Associated Press//July 30, 2012
//July 30, 2012
RICHMOND, Va. — Virginia’s government finished fiscal 2012 with about $129 million more in general revenue than what was predicted in the official forecast on which the state budget is based.
Revenues for the 12 months ending June 30 increased by 5.4 percent over the previous fiscal year, ahead of forecast growth of 4.5 percent, Gov. Bob McDonnell announced Monday.
The better-than-expected revenues, however, are only part of the total surplus. The other part, created by savings and account balances swept from state agencies, will be reported on Aug. 15, the day McDonnell addresses the combined House and Senate money committees.
Fiscal 2012 was the third in a row for the state’s general fund collections to exceed their budgeted forecasts, but it’s smaller than last year’s revenue surplus of $311 million. The general fund pays for such core state services as public safety, health care and aid to public schools.
It doesn’t, however, represent year-over-year growth.
Collections for the fiscal year that ended in June 2009 were $14.3 billion, a 9.2 percent drop from almost $15.8 billion for the previous budget year just as Wall Street began a frightful slide.
Fiscal 2010 collections dipped to $14.2 billion, the smallest general revenue yield since 2006.
The rebound began in fiscal 2011, when collections barely topped $15 billion. Monday’s report means general revenues are about at their 2008 levels, McDonnell told reporters at an Executive Mansion news conference.
The years of shortfalls forced the General Assembly, former Gov. Timothy M. Kaine and McDonnell after him to cobble together packages of deep cuts, savings in state operations and emergency reserves from the “rainy day” fund to avoid billions of dollars in deficits.
The latest surplus doesn’t herald a windfall that jump-starts state spending. The largest share, $78 million, is reserved for replenishing the rainy day reserve. State law also obligates portions of it to the Water Quality Improvement Fund.
Nor does it mean that state employees have reached the threshold for a 3 percent performance bonus in December, a one-time pay boost conditioned on the overall surplus.
“Some of this money will go toward that, but we have to wait and see what the total savings numbers are before I know whether the $77 [million] to $80 million necessary for the performance will be there,” McDonnell said.
Finance Secretary Ric Brown said that finishing ahead of projections in a tepid economic recovery is gratifying and something few of his counterparts can claim.
“Any time you can come in at 5 [percent] or 6 percent growth, I’ll take it,” Brown said, recalling months of uncertainty over the past fiscal year when it appeared the state could end up with a shortfall.
Individual withholding tax collections, which most people pay on their wages and have deducted from their paychecks, finished about $33.7 million ahead of expectations. Sales tax collections added $55 million to the surplus, and corporate income taxes were $32 million better than expected.
Sales tax collections for the year would have been higher if the state had not relaxed most of its three-year “accelerated sales tax” program, a budget balancing gimmick employed at the depth of the recession to juice up revenues by requiring retailers to remit estimated sales tax receipts to the state a month ahead of schedule. Because the accelerated sales tax was ended on all but a few merchants, an additional $50 million that a year ago would have been counted toward June’s revenues now are applied to July’s sales tax collections, making it part of fiscal year 2013, which began July 1.
Non-withholding income taxes collected on dividends and by the self-employed were down slightly, but the state paid out less in refunds, Brown said.