Gov. Bob McDonnell Continues To Mislead On Virginia's Budget Surplus

Virginia Gov. Bob McDonnell (R) is being praised by conservative pundits and politicians for a reported $400 million surplus he's helped create in the state budget.  The Wall Street Journal, for instance, has applauded McDonnell's apparent fiscal disciple, proclaiming that "Virginia Is for Surpluses."  Meanwhile, House Minority Leader John Boehner (R-OH), speaking in Cleveland yesterday, praised McDonnell for balancing his state's budget without "making it harder for Virginia families and business owners to balance their own."  McDonnell himself appeared on Fox yesterday and credited the surplus on "sound fiscal management."

PERINO: We tell me about your announcement last week.  Not many governors are able to announce the surplus.  That must have felt pretty unusual for you.  Tell me how you did it.

MCDONNELL: Well, I think it's a handful of us and I think it's just good solid fiscal management and it was bipartisan cooperation.  I have a Democratic Senate and a Republican House.  And when I was inaugurated back in January, we looked at our situation with a billion plus in deficit and said, listen, families are hurting, businesses are hurting.  We're not raising taxes.  We got to stimulate the economy through economic development and job creation.  Get entrepreneurs doing what they do best.  And we got to cut spending.  Looking at what's going on in Washington, we can't do that. We must cut spending.

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But it's really not quite that simple.  The spending in Washington that McDonnell bemoans has the direct impact of helping shore up the budget in Richmond.  As others have already pointed out, despite his anti-government rhetoric, McDonnell has benefited tremendously from funds allocated to Virginia though the Recovery Act.  According to the Commonwealth Institute, nearly $2.5 billion has gone to Virginia in direct fiscal relief.  Even more has gone to his state in the form of other grants and contracts under the stimulus.

McDonnell's surplus is the result of massive cuts — largely, as Jamelle Bouie notes, "on the backs of children, the poor, and public employees" — the Recovery Act, and of course, budget gimmickry.  The surplus was created in part by accelerating sales tax revenue, which shifts sales tax revenue from year to year.  McDonnell opposes the practice, but it's a fact that his "surplus" benefited from it.  On top of that, McDonnell is deferring hundreds of millions in scheduled payments to the state's pension fund.

Such sleight of hand accounting no doubt wins McDonnell praise from fiscal conservatives, but creates future problems for Virginia.  The Daily Progress, for instance, accuses McDonnell of playing politics with pensions.  "McDonnell looks like a man taking a calculated political risk aimed at elevating him," they note in an editorial today, "while leaving his party fellows and the state to weather the raging storm that follows."