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Commentary: Plenty of Money

Reading a letter Governor McDonnell sent to state employees or listening to a speech he gave to the General Assembly money committees last week you could conclude that Virginia state government has plenty of money. He told both, “For the fourth straight year the commonwealth will enjoy a budget surplus! We concluded Fiscal Year 2013 with a total budget surplus of $585 million, the largest since 2005. Over the full four years of my term, Virginia has enjoyed a cumulative surplus of nearly $2 billion—the highest cumulative surplus of any single administration.” For a governor in the final months of the one term he can serve (being barred by the Constitution from serving consecutive terms), the governor is given some latitude in hyperbole to try and establish a legacy for himself, especially in light of his other very significant problems. But as I have written each year at the time of the annual announcement of the “surplus,” there is much more to the story. The so-called “surplus” is an unappropriated balance of revenue brought about by conservative projections of revenue in a time of economic uncertainty and deliberate actions on the part of the executive branch not to spend monies that were appropriated by the legislature. Of this year’s ending balance of $585 million, $264.3 million came from higher than estimated revenues; $320.7 million came from monies that were budgeted but not spent.

Try telling people who are making out their checks for their son or daughter’s college tuition and fees that the state has a surplus, and you may get a less-than-polite response. As the blog for the Commonwealth Institute pointed out, “state support for the state’s colleges and universities is down 8 percent even while enrollment has jumped 24 percent. This cut in state support contributed to an astonishing 46 percent jump in average tuition and fees at Virginia’s four-year public institutions during this period.”

Local officials will show a similar reaction to any talk about a state surplus. School divisions throughout the commonwealth have had to reduce staff and programs even with increased enrollments with the decline in state revenue. K-12 education that should be an equal partnership between state and local government has seen a steady decline in state support to the point that the partnership is now 60 percent local and 40 percent state even as there are more children in the schools.

State employees have some strong reactions to this illusionary surplus when their pension funds have been under-funded year after year, and the estimates of unfunded liability range from $15 to $50 billion. Insult and injury are added to public employees by the suggestion that they have somehow caused the state budget problems while their pleas for adequate annual funding of their pension programs have been ignored.

With a budget surplus in the state, parents of children in training centers wonder why the centers are being closed. Families with members in need of mental health services wonder why the wait. Tax critics wonder why taxes were increased for transportation if the state has a surplus.

What is the value of money leftover if critical needs are unmet and funding commitments are being ignored? If there is plenty of money, we should be spending it on programs and services that matter to the quality of life in the commonwealth.