Virginia Gov. Ralph Northam said the state ended fiscal year 2021 with a record level of reserves, a budget surplus of $2.6 billion and a rosy economic outlook.
Speaking before the Legislature’s Joint Money Committee meeting Wednesday, the governor said the state is on track to put almost 15% of the general fund budget in reserves by the end of his term in 2022. This would be almost double the 8% goal he set when he took office in 2018.
“We can all be proud that we have been able to act prudently and set aside money in our reserves,” Northam said. “This action will protect Virginia when the next economic downturn comes — and we know one will come eventually.”
While the state’s economy remains strong, he said, it is impossible to tell what the future holds.
“If you’d asked me about the pandemic in June, I would have said we could have a fall that looked almost normal. But now we know that won’t be the case, thanks to the Delta variant,” Northam said. “So as we head into the fall, we will continue to be cautious and prudent in our budgeting. We want to be ready for any more surprises COVID may throw our way.”
Since Northam took office, the state has created 90,000 new jobs and received more than $45.4 billion in statewide capital investment.
Virginia’s economic recovery has continued to outpace the national average. The state’s unemployment rate was 4.3% in July, below the national average of 5.4%.
“Our economy is roaring. We see that in these revenue numbers. We know that we are taking the right steps to keep this momentum going,” he said.
Northam said all general fund revenue resources exceeded forecasts for fiscal 2021.
“Our finances are solid, and we have taken actions to keep our triple-A bond rating secure,” he added. “We are one of only 13 states that hold this rating and it’s because we laid out a long-term financial plan, and we have stuck to it, in good times and bad. We must continue this work.”
Virginia’s general obligation bonds are rated triple-A by Moody’s Investors Service, S&P Global Ratings and Fitch Ratings.
Since 2011, the state has issued about $1.6 billion of bonds, with the most issuance occurring in 2015 when it sold around $262 million. It was not in the market in 2017.
Northam, a Democrat, can’t seek re-election due to term limits. Unlike other states, in Virginia governors are not allowed to serve more than one term in a row. However, a former governor is permitted to run for another term in the future.
Democrat Terry McAuliffe and Republican Glenn Youngkin are running in November’s election to replace Northam. McAuliffe was Virginia’s governor from 2014 to 2018. Youngkin is former CEO of The Carlyle Group, a global investment firm.
“We can all be proud of Virginia’s position today. We have a strong economy, thanks to cooperative leadership, and we are well-positioned to continue seeing robust revenues and hiring going forward, if we keep steering the ship along the same course,” Northam said. “We have laid out a path for economic prosperity, and it’s working.”