While champagne corks are flying and toasts of success are being made, it is not yet time to celebrate a supposed surplus of revenue in Virginia. According to Governor Bob McDonnell, the state has a surplus of at least $220 million. But does Virginia really have a surplus?
After the past General Assembly session, many budgetary gimmicks have come to light. One such item of budgetary voodoo was a postponement of funding the VRS by $620 million. This payment, as the General Assembly and Governor McDonnell promised, would be made at a later date. Currently, the VRS has $53 billion in unfunded liabilities, according to a study of state pension plans from the American Enterprise Institute. Not only was the Governor’s decision to not return funding to this boondoggle a sleight of hand, the state is still on the hook to refund the VRS in the coming years.
Further troubling is McDonnell’s claims that he has balanced the budget, and created a surplus, without raising taxes. The budget that McDonnell signed included more than $95 million in new fees alone! Aside from the fee increases, McDonnell’s signature on that budget also revived one of the most reviled budgetary gimmicks seen yet—a requirement for retailers to pre-pay a month’s sales taxes to the state through 2013.
When McDonnell announced the surplus, Finance Secretary Richard Brown was asked if the accelerated sales tax payments had generated the revenue that boosted the state to a surplus. Brown acknowledged that the sales tax payments were less than hoped for and did nothing to boost the surplus amount. Which leads one to wonder if McDonnell, whose own Finance Secretary admits they did nothing, will discontinue the accelerated sales tax payments instead of requiring them through 2013.
Acknowledging the truth about Virginia’s finances are important. This “surplus” is nothing to be celebrated. With a $53 billion unfunded liability hanging over the head of Virginia taxpayers, this “surplus” is nothing to be exalted.
The leadership shown by Bob McDonnell is not that of a principled fiscal conservative. When he declares that he has a “surplus”, instead of putting the money into the programs that are bankrupting the state, he opts to give state employees a bonus. He has opted to push today’s problems to tomorrow’s taxpayers.
This is not leadership. This is punting responsibility down the field. As a Virginia taxpayer, I feel it is necessary to call this smoke and mirrors display out for what it is. If Republicans hope to regain the trust of Americans they must prove they are worthy of having it. Playing the politics as usual, budgetary gimmicks scheme game does not show that they are ready to hold the public’s trust again. And if Republicans take back the Congress in November, I surely hope they do not follow McDonnell’s example of fiscal responsibility.
McDonnell’s announcement that Virginia has a “surplus” is not to be heralded. Virginia is still deep in the hole.