By Alan Suderman, Associated Press
RICHMOND — Higher-than-expected state tax revenues are a sign that Virginia’s economy has recovered from the Great Recession, Gov. Terry McAuliffe says.
“Our economy is back, it’s moving,” McAuliffe said at a Capitol news conference Monday.
Preliminary budget figures show $553 million more in revenues than Virginia’s purposely conservative budget projections had anticipated in the fiscal year that ended in June. Income tax revenues, which came in higher than expected, were the biggest drivers of the revenue surplus.
The extra money is already spoken for, with most of it going to the state’s rainy day fund. The surplus also means that state employees will receive their preapproved 2 percent raise starting in September. The state will also raise the state’s share of public school teacher salaries by 1.5 percent.
Both McAuliffe, a Democrat, and Republican leaders in the General Assembly took credit for the revenue surplus. The governor, who has made attracting and retaining businesses in Virginia a top priority of his administration, noted that he’s brought in more planned capital investment to the state than any of his predecessors had by this point in their administrations.
GOP Senate Majority Leader Thomas K. Norment, Jr. said Republican control of both chambers of the General Assembly led to the surplus.
“Today’s announcement is the direct result of Republicans regaining the Senate majority in June of last year,” Norment said.
Virginia’s state budget projections have seesawed dramatically. Last year, state officials announced the state faced a $2.4 billion shortfall in the fiscal 2015 and 2016.
Officials on both sides of the aisle, including McAuliffe, also tempered Monday’s news by noting that Virginia still faces economic uncertainty thanks to a possible new round of automatic defense spending cuts, known as sequestration. Home to the Pentagon in Northern Virginia and the world’s largest naval base in Norfolk, the Old Dominion is heavily dependent on military spending. McAuliffe said he’s made it a priority to try and diversify the state’s economy.