McDonnell told a news conference that the money will go to a $82 million, 3 percent one-time bonus for state employees, to local school divisions, to the Water Quality Improvement Fund and to the transportation trust fund.
Actually, state tax revenue continued to decline in the fiscal year ended June 30, but not by as much as had been forecast, McDonnell said. The decline was 0.6 percent, versus an estimate of a 2.3 percent decline.
McDonnell hailed the surplus as a product of prudent fiscal management, noting that the state in January was forecasting a $1.8 billion shortfall. He also said a $4.2 billion budget shortfall had been forecast for the two years ending June 30, 2012.
"We have reduced state spending in this new biennium to 2006 levels," he said.
State employees have gone without a pay raise since 2007.