I’ve seen a lot of loose numbers thrown around regarding the size and impact of the 2004 tax increase on the current budget surplus. (I’ve tossed some of ’em around myself.) Here are hard numbers from Del. Vincent F. Callahan, Jr., R-McLean, chairman of the House Appropriations Committee. In a press release issued today, Callahan writes:
For those that were here during the 2004 Session, you may recall the General Assembly grappled with building a new two-year budget. At that time, it was expected that we would have approximately $1.8 billion in net new revenues available to meet our spending obligations. It was claimed that this was insufficient to meet the Commonwealth’s needs, and that additional revenue was needed. After a protracted debate and extended legislative Session, taxes were increased nearly $1.5 billion dollars. There was much self congratulation that Virginia’s fiscal house was back in order.
You may also recall that two months after that budget was adopted, Virginia received some surprising news, that the fiscal year would end with $325 million more than projected or perhaps predicted.
That happy news led to the first of several revisions to the revenue forecast during the current biennium. In fact, the most recent revision to the current fiscal year projects that general fund revenues are now forecast to generate an additional $1.4 billion over and above the revenues assumed when we left here last year.
Since that fateful day in May of 2004, the cumulative effect of Virginia’s growing economy means that what started out as $1.8 billion in new revenue growth now appears to be closer to $4.9 billion over the biennium, or 275% greater than the original biennial forecast.
