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State workers will get 3 percent bonus

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Posted: Thursday, August 16, 2012 1:00 am | Updated: 3:50 pm, Thu Jan 17, 2013.

State employees will receive a 3 percent bonus in December because Virginia generated enough money through increased revenues and agency savings to post a budget surplus of $448.5 million, Gov. Bob McDonnell told lawmakers Wednesday.

The surplus for the fiscal year that ended June 30 marked the third consecutive year in which state finances have been in the black, McDonnell told the General Assembly's money committees in Richmond.

The surplus was driven by $187 million in savings from state agencies, $132.3 million in unspent higher education and other non-general fund sources and $129.2 million in increased revenue from tax collection that exceeded budget forecasts.

"The revenue surplus is concrete evidence of the commonwealth's improving jobs picture and overall economic condition," McDonnell said in an address to returning members of the legislature's money committees.

He said the bonus is a reward to employees for their "good stewardship of the taxpayers' money."

The financial numbers come at an opportune time for McDonnell. He is promoting Virginia's fiscal stability and relatively low 5.7 percent unemployment rate under Republican leadership to make the case for former Massachusetts Gov. Mitt Romney to win the White House in November.

Democrats countered that the positive balance in recent years has been financed, at least in part, by deferral of payments into the Virginia Retirement System and heavier cuts to social services, including public education, than those undertaken by other states.

"I just don't see the surplus," said Sen. Richard L. Saslaw, D-Fairfax, the Senate minority leader. He said the actual surplus is probably closer to the money generated through increased revenues. "You can calculate it that way and call it a surplus, but when you're taking the money like that … we really didn't have $448 million. …

"If you don't pay your bills, hell yeah, you can have a surplus," he said.

All but $41.8 million of the surplus for fiscal 2012 is spoken for — after mandatory allocations to the state's rainy day fund and the state's water quality fund, among others.

The $132.3 million in unspent higher education funds and other non-general fund revenues will be returned to those accounts, and the employee bonus will account for $77.2 million.

Workers are eligible for the bonus if they receive a satisfactory performance rating, according to the administration.

State workers also received a 3 percent performance bonus in December 2010.

The current budget calls for a 2 percent salary raise for state workers and all state-supported local employees in mid-2013, contingent upon revenue performance.

R. Ronald Jordan, executive director of the Virginia Governmental Employees Association, called the bonus "a great thing for state employees," noting that the timing of the Dec. 1 bonus comes before the holiday season.

"Success has a lot of fathers, and in this case, credit goes to the governor, the General Assembly and the employees themselves," he said.

Virginia posted budget surpluses of $544.8 million in 2011 and $403 million in 2010 — more than half of which were accounted for by revenues that exceeded conservative forecasts incorporated into the budgets passed by lawmakers.

According to McDonnell, the total revenues reported for 2012 were just marginally higher than those reported for 2008.

The governor and lawmakers were quick to acknowledge an approaching, ominous fiscal cloud that threatens the commonwealth's sunny financial forecast.

Budget sequestration — the process by which federal budget cuts will be automatically triggered in January if Congress fails to reach agreement on a deficit reduction deal — could cost Virginia more than 200,000 jobs.

Virginia's border with Washington and its economic reliance on the defense industry would make it among the biggest losers if the cuts — including $500 billion in defense spending — are triggered.

McDonnell funneled $30 million of the surplus to the Federal Action Contingency Trust Fund, an account designed to help counteract impacts from federal budget cuts.

House Majority Leader Del. M. Kirkland Cox, R-Colonial Heights, called sequestration cuts "the biggest threat we face," saying monies in the state's rainy day fund and FACT fund will not fully spare the commonwealth from economic hardship.

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