Virginia’s Balance Sheet is Embarrassingly Strong

Virginia is floating on a sea of unspent cash, but tax relief fails again.

By Steve Haner

“Our balance sheet couldn’t be stronger…this is our moment to soar.”

So said Virginia Governor Glenn Youngkin Wednesday. Every year, our governors come to the legislature to report on the end of the fiscal year financial result, and often they say something like that. They always prefer to bring a happy message over one of caution or doom.

This time, however, it is true.

The headlines are always about the so-called revenue surplus, if there is one, which is the amount of taxes collected in excess of the official revenue forecast. The current two-year budget was adopted in early 2022, about 18 months ago, and the revenue it initially predicted for the 12 months ending June 30 was fully $3 billion lower than the amount of taxes the Commonwealth actually collected.

Details can be found in Secretary of Finance Stephen Cummings’ presentation to the legislators, which followed Governor Youngkin’s more general remarks. The surplus is only one sign the state has an embarrassment of riches.

On top of that unplanned revenue, Cummings announced that the state spent $1.6 billion less than was planned in the budget in the same 12-month period. The various agencies and operations often end the year without spending 100% of their budgets, but $1.6 billion is an unprecedented amount. This also happened last year when the state operations failed to spend $1.2 billion in their budgets.

And that is just on the General Fund, or general tax-funded, side of the budget. The state’s Non-General Fund operations, funded by user fees, transportation taxes, and federal funds, also ended the year with cash left over. The Non-General Fund agencies ended the fiscal year with $16 billion (no, the decimal is not missing) in account balances. That is double what their cash balance was as of June 30 four years ago.

The state’s general ledger account balance as of the end of June was $29 billion. Four years ago, it was just $9 billion. The standing daily cash balance has tripled in four years.

The state’s transportation program is on the Non-General Fund side of the budget, and its tax revenues also exceeded projections for the twelve months ending June 30, although by only about $43 million. The Commonwealth Transportation Fund is now just under $5 billion annually, which was the size of the General Fund not that long ago.

Youngkin and Cummings both mentioned the state taking major steps to cut unnecessary spending. The fleet of state cars, deemed to be underutilized, has been trimmed by 800 vehicles.  A planned office building in Richmond, $400 million in cost, was also scrapped. Pressed by legislators, Cummings denied ordering agencies to stay under budget but mentioned efforts at the end of the fiscal year to prevent them from using excesses to buy things not in that year’s budget.

State law allows for the state to accumulate cash reserves to protect against an economic downturn, with a target of saving 15% of the General Fund spending amount. The reserves of $3.8 billion as of June 30 met that 15% target. More cash is set to flow into the reserves and raise it to $4.6 billion (an 18% cushion) a year from now.

In the business world, those various metrics point to an operation generating healthy free cash flow, with income well above expenses. Dare one say profit? Per media reports, less than $1 billion of that will flow back to the taxpayers as a rebate, and not to all taxpayers. But the fate of Youngkin’s abandoned proposals for broader tax cuts is not the focus of this discussion.

What is in focus here is how possible it all was, as the opportunity now appears to be slipping away. Youngkin said it again in his prepared remarks, that the state can easily provide tax cuts and continue to increase spending in key categories. At the end of Wednesday’s meeting, he signaled to reporters that he can accept the one-time rebates and will restart the push for long-term tax reform with the 2024 General Assembly (still to be elected.)

After all, the 2022 General Assembly did approve major tax cuts. All of those sterling financial results for the past year happened even after the 2022 “one time rebate” coupled with real tax cuts saved Virginians $2.5 billion in those twelve months. (If approved, what is coming will be the third “one time rebate” since 2019.)

In the absence of more tax reform, the big winner as the legislature finally divvies up all this excess cash will likely be local public schools. The year that just ended saw spending on per pupil direct aid grow 22%, after having grown 5% and 10% in the previous two years. Expect a raging debate on this over the remaining ten weeks of the election season.

We are now in Fiscal Year 2024. As was the case with FY 2023, the revenue assumptions are cautious, dampened by fears of a possible recession. The fear is abating but it is not gone. So the baseline General Fund revenue prediction for FY 2024 is $27.3 billion, lower than was collected in both FY 2022 and FY 2023.

