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Del. Ken Plum: A Budget Surplus?

by Del. Ken Plum July 19, 2018 at 10:15 am 10 Comments

Del. Ken Plum/File photoThis is an opinion column by Del. Ken Plum (D), who represents Reston in Virginia’s House of Delegates. It does not reflect the opinion of Reston Now.

Newspaper headlines last week declared “State posts surplus of more than $500 million.” Such headlines about a “surplus” in Virginia’s budget appear with some regularity. I checked the meaning of “surplus” the old-fashioned way–in Webster’s Dictionary: “an amount or quantity in excess of what is needed.”

Hardly is the term surplus applicable to Virginia’s current situation. More accurately the excess cash the state had on the day it finalized its books should be termed an unappropriated balance or an amount of revenues received beyond the forecasted amount.

Why is the distinction I am making important? To suggest that the state has a surplus of money over what it needs is to totally discount unmet needs in the state that do not even make their way into budget consideration. It would be nice to have more money than needed allowing all taxpayers to get a refund. It is also important that the state not have to go into debt to meet current obligations.

A full assessment of the cost of government if the state met its clear obligations has never been made to my knowledge. Such an assessment would allow for an honest discussion of whether the state has a temporary receipt of cash beyond what it expected or has a surplus of cash beyond what it needs. I have ranted in this space before about my concern with the misleading way the state handles its budgeting.

I believe one example will make my point that there is no reasonable way the state could be considered to have a surplus when there are such outstanding unmet needs in the areas for which the state has a responsibility–that example is funding for public schools. On the same day that the half-billion dollar “surplus” was announced, The Commonwealth Institute issued a report, “State K-12 Funding in Virginia: Incremental Progress and Opportunities for Long-Term Solutions,” that found that if public schools were funded today at the same level they were in 2009 an additional three-quarter billion dollars would have been provided–all the surplus and about half that amount more.

Instead, school staffing in Virginia has declined by 1,242 positions while enrollment has increased by more than 50,000 students since 2009. A promise by the state to fund fifty-five percent of the cost of public schools with localities picking up the remaining forty-five percent has been flipped with localities having to pick up a much greater amount since the recession. Virginia ranks forty among the fifty states in the state funding it provides for public schools.

This example focuses on the inadequacy of the level of public school funding, but other examples could be given in the areas of mental health services and public health and safety. The conservative approach of forecasting revenue and the tight limitation on spending will keep Virginia with a more than balanced budget. If realistic state responsibilities were factored in, we could have a realistic balanced budget. Instead, we have underfunded programs and services with persons scratching their heads wondering how we could have a surplus with so much more left to do.

File photo

  • 30yearsinreston

    Dear Ken,
    You will never have enough to meet your fiscal wishes
    Spendng other peoples money knows no bounds
    As for school systems,please explain why one of the nations wealthiest school systems has degrading performance
    Hint: its not because they lack money

  • AAA Things OK

    https://www.richmond.com/news/virginia/government-politics/ahead-of-budget-signing-moody-s-affirms-virginia-aaa-bond/article_1c80c774-d277-57f2-ab26-5e0a4635bd59.html

    “I am very pleased that Moody’s has
    reaffirmed Virginia’s bond rating,” Jones said Wednesday. “I believe
    their actions are reflective of the General Assembly’s commitment to
    build up our cash reserves, make investments in education and meet the
    needs of Virginia business through workforce development.”

    Senate Majority Leader Tommy
    Norment, R-James City, said via text message that the Moody’s report
    was “no surprise to me. I repeatedly said during the session the threat
    of losing AAA was demagoguery and false assertion to try to scare
    legislators into voting for expansion. Complete poppycock.”

  • Chuck Morningwood

    Maybe all of that extra money should be stuffed into a “rainy day” fund so that when the inevitable economic downturn occurs, the Commonwealth will have a way to soften the blow.

    • AAA Things OK

      S&P downgraded the state’s

      financial outlook last year while reaffirming its AAA rating because of
      concern over Virginia’s depleted Revenue Stabilization Fund — also
      called its rainy day fund. Withdrawals from the fund to balance the
      current budget lowered the reserve to $281.7 million, or about 1.4
      percent of state general funds. That level is the lowest among the 14
      states that S&P rates AAA.

      Similarly, Moody’s previously had cited low reserves “as a factor that could lead to a downgrade,” Public Resources Advisory Group, an outside state
      consultant, said in a report shared with legislators last month.

      The pending budget appropriates an additional $90 million for the cash
      reserve, on top of the $156.4 million already pledged from excess
      revenues carried over from the fiscal year that ended June 30.

      However,
      Layne said a surge in income tax payments after President Donald Trump
      signed the Tax Cuts and Jobs Act on Dec. 22 could produce additional
      revenues of more than $500 million in one-time payments of income taxes
      not withheld from paychecks, such as those paid on capital gains.

      The budget projects the combined revenues held in the new cash reserve and the rainy day fund could exceed $976 million at the end of the biennium
      in mid-2020. That would represent about 5 percent of the state’s general
      fund revenues.

  • drb

    Just wondering why the “surplus” isn’t considered to be used to pay down debt? After all with the new Medicaid expansion more money will need to be borrowed very soon.

  • KPHNHH

    I can feel the heat of that money burning a hole in Kens pocket.

  • John Higgins

    What nonsense. Surely the learned delegate is aware that “surplus” in the context of financial results: (a) does not refer to cash-on-hand and (b) has a meaning quite distinct from the definition he selected from the dictionary. Want to use Webster’s to discuss state financials? Appropriate, verb: take (something) for one’s own use, typically without the owner’s permission.

    • 30yearsinreston

      Surplus: continuing partisan drivel from Mr speaker (with a small “s”)

    • AAA Things OK

      KPHNHH already hinted at this, a surplus is meaningless unless its applied against existing debt.

      From that perspective the state is in deep trouble like many others. From what I know there was never a debt free state, although in Canada the province of Alberta eliminated practically all debt under Klein and after. This lead to bonds maturing early,, not now tho (under NDP).

      If everyone contributes roughly 4K the state of VA will be debtfree.

  • Mike M

    My comment was censored. I broke none of the rules.

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