Virginia Budget: Where the money comes from and how it’s spent

This fall, Virginia Delegate Stephen Landes held a presentation to allow for better understanding of our state’s budgetary process. Since it is such a complicated system, and is always an issue of importance at Session, I thought you may like to know what makes up the funds used in the budget, and where the majority of that money is used.

Where it comes from: State revenues consist of General Funds or GF (38% of the budget) and Non-General Funds or NGF (62% of the budget). GF revenues include income taxes, sales taxes and corporate taxes. These funds are usually used for funding education, health care, public safety and social services. NGF revenues come from federal revenues, tuition fees and gas taxes and are usually used to fund specific state agencies and programs.

In the past two years, two-thirds of the GF funds came from income taxes with 20% from sales taxes. Over 40% of NGF revenue came from federal grants and contracts with 23% coming from institutional revenue (universities, hospitals, etc.) and 9% from transportation (including gas tax, motor vehicle sales tax and licenses).

How it’s spent: Eighty percent of the GF revenue in the last two years went to education, health and human resources and public safety. Of the GF Budget, half of the funds were distributed to localities. This includes 31% of GF funds given to Direct Aid to Public Education. State funding for education is calculated based on the Standards of Quality framework which determines how funding is allocated based on school staffing standards and annual costs to maintain the quality of our schools. Since 2000, education spending has increased by 61%.

Seventeen percent of the GF budget went to aid to individuals in the last two years. This includes Medicaid funding, which provides health care services to low-income Virginians. As a condition of receiving matching federal funding, states are required, at a minimum, to cover certain populations (e.g., low-income children, pregnant women, the elderly, and disabled) and provide certain services (i.e., inpatient hospital services, physician services and nursing home care).  Two-thirds of Medicaid expenditures are paid on behalf of the elderly and disabled even though they make up only one-third of Medicaid enrollment. Since 2000, Medicaid spending has tripled.

Though these seem like a bunch of boring statistics, these numbers map out the spending in two major budget areas within the General Fund. Both of these issues will once again be important at the 2012 Session, given the state of the economy and ever-growing needs of our state with special significance this year in terms of Federal Health Reform. If you have any questions about these issues, don’t hesitate to email me at dave@davealbo.com.

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