The revenue prediction is flat even though the state’s labor participation rate is at the highest level since 2012. Also, there are indications that Virginia is now seeing net in-migration of population, reversing years of slow population loss, as mentioned by Youngkin and Cummings.  State employment grew 2.7% last year, beating the estimate of 2.5%. The 2024 budget is based on an assumed addition of 1.1% in job growth and income growth of only 4.1%. Beating those assumptions is very possible, if not highly probable.

One month of the new fiscal year is in the books, July, and both the General Fund and Commonwealth Transportation Fund are running ahead of forecast.

In other words, the budget is being low-balled. This is a cautious and prudent approach, but it also gives Youngkin a chance that when he introduces his own full budget in December, he will have more great news of excess funds piled here and there — funds he will earmark, at least in part, for tax relief. The question now is whether voters will give him enough new legislators willing to join him in that effort.

First published today by the Thomas Jefferson Institute for Public Policy. 


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34 responses to “Virginia’s Balance Sheet is Embarrassingly Strong”

  1. Virginia Gentleman Avatar
    Virginia Gentleman

    This is great news for Va. Our economy is strong and Youngkin and Biden deserve a lot of credit.

    1. Stephen Haner Avatar
      Stephen Haner

      Yes, Biden’s massive wave of inflation was a factor, given the state reaps great benefits from inflation. 🙂 Sales and income taxes in particular. The effects of that and of some of the Biden spending programs are still working their way through, another reason to suspect the state is starting another fat tax year.

      1. Nancy Naive Avatar
        Nancy Naive

        Ryan’s $5T magic trick didn’t hurt.

      2. Virginia Gentleman Avatar
        Virginia Gentleman

        Everyone is quick to blame BIden on inflation but not give him any credit for low unemployment and the economic recovery. I guess nobody cares about that. And all of the other legislation that he signed which the former guy couldn’t get done – just doesn’t matter.

        1. walter smith Avatar
          walter smith

          In the real world, Biden is a corrupt, brain-challenged when he had his fastball, perverted husk. Showering with your daughter? Anyone?
          Meanwhile, both parties are terrible. Just the Pubbies less so, cuz they want to go to H3!! slower.
          We have inflation cuz “Rich Men North of Richmond” have spent money stupidly, haphazardly, evilly in ways that would make drunken sailors blush. And the grifters do very well with all that spending. Where do many of the grifters live? And where do such grifters pay State taxes?
          And why do we have low unemployment? Is it because the economy is smoking? Not really…
          We have a rise in disabilities in the working age population. A real spike. Gee…it seems tied to the mandated, safe and effective Covid “vaccine,” which didn’t work and the truth about even questioning our betters, our “Rich Men North of Richmond,” was illegally censored by “Rich Men North of Richmond.”
          Speaking of which, I can’t imagine why that right wing psy op song is doing so well.

          Larry and Troll – summon the bot troop!

          1. Virginia Gentleman Avatar
            Virginia Gentleman

            Lol. Does someone have a new favorite song?

          2. walter smith Avatar
            walter smith

            SlowJoe showering with his daughter bother you? Or are you just “all in” to “save our Democracy!!!!! – and good with the Dem apparat violating all political norms to retain power?
            Seriously, do any of the Lefty commenters here have any decency? Any ability to break from the Party to say the truth?
            If any of you cannot admit there are only two sexes, then nothing you ever post here should be believed. You’ll say 2+2 = 4, until math is officially determined racist and not just on your crazier fringe, but the how many sexes question is the decision dilemma for Leftists…

            Oh, and as to your inane non-response, it is a great song and I am not sorry about all the butt hurt it causes our society’s so-called betters.

          3. William O'Keefe Avatar
            William O’Keefe

            I have read the showering rumor but have not found any corroborating evidence. Do you have any? If not, you are being irresponsible in trafficking in such garbage.

