bay and Virginia rivers already are experiencing dead zones this summer.

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    Click on a headline below to read an article or click “more” to see other related articles. News articles are listed with the most recent articles first.

    Citizens Asked to Keep Eye on Water for Fish Kills, Algal Blooms

  4. Ben Kyber Avatar
    Ben Kyber

    There are so many things to do with that money. Schools in Richmond City could be improved drastically (or at least so they don’t have leaky roofs anymore.)

    Or maybe give some of the money to the city to fix the Public Safety building that a court order has required be fixed.

    Richmond is our state’s capital and a potential hub for tourism and growth in the Commonwealth. Unfortionately, its in such bad shape, few folks actually want to visit.

    Its time that Virginia take full advantage of funds to make its own state capital a city that really is “easy to love” as its slogan says.

    Or it could be used for transportation improvements.

    Or a score of other worthwhile things…

    Believe me, Virginians should by no means feel like their $554 million is set to be wasted.

  5. criticallythinking Avatar

    blueinthecommonwealth_va said we could spend the surplus in Richmond, on the dilapidated schools, the unsafe public safety building, or anywhere else in Richmond which is “in such bad shape”.

    Wasn’t Richmond one of Kaine’s great success stories?

  6. Ben Kyber Avatar
    Ben Kyber

    In Richmond, success story is a very relative term.

  7. I find it quite entertaining to read this post, and all the comments. Somewhat, like who’s going to be in the candy shop, and what can I spend Virginia’s money on first. It will be interesting to see how this plays out to the voters, after all, its really their money. Great blog by the way.

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