Virginia’s Budget
Update
Michael Maul
Associate Director, Department of Planning and Budget
November 13, 2009
2008-10 Revenue Reductions:
Impact on State Government
• Including the August reforecast, there now have been a series of
revenue reductions for the 2008-2010 biennium totaling more
than $7.0 billion
Date
August 2007
February 2008
October 2008
December 2008
February 2009
August 2009
Total
Reductions in Millions
-$ 849.1
- 1,064.5
- 2,513.7
- 373.6
- 821.5
- 1,508.0
-$7,130.4
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Overview of the FY 2010 Budget Shortfall
and Reduction Strategies
Net Budget Shortfall for 2008-2010 Biennium
Balance in Appropriations Act (Chapter 781)
FY 2009 Revenue Shortfall
FY 2010 Revenue Shortfall
Net Budget Shortfall for Biennium
•
$ in Millions
$
157
(299)
(1,209)
$
(1,351)
Because almost three months of fiscal year 2010 had elapsed, the Governor’s
proposals were intended to
– Manage the shortfall while minimizing impact on K-12 education, safety net services, and
local governments
– Make agency and targeted budget reductions that could be continued through 2010-12
biennium and beyond
•
The Governor’s plan includes a variety of actions including:
– Agency and program reductions
– Reversion of prior year unspent general fund and nongeneral fund balances
– Use of alternative funding sources as a substitute for general fund spending
– Proposed Revenue Stabilization Fund transfer
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Summary of Governor’s September 2009
Proposed Budget Actions
General Fund Revenue Shortfall (incl. transfers)
$
Agency-based Actions:
Agency Pledged Balances
Agency GF/NGF Balances
Net GF Higher Education Reductions
Close Correctional Facilities
Constitutional Officers
One Day Employee Furlough
Indigent Care Funding
MH Treatment/Disability Training Centers
Economic Development/Tourism
Remaining Agency Reductions
FY 2010
(1,350.5)
$
22.8
143.4
105.3
36.6
30.4
16.3
7.0
6.3
3.1
190.4
561.6
Subtotal
Other Actions:
Revenue Stabilization Fund Withdrawal
Federal Stimulus (K12 & Higher Education)
VRS Employer Retirement Rate Suspension
VRS Employer Non Retirement Programs Rate Suspension
Federal Stimulus (Medicaid Match Rate)
Literary Fund
Lottery Profits (from FY2009)
Subtotal
$
37.6
13.7
51.3
$
283.0
160.4
104.1
30.9
97.0
55.0
9.9
740.3
Total of All Actions
$
1,353.2
Amount in Excess of Shortfall
$
2.7
Subtotal
Revenue Sharing Adjustments:
K-12 Sales Tax
HB 599 Payments
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Higher Education Reduction Strategies
• Higher education reductions total $196.8 million from the general fund
• The net reductions to higher education institutions (using available
federal stimulus funding) totals $105.2 million
– An additional $91.5 million in stimulus funding used in fiscal year 2010 to
mitigate the impact
• Four year schools are reduced by 15 percent
– Two year colleges (VCCS and RBC) are reduced by 13 percent
• Institutions of higher education are given flexibility to determine how
to implement the reductions (i.e., no specifically approved reduction
strategies)
– No restrictions are placed on tuition increases
• With the federal stimulus, the net impact for four-year institutions now
becomes 8 percent and 6.9 percent for two-year colleges (systemwide
= 7.7 percent)
4
Looking Ahead to the Next Biennium
Slower Revenue Growth
• Slower revenue growth in the future – no quick post-recession
“bump”
– FY 2006: $14,834.8 billion
– FY 2011: $14,618.0 billion (August 2009 General Fund Forecast)
• Means that:
– Significant budget pressures will continue in the next biennium
– Budget reductions against current spending levels will be needed in many
areas to maintain fiscal balance
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Where the Money Goes in 2008-2010
81% of state GF revenues are used for education, health and public safety programs
Public Safety
$3,536.0
10.8%
Other
$1,513.1
4.6%
General
Government
$1,640.0
5.0%
Car Tax
$1,900.0
Debt Service
5.8%
$957.3
2.9%
Transportation
$82.0
0.3%
K-12
$11,091.8
75.2%
Education
$14,757.7
45.0%
Health & Human
Resources
$8,373.6
25.6%
*Governor Kaine’s Introduced 2008-2010 Biennial Budget
Higher
Education
$3,317.2
22.5%
Other
$348.6
2.4%
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Federal Stimulus Package
• Allocation: $4.8 billion
• Big ticket items that supplanted/replaced GF appropriations:
– Fiscal Stimulus Funds for Education - $984 million
• K-12 - $435 million
• Higher Education - $217 million
• Reserved for FY2011 - $332 million
– Fiscal Stimulus Funds (Flexible Portion - $218.9 million)
• FY2009 - $109.8 million
• FY2010 - $109.8 million
– Medicaid - $1.3 billion
• FY2009 - $368.8 million
• FY2010 - $593.7 million
• Remainder in FY2011 (six months of FY only)
– Byrne Justice Assistance Grants - $23.3 million
• Use in FY2010 for Sheriffs
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For more information on Virginia’s
budget, visit these websites at:
www.Finance.Virginia.gov
or
www.DPB.Virginia.gov
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