Virginia lawmakers and the Governor just wrapped up the state’s latest budget -- and it was no easy task. Because Virginia had lower than expected tax revenues, they had to find ways to close a $1.5 billion gap. And while they managed to do it, some critics say they didn’t do enough to address the underlying issues.
To help close the budget gap, state lawmakers and the Governor made a serious withdrawal from the state’s savings account, and it’s not the first year they’ve done so.
Before 2007 Virginia had more than a billion dollars stored away. By next summer that number will only be about 280 million -- a drop of more than 75%.
Laura Goren, a fiscal analyst with the Commonwealth Institute, says that doesn’t bode well for the state’s overall finances.
“It points us in a dangerous spot when the next recession comes when we are taking money out of our rainy day fund during an economic expansion," Goren says. "There’s not going to be as much money in there when times are really tough”
This year’s budget included no tax increases, but Goren says lawmakers need to think seriously about ways to raise revenues.
According to a recent poll by VCU, a narrow majority of Virginians would be willing pay higher taxes, if it meant more money for education.
ETA: This story has been corrected. The amount left in the fund is $280 million, not $2 million.