State Spending Grows Faster Than Income. Something Has to Give.
By Steve Haner
There was an important story in the preliminary end-of-year financial report that the Richmond Times-Dispatch misinterpreted as the state “running in the red.” State spending has been on a major growth spurt under Republican Governor Glenn Youngkin, although the Democrats with the majority in the General Assembly have just as much to do with it.
The data from the state comptroller, which will reappear later this year after the state’s books are audited, shows that general fund tax revenue grew 25% during the four years it covers in one of its tables (page 3), fiscal years 2021-2025. During that same period, the spending in that general fund category grew 47% (from $23.1 billion to $34 billion.)
The report uses only a few broad categories for spending. Again, this is general fund only so all the various federal programs or dedicated non-general fund revenue for the same services are not included. Spending on individual and family services was $10.7 billion in the year ending June 30, 2025, and that was 52% higher than four years ago. That is steady growth of far more than 10% annually, with Medicaid likely leading the charge.
Spending on education, which always gets the most political focus, was the largest category by far. The $14.9 billion spent during FY 2025 was an increase of 50% since 2021. Presumably this covers the waterfront from pre-K through higher education. Higher education is much more dependent on non-general fund revenue (think tuition and fees), but does share in the general fund, too.
Education and individual and family services accounted for about $25.6 billion of the $34 billion spent by the general fund. The catch-all “general government” account for dozens of other agencies grew only 8% in four years. Administration of Justice grew 29%. It is hard to imagine complaints that education spending grew “only” 50% under this governor, but silly things get said in elections.
The Times-Dispatch article was correct in reporting that the report showed general fund spending slightly exceeded general fund tax revenue that year and the year before. But in its haste to apply the inflammatory claim Virginia was “running in the red,” it ignored how the budget was easily balanced with transfer funds, a standard financial step you see in all annual budgets. Again, though, the table showed the amount of transfer funds needed has grown. This is another flashing yellow light.
The headline that should have been written would go something like this. “With Spending Growing Faster Than Income, Something Has to Give.” The options, of course, include controls on spending or tax increases. Some legislators will happily argue that the tax policy changes that lowered revenue under Youngkin are the reason for this gap (and not their spending appetites.)
Once again, this has been such an unsatisfactory campaign season. There are so many pressing issues, so many questions that should be put to the various candidates at every opportunity. Distracting you from that was the point of Senate Majority Leader Scott Surovell’s attack on Youngkin and the Secretary of Finance staff in the Times-Dispatch article, accusing them of deception.
This (dare I call it this) structural imbalance between spending and revenue was part of the adopted budget he and his fellow Democrats had the majority votes to control. In fact, the imbalance was far larger in the adopted budget and got better by the end of the reporting period. For Surovell to claim this was being hidden lacks all credibility. But we will probably hear that again when the push for a tax increase begins in January.
Republished with permission from Bacon’s Rebellion.
