Despite a state surplus announced Monday, bonuses for Virginia state employees are still in limbo. Virginia now has $129 million in surplus revenue.
Three percent employee raises set for the end of the year are tied to state performance. McDonnell says he's optimistic that will happen.
"If we can get the 3 percent bonus this year plus the 2 percent pay raise the following year, this will be the most significant increase in compensation for our hard-working employees in a while," said the governor.
The state still has to tabulate savings from individual agencies before committing to the raises. State employees haven't received a raise since 2010.
RICHMOND, Va. (AP) - Virginia's government finished the 2012 fiscal year last month collecting about $129 million more in revenue than the official forecast on which the budget was based.
In an Associated Press interview, Finance Secretary Ric Brown said revenues for the 12 months ending June 30 increased by 5.4 percent over the previous fiscal year, ahead of forecast growth of 4.5 percent.
Individual withholding, the tax most people pay on their wages, finished about $33.7 million ahead of expectations. Sales tax collections added $55 million to the surplus, and corporate income taxes were $32 million better than expected.
Nonwitholding income taxes collected on dividends and by the self-employed were down slightly, but the state paid out less in refunds.
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Commonwealth of Virginia
Office of Governor Bob McDonnell
Governor McDonnell Announces Commonwealth Posts $129.2 Million Revenue Surplus for Fiscal Year 2012
RICHMOND – For the third straight year, the Commonwealth of Virginia has reached the end of the fiscal year with a revenue surplus. Governor Bob McDonnell announced today that the state concluded Fiscal Year (FY) 2012 with an approximately $129.2 million surplus from general fund revenue collections and transfers. Total revenue collections rose by 5.4 percent in FY 2012, ahead of the revised revenue forecast 4.5 percent growth. This marks the second straight year that revenue growth has exceeded 5 percent in Virginia. The main drivers of the revenue increase were growth in individual income tax receipts from payroll withholding, lower individual income tax refunds and higher than expected sales and corporate income tax collections. A comprehensive breakdown of the FY 2012 revenue surplus is attached to this press release.
Revenue and transfers make up one-half of the overall FY 2012 surplus number. The other half comes from savings in state government. The final FY 2012 surplus tally will not be available until mid-August after final tabulations of appropriation savings recognized through greater operational efficiencies and incentives to control spending throughout state government are calculated.
It is the third fiscal year in a row that Virginia has concluded the fiscal year with a revenue surplus. In FY 2010 the revenue surplus for the year was $228 million. The final FY 2010 surplus, including savings, was $403 million. In FY 2011, the revenue surplus was $311 million, and the final surplus, including savings, was $544.8 million.
Total revenues have now returned to the level reached in FY 2008, an indication of continued recovery from the recession that struck the country in recent years.
"Virginia continues to demonstrate that conservative fiscal management, a focus on government efficiency, and bi-partisan efforts to bolster our economic development and job creation programs can speed economic recovery in the Commonwealth," Governor McDonnell said. "For too long, elected officials from both parties have over promised and overspent, and the result is the fiscal crisis we see unfolding in Washington D.C. Here in Richmond, we are committed to a culture of fiscal responsibility and restraint in state government. We have made some very tough choices. We have reduced spending, not raised taxes and focused government on its core functions. Virginia continues to live within its means and in doing so has posted three straight years of surpluses, while being recognized as one of the best places in the nation in which to live and do business. During that same period, unemployment in our state has fallen by over 20 percent, and our 5.7 percent unemployment rate is the lowest in the Southeast. We will continue to follow this path of bi-partisan cooperation, fiscal responsibility and a focus on private-sector job creation. It is working."
Lieutenant Governor and Chief Jobs Creation Officer Bill Bolling added, "Through conservative fiscal policies and disciplined spending, Virginia has enjoyed revenue surpluses in excess of $650 million during the first three years of our administration. Adding in the agency savings from the past two years, Virginia has experienced more than $1 billion in total surpluses, with more good news expected when FY 2012 agency savings are calculated next month. This record demonstrates the power of these conservative principles and the bi-partisan focus on keeping Virginia's financial health in order. With continued economic uncertainty and mixed financial indicators, Virginia must continue to be frugal with how we spend the taxpayer's money, and we must direct those resources we have to the state's highest priorities. This third straight surplus shows our policies of job creation, economic development, and government reform are working for the people. Continued fiscal discipline and a vigilant focus on creating jobs and growing our economy will ensure that the Commonwealth continues this trend of positive economic news in the days to come."
Secretary of Finance Ric Brown outlined the sources of the surplus funds and where it will be spent going forward. The majority of the revenue surplus is obligated to predetermined areas of the state budget as outlined in the Virginia Constitution and state law. This year, as required, the majority of this revenue surplus, or $78.6 million, must be deposited to the Rainy Day Fund. The Fund will now stand at $690 million, the largest it has been since 2008. If sufficient, funds also will be directed toward paying for a state employee bonus of up to 3 percent as provided for in the Appropriation Act."
Disbursement of FY 2012 Revenue Surplus (All numbers are approximate and subject to revisions):
Analysis of Fiscal Year 2012 Revenues
Based on Preliminary Data