The Structural Budget Surplus: The Latest Numbers

Kudos to Mike Hardy at the Richmond Times-Dispatch for staying on top of the latest state revenue reports. Tax collections for July and August, the first two months of the 2006 fiscal year, grew 17 percent over the same period last year.

Makes you wonder if apologists for the 2004 tax increase, who predicated the hike on forecasts of a long-term, “structural” revenue shortfall, will ever admit they were wrong. The Warner administration underestimated revenues in 2004 (up 7.9 percent), and again in 2005 (up 14.8 percent, thanks in part to the tax hikes). Now, it looks like they’ve underestimated again.

The 17 percent growth rate is unsustainable, but even if it moderates, it will be bigger than the budget calls for, and we’re bound to see another giganzo revenue surplus…. unless the General Assembly spends it all first.

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  1. Anonymous Avatar

    This always confuses me. First I get told that we have a surplus. Then I get told that we have massive transportation costs that the state can’t meet. Anytime Jerry or Tim propose some new program, all the papers scream “how are you going to pay for it!!!” Is there much money there, next to all the expected transportation costs even without new programs, or not?

  2. Jim Bacon Avatar

    Anonymous: The editorial pundits of Virginia’s newspapers are a huge part of the problem. How they overlook the massive, accumulating budget surplus is utterly beyond me.

  3. When you figure that the (current) estimate for spending on Katrina is $200 billion, it makes vdots estimate of $200 billion for virgina highways look bloated, so maybe we don’t need as much as claimed.

    But the increase in revenue means that, even if we give half of it back, we can still afford to spend an additional 8% on needed road construction.

  4. Steve Haner Avatar
    Steve Haner

    Ray: The pie in the sky VTRANS estimate is $108 billion, not $200 billion. Let’s be accurate while we’re being unrealistic.

    And Ann 10:34: Despite the good news on sales, income, etc. I stand by my predictions that Virginia will NOT make the revenue estimates on transportation this fiscal year. I’m sure it won’t see the 3.5 percent growth in gas tax revenue that is required. Feast in one account (general fund) and famine in the other (transportation special funds).

  5. Anonymous Avatar

    There is no surplus because the General Assembly keeps spending. Surpluses exist when revenues exceed expenditures, but what we have now is a constant drive to increase expenditures to keep up with revenue growth. This is what got Gilmore and the Republican General Assembly in trouble five years ago and the Commonwealth is on the same track once again.

  6. James Atticus Bowden Avatar
    James Atticus Bowden

    Jim: I don’t know what is sustainable growth for us. Virginia felt the Recession – which began in 00 and took a dip after 9-11 (or flattened recovery however the numbers really work out). But, the fact is that GOTUS, but you can just call it ‘Rome’, will keep pulling money to its center and spending it in Washington – thus NoVa and spending money on the military in Hampton Roads for all forseeable future.

    That money pump is going to keep going until there is a world catastrophe – like a huge oil shock – or our structural problems of socialist medicare/medicaid and social security bankrupt us.

    The GA should spend money for a university consortium to build a good Macro-econ model of the Commonwealth’s economy. It’s be nice to know what is ‘sustainable’ growth.

  7. Anonymous Avatar

    “The editorial pundits of Virginia’s newspapers are a huge part of the problem.”

    I wish someone would call them on it in a big way. I mean, I don’t see how they could get much lazier. From my side, it’s: Kaine proposes a fairly moderate set of programs and they scream “where will the money come from!!!” Then the next day Kaine they attack Kaine for not proposing to spend money on program they want “why won’t you propose several billion dollars worth of program XYZ!!!!!” There’s no consistency there, just reflex.

    It’s no wonder they are flirting so much with the otherwise forgettable Potts. They love acting all indepedent and hollier-than-thou without having to admit that what they really want is to skyrocket taxes. Probably not even really to raise revenue: just because they seem to consider driving to be immoral.

  8. Steve: You are right. Don’t know what I was thinking.

  9. Steve Haner Avatar
    Steve Haner

    $100 billion. $200 billion. Pretty soon we’re talking about real money. We’re not going to achieve either figure in the next 20 years.

  10. Steve, right again, but we still need to figure out what we can afford, and how to spend it best, so we can afford more later.

    I think that if we ever actually achieve a sustinable economy, that it will look decidedly Amish. Since it is unlikely that we will get a political constituency for such a plan, JAB is right, too.

    The money machine will keep on pumping until there is a real crisis.

    The looting situation in New Orleans may give a hint what it will look like when millions can’t heat their townhomes.

    This is admittedly a very bleak outlook, but when you consider what our current energy balance looks like, and what it will look like when we have to compete with developing countries, whether over there or whether they come here, any other outlook seems hopelessly optomistic.

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