          4. walter smith Avatar
            walter smith

            Blame the mainstream propaganda media. She has confirmed her diary as her diary.
            Despite Snopes and all the other usual “trusted” “experts” telling us it was false. Just like Hunter’s laptop. Project Veritas was raided and is being investigated for having possession of it AND deciding not to publish it. But the FBI is a law enforcement agency, and plays it straight. Right?
            Meanwhile, the people who sold it to Project Veritas have pleaded guilty to a crime and cooperated with the investigation into PV. Process sound familiar to you? The “special master” (needed because of stealing all of the PV and O’Keefe data) has concluded it was real, but there is still some possibility of a crime by PV, so no attorney-client or journalistic privilege. A travesty. Save our Democracy by destroying it to keep the Rich Men North of Richmond in on the gravy train grift…
            Even DuckDuckGo makes it hard to find.
            Here is one article – I have seen more – but if you just do “Ashley Biden Diary” you get pages and pages of Snopes and other dutiful “truth” organizations telling us it is not true.

            https://www.bizpacreview.com/2023/03/22/ashley-biden-reportedly-confirmed-infamous-diary-was-hers-according-to-recently-released-court-docs-1343214/

            Joe Biden is a pervert. Hunter is a pervert. Both are crooks. Joe should have been impeached for Ukraine – he should never have been “elected!” At some point, everybody has to get over Trump Derangement Syndrome and fight the tyrannical Left.

          5. William O'Keefe Avatar
            William O’Keefe

            What is the source of her so called verification? This is important because of your obvious bias.

          6. walter smith Avatar
            walter smith

            There was a linked article, citing the Fl court and the Project Veritas court. There have been numerous other articles. Biased?? Give me a break. Disgusted by lies and propaganda and lawfare A lawyer who believes that law should pursue truth and all Americans have the same rights. That used to be something all Americans agreed on.

          7. walter smith Avatar
            walter smith

            I gave you a link to an article. The article references the Fl court proceedings and the proceedings against Project Veritas. And yes, I am biased against lies, propaganda, unAmerican lawfare There re o trickles and

        2. Matt Adams Avatar
          Matt Adams

          “Everyone is quick to blame BIden [sic] on inflation but not give him any credit for low unemployment and the economic recovery.”

          You mean give him credit for allowing people to return to their previous jobs after a pandemic?

          “And all of the other legislation that he signed which the former guy couldn’t get done – just doesn’t matter.”

          He signed the Inflation Reduction Act, which has nothing to do with Inflation. It was a name slapped on it so Gomer’s would think it did something. It was a Green New Deal “Light”.

          1. Virginia Gentleman Avatar
            Virginia Gentleman

            Hmm. I thought he signed a bunch of new important pieces of legislation. You guys are really going to hate the next five years aren’t you?

          2. Matt Adams Avatar
            Matt Adams

            “Hmm. I thought he signed a bunch of new important pieces of legislation. You guys are really going to hate the next five years aren’t you?”

            Okay, if you’re so inclined to a statement, what are they?

            I’d also tell you not to count your chicken’s before they hatch, next year is a Presidential election and he’s the oldest President in our Nations history.

          3. Virginia Gentleman Avatar
            Virginia Gentleman

            None that the right will give him credit for. But the infrastructure bill was bipartisan and something that Trump wanted to do but never accomplished. And I would rather be the oldest President than the one who was impeached twice, found liable for sexual abuse, has over 90 indictments, and is out on bail in four jurisdictions. I like my chances.

          4. Matt Adams Avatar
            Matt Adams

            “None that the right will give him credit for. But the infrastructure bill was bipartisan and something that Trump wanted to do but never accomplished.”

            Roads, Bridges, & major projects: $110B – Includes the Surface Transportation Reauthorization Act and Surface Transportation Investment Act. Funds new, dedicated grant program to replace and repair bridges and increases funding for the major project competitive grant programs. At the same time, the package preserves the 90/10 split of federal highway aid to states.

            Passenger and Freight Rail: $66B – Provides funding for the Amtrak National Network for new service and dedicated funding to the Northeast Corridor, which has incurred a severe repair backlog after Hurricane Sandy. Increases funding for freight rail and safety.

            Safety: $11B – Funds highway & pedestrian safety programs, as well as pipeline safety and repair.

            Public Transit: $39.2B – Funds nation’s transit system repair backlog, which DOT estimates is more than 24,000 buses, 5,000 rail cars, 200 stations, and thousands of miles of track, signals, and power systems. Expands transit systems, supports clean transit options, and increases accessibility for seniors and persons with disabilities.

            Broadband: $65B – Grants to states for broadband deployment, makes broadband access more affordable for low-income families, expands eligible private activity bond projects to include broadband infrastructure, and supports middle-mile deployment efforts.

