Balance Will be 3rd Largest in Virginia History
Fund Will Have Grown 350% from Close of Fiscal Year 2010 to End of Fiscal Year 2016
Recovery of Fund Puts Commonwealth in Strong Financial Position
RICHMOND- Three days before he delivers his fourth and final annual ‘end of the fiscal year’ address to the members of the money committees of the General Assembly, Governor Bob McDonnell announced that a portion of his remarks will highlight the news that Virginia’s Rainy Day Fund is on pace to exceed $1 billion by the close of Fiscal Year (FY) 2016. The projection represents a dramatic upswing in the balance sheet of the Commonwealth’s emergency cash reserve, which stood at only $295.2 million at the conclusion of FY 2010, midway through the governor’s first year in office. The growth in the Rainy Day Fund, made possible through conservative budgeting in Richmond and ongoing private sector job-creation across the Commonwealth, helps to restore the state’s financial health and places Virginia in a strong position for both future economic growth as well as the navigation of any potential future financial downturns.
Based on the size of the overall budget surplus, the McDonnell Administration’s fourth in as many years, the Constitution prescribes an additional $313.9 million will be deposited to the Rainy Day Fund in FY’s 2015 and 2016. The governor will include that amount in the new budget he will propose this December. The amount is based on actual collections of general fund revenues in fiscal year 2013 and the official budget estimate for general fund revenues in FY 2014. The governor has previously announced that the Commonwealth concluded FY 2013 with a revenue surplus of over $261 million. This is the first time a single gubernatorial administration has posted four consecutive revenue surpluses since the Allen Administration in the mid-1990’s. On Monday the governor will announce the second half of Virginia’s final surplus amount: savings within state government generated through the administration’s conservative fiscal policies. Taken together the revenue surplus and savings surplus will provide the total surplus amount for the Commonwealth for FY 2013.
Speaking about the rapid, positive turnaround in the financial health of the state’s Rainy Day Fund, the governor remarked, “We all know these are uncertain fiscal times. In the states, that uncertainty is only heightened by the failure of the federal government to provide budgetary certainty and make the long-term decisions necessary for proper planning moving forward. With that in mind, it is crucial that we have the liquidity necessary to weather any potential disruptions and downturns in the years ahead. That’s the role of Virginia’s Rainy Day Fund, which was wisely created by the General Assembly after Governor Doug Wilder devised the smart idea of a “Revenue Reserve.” This Fund provides the Commonwealth with a financial safety-net of sorts. It is also watched closely by the bond rating firms that are so important to our financial standing in the global markets.”
The governor continued, “With today’s announcement, I am pleased to note that a significant portion of the revenue surplus for this year, as has been the case previously in our administration as well, will not be spent. Rather, it will be saved and deposited to the Rainy Day Fund allowing that Fund to grow to nearly $688 million by the end of FY 2014 and cross $1 billion by the end of FY 2016. That is the result of our four consecutive budget surpluses, which have provided the means by which we have been able to replenish Virginia’s nest egg. In our first year in office, the Fund was only $295 million. By the end of 2016 it will have grown by 350%. It will reach the third-highest amount in its history, and the highest amount since the end of FY 2007, just prior to the economic downturn. The work to restore the Rainy Day Fund is yet another bipartisan accomplishment in Richmond. We’ve budgeted conservatively, saved taxpayer dollars and properly planned for the years ahead. These steps have put the Commonwealth in a much stronger financial position than we saw just three years ago. I thank the members of the General Assembly for their work with us in achieving this important step forward for Virginia’s fiscal future.”
A chart detailing the financial history of Virginia’s Rainy Day Fund can be found here.