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Governor McDonnell Announces $544.8 Million Surplus for Fiscal Year 2011

Governor McDonnell Announces $544.8 Million Surplus for Fiscal Year 2011

Governor McDonnell Announces $544.8 Million Surplus for
Fiscal Year 2011
– Commonwealth Posts Back to Back Fiscal Year Surpluses –

Governor Announces $132.7 Million Will Go to Rainy Day Fund; $93.2 Million to Transportation; Creates "Federal Action Contingency Trust" Fund (FACT Fund) To Prepare Commonwealth for Likely Future Federal Spending Reductions

Full Text of Governor's Speech to Joint Money Committees (PDF)

RICHMOND - In his annual summer address to the Joint Money Committees of the General Assembly this morning, Governor Bob McDonnell announced that Virginia has posted a surplus of over half a billion dollars for FY 2011. The $544.8 million surplus follows the Commonwealth's $403.3 million surplus for FY 2010. The FY 2011 surplus consists of the previously announced revenue surplus of $310.7 million along with $234.1 million in state agency savings and agency balances.

Speaking about the back to back surpluses, the Governor remarked, "These are extremely difficult economic times. At the national and international levels we face tremendous uncertainty and volatility. Here at home, Virginians are worried about their jobs, and watching their checkbooks and retirement accounts with concern. While we are all, to a great extent, captive to the same domestic and global economic trends, there are many areas that remain within our control. One of those is how we handle our annual state budgets. I am pleased to report today that, through bipartisan cooperation, we have ended the 2011 Fiscal Year with a surplus of over half a billion dollars. This is the second year in a row that we have posted a budget surplus. We have done this by budgeting conservatively, keeping taxes low, reforming how state government works, and investing wisely in core functions of government crucial to private sector job creation and economic development."

The Governor continued, "Our fiscally responsible course has led to economic growth in the Commonwealth. The seasonally-adjusted unemployment rate has fallen over one full point since February 2010, and is the third-lowest rate east of the Mississippi. More Virginians are working and spending, and that can be seen in the revenue growth that is responsible for more than one-half of this surplus. At the same time, our efforts to reform state government and make it function more efficiently have also produced savings. We have brought in more revenue, and spent less, than anticipated. That's how we have achieved this budget surplus, and I thank General Assembly members of both parties for their leadership and partnership in this effort."

The Governor also used this morning's remarks to detail the disbursement of the FY 2011 surplus, including his call for the creation of a Federal Action Contingency Trust (FACT) Fund to help prepare the Commonwealth for future federal spending actions. He noted, "In uncertain times we must prudently prepare for the future. We will deposit another $132.7 million into the state's Rainy Day Fund. And we will ask the General Assembly to create a "Federal Action Contingency Trust" Fund that will help increase our ability to handle the impact of likely future federal reductions. I am recommending that $30 million from the surplus be used to initiate this fund. While we do not know exactly how federal spending will be reduced, we all know it will and must be. I strongly support efforts to reverse the immoral and unsustainable pace of federal spending. At the same time, as Governor of Virginia, I want to take every step possible to ensure that no matter what occurs Virginia will be ready. This FACT Fund is the start of that effort, and I hope the General Assembly will support our common-sense proposal to proactively plan for the years ahead."

Allocation of FY 2011 Surplus

Revenue Stabilization Fund: $132.7 million
'Federal Action Contingency Trust' Fund (FACT Fund): $30 million
Virginia Water Quality Improvement Fund: $50.3 million
Accelerated Sales Tax to Transportation Trust Fund: $26 million
Natural Disaster Reserve: $17.3 million
Capital Renovation (Treasury Loan Repayment): $13.1 million
Unemployment Compensation Trust Fund Interest: $8.9 million
Federal Portion of Electric Rate Refund: $1.4 million
Miscellaneous Transactions: $2.9 million
Transportation Trust Fund: $67.2 million
BRAC Commitments: $7.5 million
Sheriff Departments: $7.4 million
VRS Payment and other: $18.7 million
Planned Revisions in Budget: $13.4 million
Reappropriated Non-General Fund/Higher Education Balances: $63.6 million
Reappropriated General Fund Operation Balances: $84.4 million