            Ports and Waterways: $16.6B – Funding for waterway and coastal infrastructure, inland waterway improvements, port infrastructure, and land ports of entry through the Army Corps of Engineers, Department of Transportation, Coast Guard, General Services Administration, and Department of Homeland Security.

            Airports: $25B – Increases funds for Airport Improvement grant program for runways, gates, & taxiways as well as a new Airport Terminal Improvement program for terminals, concessions, and multimodal connections. Improves Air Traffic Control infrastructure.

            Water Infrastructure: $55B – Includes $23.4 billion for the bipartisan Drinking Water and Wastewater Infrastructure Act of 2021. Provides a historic $15 billion for lead service line replacement and $10 billion to address Per- and Polyfluoroalkyl Substances (PFAS). Supports water infrastructure in Tribal communities by providing $3.5 billion ($1.8 billion under Water Infrastructure and $1.7 billion under Resiliency) for the Indian Health Service Sanitation Facilities Construction program, in addition to providing funding to complete all currently authorized Indian Water Rights Settlements.

            Power and Grid: $65B – Includes the bipartisan, ENR-passed Energy Infrastructure Act, which includes funds for grid reliability and resiliency and support for a Grid Deployment Authority; critical minerals and supply chains for clean energy technology; key technologies like carbon capture, hydrogen, direct air capture, and energy efficiency; and energy demonstration projects from the bipartisan Energy Act of 2020.

            Resiliency: $47.2B – Funding for cybersecurity to address critical infrastructure needs, waste management, flood and wildfire mitigation, drought, and coastal resiliency, ecosystem restoration, heat stress, and weatherization.

            Clean School Buses & Ferries: $7.5B – Includes historic $5 billion for the replacement of existing school buses with zero emission and clean school buses, with a priority on low income, rural and Tribal schools. Provides $2.5 billion for the replacement of existing ferries with low carbon ferries and to assist states with operational costs for essential rural ferries. These investments will drive demand for American-made batteries and vehicles, creating jobs and supporting domestic manufacturing, while also removing old, dirty diesel buses and ferries from some of our most vulnerable communities.

            Electric Vehicle Charging: $7.5B – Funds for alternative fuel corridors and to build out a national network of electric vehicle charging infrastructure to facilitate long-distance travel and to provide convenient charging where people live, work, and shop. The federal funding will have a particular focus on rural disadvantaged, and hard-to-reach communities.

            Reconnecting Communities: $1B – Total of $1 billion between contract authority and new appropriations. Funds for projects that remove barriers to opportunity caused by legacy infrastructure. The program will provide dedicated funding for planning, design, demolition, and reconstruction of street grids, parks, or other infrastructure.

            Addressing Legacy Pollution: $21B – Funds to clean up brownfield and superfund sites, reclaim abandoned mine lands, and plug orphan oil and gas wells, improving public health and creating good-paying jobs.

            Western Water Infrastructure: $8.3B – Funds for Bureau of Reclamation western water infrastructure, including for aging infrastructure, water storage, water recycling and reuse, waterSMART, and drought contingency plans, among other things.

            While some items are laudable, a vast majority of them are already funded through other programs, so I guess we just throw additional moneys at things.

            Also note, there are 617,000 bridges in the United States and a vast majority are in disrepair. Roughly costing $6.8 million per bridge that totals to $4.2 billion on a conservative estimate. That doesn’t include bridges that will need to be completely rebuilt nor does it include the roadway leading up said bridge.

            “And I would rather be the oldest President than the one who was impeached twice, found liable for sexual assault, has over 90 indictments, and is out on bail in four jurisdictions. I like my chances.”

            Gee how did I ever guess you’d kneejerk right to Trump, where in my statement did you derive that from?

            You’re also in the minority on wanting POTUS Biden part deux, over 50% of Democrat voters want someone else.

          5. Virginia Gentleman Avatar
            Virginia Gentleman

            It really isn’t that hard to get to Trump when you mention the election. He is an overwhelmingly favorite to win the nomination right now – should I have framed the race against someone different? Both parties are pretty clear on who the candidates are going to be and for that reason- I love my chances. And your comment on the infrastructure bill was just laughable.

          6. Matt Adams Avatar
            Matt Adams

            “It really isn’t that hard to get to Trump when you mention the election.”

