As economy improves, Va. predicts healthier revenue rebound
Gov. Bob McDonnell (R) has delivered some good budget news to leading budget writers in the Senate and House as they prepare to unveil their competing proposed spending plans Sunday -- the state will have $152 million more than predicted over the next two years.
In a letter delivered Friday and over breakfast at the Executive Mansion, McDonnell informed the legislators that his number crunchers have reforecast their projections for tax revenues, predicting that the state's income tax and other collections will improve at a faster rate than once thought.
The improved projections are a sign that Virginia's economy is turning a corner more rapidly than once thought. McDonnell had already inserted $337 million from higher-than-expected revenues and transfers into his budget proposals to legislators in December.
The revised revenue projections means delegates and senators have more money to prioritize in the amendments to the two-year budget that they introduce this weekend. McDonnell, of course, has suggestions to the General Assembly of how he'd like to see the additional money spent.
In his letter, he proposes depositing $50 million into the state's rainy day fund, doubling the payments to the fund over the two-year time span. He also recommended spending $37.8 million to eliminate the accelerated sales tax for 75 percent of the 6,500 merchants scheduled to pay it this June. The state was already scheduled to phase out the accelerated sales tax--which requires businesses to pay their monthly tax early once during the summer so the state can recognize the revenue before the end of the fiscal year June 30--in 2013.
And he suggested spending $37.5 million to begin paying back $620 million the state borrowed from the Virginia Retirement System last year to fill a budget hole. The General Assembly had agreed they would begin repaying the money back, with interest, in 2013. McDonnell's suggestion would have them making half of their first year's payment early.
McDonnell offered no suggestions for $19.2 million, indicating the General Assembly should use it as lawmakers see fit.
In the letter, McDonnell noted that Virginia had scaled back its spending during the recession to 2006 levels.
"Most of my recommendations make down payments on future obligations that will continue to help us down the road in budget development and I urge you not to spend this new money on recurring operations," he wrote in a letter to Senate Finance Sen. Chairman Chuck Colgan (D-Prince William) and House Appropriations Chairman Del. Lacey Putney (I-Bedford). "
Rosalind S. Helderman
| February 4, 2011; 11:05 AM ET
Categories: General Assembly 2011, House of Delegates, Robert F. McDonnell, Rosalind Helderman, State Senate
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