Why is the budget not a “budget?”

VA BUDGET QUESTIONS

by Tom Cranmer

– Why is the budget not a “budget?” It is more of a forecast of revenues and expenditures.

– Why are expenditures self-adjusting? By law they have to be balanced with revenues. In 2010 VA had a $400 million surplus. The Sunshine Review reported the “Revenue Stabilization Fund has shrunken from $1.19 billion in 2006 to $295 million in 2010.”

– What are the biggest tricks in the budget? To delay funding $600 million of pension plans, according to the VA Pilot. The Sunshine Review notes the Institute for Truth in Accounting “does not consider Virginia’s Comprehensive Annual Financial Report, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles basis does not include significant liabilities for the pension plans and for other post employment benefit, such as health care.”

– What is the biggest progress in the budget? No new taxes and to require state employees put in 5% of their pension contribution (before they put in zero). However, they got a pay raise to cover it.

– What period does the budget cover? Two calendar years — 2011 and 2012.

– What’s the trend of the budget over those years? Steady at almost $38 billion both years.

– How is the expenditure budget divided up? First by receipts called “Non-General Funds” targeted to specific activities such as grants from the federal government (like medicaid) and special fees (like college tuition) and special taxes (like gasoline taxes). Second by General Fund (primarily from income taxes) divided up by activity at the discretion of the legislature and governor. General revenue declined in 2009 and 2010, but is forecast to increase annually by 5-6% in 2011-12.

– What is the most important part of the budget? The Non-General Funds make up nearly 60% of the budget, so if the grants and fees don’t come in, the activities they are tied to get reduced.

– What’s the money spent for primarily? Education first and health second. Together they make up two-thirds of the budget.

– As a taxpayer, what’s my share of the expenditures? About $5,000, including the federal taxes you are paying, which are recycled back to Virginia. Thus for a family of four that’s $20,000 per year!

– Do I have a big debt I have to repay? Fortunately not. It is only about $1,000 per person. That’s why Virginia is one of the few states with the highest bond rating.

– How could the expenditures by reduced? Primarily by reducing taxes. Politicians will spend every dime they collect. Special interest groups would have to be told: “Ain’t no money honey.”