            Of course it is, as I’ve never made a singular statement that would indicate I would vote for him, considering I never have.

            ‘Both parties are pretty clear on who the candidates are going to be and for that reason- I love my chances. And your comment on the infrastructure bill was just laughable.”

            No, no they aren’t. You can go ahead with that though.

            I’m sorry facts were laughable, I should’ve known you aren’t a serious poster, but rather just a run of the mill troll.

          7. Virginia Gentleman Avatar
            Virginia Gentleman

            I really could care less who you would or would not vote for. It isn’t my opinion who the leading candidates are right now. That is an undisputed fact. Signed – run of the mill troll.

          8. Matt Adams Avatar
            Matt Adams

            “I really could care less [sic] who you would or would not vote for. It isn’t my opinion who the leading candidates are right now. That is an undisputed fact. Signed – run of the mill troll.”

            That would be “couldn’t care less”.

            “It isn’t my opinion who the leading candidates are right now. That is an undisputed fact.”

            See now, that’s not what you previously stated. “Both parties are pretty clear on who the candidates are going to be” They aren’t and there hasn’t been a convention to determine who is going to be the nominee for either party. For all you know, POTUS Biden could be “Sandersed” and the super-delegates vote for Gov. Newsome, thereby negating all those primaries you just wen through.

            Oh and I’m still waiting on those “bunches of important pieces of legislation”, POTUS Biden signed. I gave you one and you managed to provide one yourself. Should I hold my breath while you scourer your party talking points campaign memo?

          9. Virginia Gentleman Avatar
            Virginia Gentleman

            Nope. Don’t hold your breath. Google is your friend. I am sure you can find if you are interested. Thanks for the correction on the typo but i really could NOT care less.

          10. Matt Adams Avatar
            Matt Adams

            “Nope. Don’t hold your breath. Google is your friend. I am sure you can find if you are interested. Thanks for the correction on the typo but i really could NOT care less.”

            Go it, so you made a statement. However, are unwilling to back up said statement. Seems like you might not be able to validate said statement and therefore were talking out of your 4th point of contact.

            It’s not a typo, you just are awful at grammar and you forgot a comma, well a good number of them.

            Seems to me your POTUS Biden’s kinda voter, he loves mushrooms.

          11. Virginia Gentleman Avatar
            Virginia Gentleman

            “Go it”. I think you mean “Got it”.

          12. Matt Adams Avatar
            Matt Adams

            Oh wow you do know what a typo is vs grammar, color me surprised.

  2. Matt Adams Avatar
    Matt Adams

    “Youngkin and Cummings both mentioned the state taking major steps to cut unnecessary spending. The fleet of state cars, deemed to be underutilized, has been trimmed by 800 vehicles. A planned office building in Richmond, $400 million in cost, was also scrapped. Pressed by legislators, Cummings denied ordering agencies to stay under budget but mentioned efforts at the end of the fiscal year to prevent them from using excesses to buy things not in that year’s budget.”

    Ah cutting that there “waste, fraud and abuse” is always a good start. I’m rather pessimistic though, once they start a tax, politicians from either side as not very likely to give up that source of revenue.

    1. Stephen Haner Avatar
      Stephen Haner

      I have been the agency finance person looking for ways to spend at the end of the FY to prevent showing a big end-of-cycle balance. It happens!

      1. Matt Adams Avatar
        Matt Adams

        Yep, the Military operated the same way. If you don’t spend your budget, you don’t get it again.

        1. how_it_works Avatar
          how_it_works

          Just trying to justify your inflated budget..

          1. My wife won’t let me watch that movie…

  3. Stephen Haner Avatar
    Stephen Haner

    My interpretation of where we are? A political calculation was made by the GOP legislators and candidates that they were more vulnerable from the continued budget stalemate, they feared the voter reaction. Even though the Democrats were also refusing to compromise (and the House came way, way in their direction.) So they punted and Youngkin swallowed the toad he had to swallow.
    It is still very possible to put this issue squarely in front of the voters. But it must be made a major campaign message.

  4. Nancy Naive Avatar
    Nancy Naive

    Fixing it…

    1. Stephen Haner Avatar
      Stephen Haner

      “Use fewer.” I love it.

      1. Nancy Naive Avatar
        Nancy Naive

        Your next energy piece is all set for a C&D retort.

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