A Virginia ‘surplus’ that masks future pain

[Derechos]

IMAGINE A BUSINESS that declares a profit two years running but achieves it by withholding payments owed to an important supplier. In effect, that’s what Virginia Gov. Robert F. McDonnell has now done by declaring what he unconvincingly terms a budget “surplus” for the last two years. Call it what you like, governor, but it doesn’t change the rather more awkward facts.

Like most states, Virginia has made massive spending cuts since the recession started three years ago, slashing billions of dollars in outlays to schools, colleges and universities, and virtually every social service the state provides. Although Republicans like Mr. McDonnell don’t often mention it, the impact of those cuts was cushioned by the federal stimulus, which added hundreds of millions of dollars to cover health care for the poor through Medicaid, among other needs.

Last year, with the stimulus dollars running dry and targets for further savings dwindling amid already shrunken government spending, Mr. McDonnell relied more heavily on budgetary gimmickry than he has before. He postponed $620 million in payments owed to the state pension system, which covers 600,000 teachers, among other beneficiaries. And he declared the money would be repaid starting in 2013 — conveniently, the year his gubernatorial term ends.

The governor also continued to rely on a trick of creative accounting he used last year, speeding up sales tax collections from businesses so that the first month’s taxes they owed in the new fiscal year were credited to last year’s books.

Now Mr. McDonnell has announced that Virginia notched up a “surplus” of $311 million for the fiscal year that ended June 30. But just like last year — when to manage a balanced budget he also postponed payments of $135 million to the state pension fund, known as the Virginia Retirement System — it is a surplus with a very large asterisk. In fact, the $620 million that Mr. McDonnell withheld from the pension fund is almost exactly twice the size of the “surplus.”

http://www.washingtonpost.com/opinions/a-virginia-surplus-that-masks-future-pain/2011/07/28/gIQA4nb3jI_story.html

[peacebird]

1. A Republican lying? Why I'm shocked! Shocked, I tell you!

[mh74562]

2. hear hear!