State Surplus Will Go Towards Bonus, Schools, Water, Roads

The state finished the last fiscal year with a $220 million surplus, Gov. Bob McDonnell confirmed today, which means state workers will get a bonus in December.

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.

McDonnell said there are still problems in the economy, particularly in the real estate sector, but that tax collections appeared to have begun turning around in April.

www.timesdispatch.com

Virginia's Fiscal Year Turns Out To Be Better Than Anticipated

Virginia's battered state budget ended a turbulent 2010 fiscal year on June 30 with a surprise surplus of about $220 million, government figures show.

That exceeds forecasts of a month ago anticipating a $140 million unspent balance and guarantees a September bonus for state employees, the first pay boost in years for most.

Gov. Bob McDonnell's administration is expected to formally announce the figures in a late morning news conference.

The surplus ended a dire budget year in which official revenue forecasts were lowered three times and raised once as policymakers struggled to reconcile a nearly $2 billion shortfall.

Preliminary June revenue figures show that the larger-than-expected year-end balance resulted mostly from strong collections of individual and corporate income taxes, said Finance Secretary Richard D. Brown.

Taxes withheld from individual wages barely topped $820 million last month, up 2.5 percent from June 2009. That brought final annual collections of the tax that accounts for two-thirds of the state's general operating budget to nearly $9.2 billion by the time the fiscal year ended on June 30.

It was an increase of just 0.4 percent over total withholding income tax collections for the previous fiscal year, but it beat the official forecast which was for an increase of only 0.2 percent, and that made the difference, Brown said.

Corporate income tax receipts of $157 million for June increased by 14.2 percent over the same month the year before, and collections of about $806 million for the full year were nearly one-fourth greater than the previous fiscal year.

Sales tax collections for the most recent month doubled what they had been in June 2009. In a bid to generate a cash boost, the state accelerated the schedule for retailers to turn in taxes collected on sales. But Brown said the accelerated sales tax generated less than expected and did not boost the final surplus figure.

http://www.shoredailynews.com/