No, Times-Dispatch, Virginia’s Budget Did Not “Run in the Red”
By Steve Haner
It is not clear who should be more ashamed of themselves, the Richmond Times-Dispatch or Senate Majority Leader Scott Surovell (D-Fairfax). Both didn’t just mislead Virginians, but defamed Republican Governor Glenn Youngkin and the entire state finance staff. Even the silly season has limits.
Virginia’s state government finances did not “run in the red” during the fiscal year that ended June 30, despite the newspaper’s front page headline September 26. Surovell knows that full well, and if he doesn’t, somebody better audit his law firm escrow fund. His claim that the governor is “trying to hide the real numbers” would garner an instant lawsuit if he made it about the CEO of a major publicly traded corporation.
Of the bitter partisan Surovell, I no longer expect better. His shoes do not fill the footsteps he seeks to walk in, those of the late Senators Ed Willey and Hunter Andrews and the still kicking Walter Stosch.
But the Times-Dispatch deeply disappointed me with that report and headline. The implication that Virginia’s governor and financial leaders are misleading the public when they report the state finished the fiscal year with a general fund surplus is shameful. It smacks of a partisan hit no different than Surovell’s motivations. Then the “shocking” story became the number one item on the daily Virginia Public Access Project news feed hitting far more inboxes than the dying newspaper does.
The timing was obvious too, landing during voting season and just as Youngkin was announcing the rebates for taxpayers. The preliminary report cited was dated August 13, six weeks ago. Some partisan actor waited, then called it to the reporter’s attention and he took the bait. Will it now show up in Democratic advertising along with other claims the state is financially tanking, such as the discredited “33,000 lost jobs”?
The basis of the Times-Dispatch’s claim is the preliminary, with a stress on the word preliminary, accounting for the fiscal year at its end. The first-look report is on a cash basis when the state’s budget process is accrual. Many Fiscal Year 2025 transactions were not fully settled as of close of business June 30 but will be picked up (both positives and negatives) in the final audited report.
But most important, and the story does mention this and disproves itself internally, the general fund doesn’t go to zero. Like a family or business checking account (and the state has many accounts other than the general fund) it maintains a balance at the start of the year and a balance at the end. The story itself mentioned the balance was a full $15.4 billion in cash at close of business. That is $15 billion away from “running in the red.”
The report does show, on a cash accounting basis, that the general fund spent more during the 12 months than it took in from taxes. Read it and you can see that was what the budget called for when it was adopted (with Surovell’s vote), an imbalance between income and spending. Then over the 12 months income exceeded expectations, creating a revenue surplus, and spending was below the budget. The state ended with more cash than the budget had projected, a surplus.
In addition to the starting balance mentioned above, every budget at the beginning includes the transfer of balances from other accounts into the general fund. The amount the budget plans to spend can be higher than the amount expected in direct tax revenue. Cash balances and transfers keep the state in positive territory, not “in the red.”
A chart in the standard end of year report the Youngkin Administration provided to the General Assembly last month tallies the amount of excess money the state keeps invested month to month. For July 2024, the first month of Fiscal Year 2025, the balance across all accounts was $30.16 billion. For the final month, June 2025, the balance averaged $30.48 (growth of more than $300 million.)
So, looking beyond just the general fund to all accounts, the state was more than $30 billion away from “running in the red.” That includes the official “rainy day fund” and other surpluses tied just to the general fund budget.
Four years before, pre-Youngkin, that balance was $21 billion. It could not have grown $9 billion without a series of good years ending with leftover cash. There have been solid surpluses.
The Wall Street rating agencies that give Virginia AAA marks do so as much for the honesty of the finance staff’s reporting as for any other reason. Surovell knows that but popped off anyway. The Times-Dispatch didn’t accuse the Governor deception but gave Surovell the platform to do so. It was the Times-Dispatch, however, making up the charge the state was “running in the red” out of whole cloth.
FY 2025 was not a gangbuster financial year and one valid conclusion from the report is that the state’s cash cushion did not grow much that year, not as much as recent previous years. No one denies the state is facing some financial headwinds, and the next governor may have less to crow about than Youngkin did. But the newspaper applied its fading credibility to a false and defamatory claim at the height of election season, to its discredit.
Republished with permission from Bacon’s Rebellion.
