The Virginia Miracle

The headline reads, “Feeling flush: Virginia’s budget surplus doubles.” The article notes:

Virginia closed its fiscal 2010 budget with a $403.2 million budget surplus, Governor Bob McDonell said on Thursday. That’s even higher than the $220 million surplus he previously estimated.

“But please don’t get too excited,” McDonnell said during an address to state congressional members. “Most of it is already obligated in statute or in the budget to meet various needs.”

McDonnell said much of the boost was thanks to state employees, who spent $175 million less then the budget allowed rather than whittling down balances to zero. Plus, Virginia collected $228 million more in individual tax revenues that it was expecting.

It is a veritable Virginian miracle: Despite the fiscal crises hitting states, forcing layoffs and shuttering services, Virginia managed to build a budget surplus and is feeling flush! But the article elides how painful it was for Virginia to get there. The budget surplus is due not to a dramatic growth in revenue, or sensible tax increases. It is because the state received billions in federal stimulus funding — and to make up the difference, chose and made painful cuts. The Times-Dispatch explains the process of getting to that surplus:

Gov. Bob McDonnell wants to fill a $2 billion budget shortfall by eliminating more than 500 jobs over three years, instituting 10 furlough days for state workers and slashing services for children and the sick.

But he proposes no new taxes, and he is electing to keep the $950 million-a-year car-tax break for localities.

The governor also wants to spare higher education from further cuts and seeks to restore some of former Gov. Timothy M. Kaine’s proposed cuts to public safety.

Schools and health care — the largest parts of the state’s general fund budget — take heavy hits under McDonnell’s plan, with reductions of $731 million to public education over the two-year budget period, and more than $300 million to health-care programs.

“All the cuts give me heartburn,” McDonnell said at a news conference. “All of them were difficult because I know that behind every cut there is a Virginian . . . that might be affected.”