While most states are experiencing debilitating budget deficits, Virginia is “feeling flush” after turning a $1.8 billion deficit into a $403.2 million budget surplus at the close of the fiscal year. In a celebratory speech before the Virginia legislature Thursday, Virginia Gov. Bob McDonnell (R) credited higher tax revenue, state agencies’ fiscal responsibility, and serious budget cuts for the state’s ability “to balance the books.”
McDonnell’s victory tour continued with a stop on the Fox Business network to tout “fiscal prudence and conservative budgeting” as “the key” to his surplus. When enamored host Gerri Willis asked him whether Washington “could learn something from Virginia,” McDonnell replied he hoped his fiscal responsibility in Richmond “would be a model for Washington”:
WILLIS: Well you know congratulations, it’s an amazing story. You started the year with $1.8 billion deficit – you turned it around completely, even have a surplus. How’d you do it?
MCDONNELL: Well it took a lot of work and a lot of bipartisan support in both houses of the legislature but I think we took a very conservative, fiscal, practical approach to budget. You can’t spend what you don’t have. [...]
WILLIS: And you mentioned some of the spending priorities in Washington, could they learn something from Virginia?
MCDONNELL: Well, as I said in my speech to the legislature today, they sure could. Everybody knows, families and businesses that are cutting in these tough economic times, this is an unsustainable level of spending. What we need to do is incentivize the free enterprise system which has been the strength of American democracy for hundreds of years to grow. And we can’t keep adding a trillion and a half dollars to the national debt every year with this deficit, you’ve got to be fiscally prudent and incentivize the free enterprise system so you don’t have more government bailouts and more dependence of people on government. It’s a very different model and I hope Richmond would be a model for Washington.
McDonnell’s “prudence” would be a shining example for the federal government if he hadn’t relied on one important contributor: the federal government. According to a Commonwealth Institute for Fiscal Analysis report released this week, last year’s Recovery Act provided $2.5 billion in stimulus relief to “maintain crucial services for [Virginia] citizens” and “help close the state’s budget shortfall in 2010-2012.” Virginia legislators relied on $1.3 billion in enhanced Medicaid funding, $1 billion in funding for K-12 and higher education, $39 million for public safety, and $200 million in general support to reduce “what would otherwise have been a $5.4 billion budget hole.”
But McDonnell has a history of selective amnesia when it comes to Recovery funds. During his gubernatorial campaign, McDonnell continually criticized the Recovery Act as a “massive” spending bill that would “do little to help the economy.” But, while in office, McDonnell heralded $24 million in federal funding to advance health information technology while sweeping the fact that it was stimulus funding under the rug. He even requested stimulus funds to cover rising health care costs and to help build a Rolls Royce manufacturing plant in Prince George County. As one Virginia legislator put it, “we wouldn’t even be talking about the surplus if it weren’t for the stimulus.”