Yes, Virginia, There Really is Light at the End of the Tunnel (Looking at the State FY 10-12 Budget)

INPUT Sr. Analyst Chris Cotner reports.

On Meet the Press [May 1, 2011], Governor Bob McDonnell jousted points of the state budget with Obama 2012 Campaign Advisor David Axelrod. “We made all those really tough decisions last year … We balanced a $6 billion deficit without raising taxes, mostly through spending cuts, and it included education and included health,” McDonnell asserted.”We can’t kick the can down the road … we’ve gotta make tough decisions.”

In direct counterpoint, Axelrod retorted that McDonnell “balanced [the] budget with $1.7 billion in money from the Recovery Act … borrowing $3 billion against future receipts on transportation … [and] borrow[ing] money from [the] pension plan.”

Axelrod finished, saying, “… when you borrow billions of dollars from future receipts … the next governor’s gonna have to wrestle with that.”

Understanding the right time and place to announce exactly how and when a government is borrowing or creating funding to offset deficits is tricky at best. To be sure, political motivations lurk underneath the substance of any such announcements and counters.

Despite the heated debate – and much more important for immediate procurement opportunities with the commonwealth – Virginia’s budget is up approximately $721 million (1.8 percent) from FY 2011 to FY 2012 after amendments to the biennium filed by McDonnell in December 2010. This is partially the result of the continued good news from 2010, when the McDonnell administration announced a midyear swing from a projected $1.8 billion deficit to a $403 million surplus. Once all the figures and estimates settled for the FY 2010 to 2012 biennium, there was an overall increase of $426 million in general fund revenues.

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