The right way to build a budget

Published 10:02 am Wednesday, November 29, 2017

Those who watch Washington know that it has been decades since the federal government has balanced its budget properly. This involves simply balancing the federal spending with expected revenues. Most of us that deal with households have to do that. As well, state governments must do so. Federal guidelines call for the process to be completed before the start of the fiscal year, which, for them, is October. On the state level, ours has to be passed to begin the state fiscal year that starts July 1. Only a few times have we not had the process completed by the spring. This allows all to plan ahead.


In Virginia, the process begins in the summer with instructions to each agency to lay out what that agency expects it will need to operate for the next two years. As each agency reports up to the governor’s cabinet, the current monthly revenue gives some guidance as to how the current revenues are meeting expectations. Sometimes this requires reduced spending and future spending.

The secretary of finance, in the meantime, is watching and listening to national and statewide trends. This includes considering three prevailing views of the coming couple of years. One is the prevailing economists’ view, another is more optimistic than the prevailing one and the third is a more pessimistic view of the national economy. These three views are considered and the secretary and governor decide which, if any of those views, is the best prediction with which to plan.

The next step is to present their thoughts to the Governor’s Advisory Council on Revenue Estimate, on which I serve as well as other General Assembly leaders and a dozen of the most knowledgeable business leaders in the state. They represent most of the sectors in Virginia’s economy. This fall’s meeting was held last week. At that meeting, the governor offered his opinion that he and the secretary of finance have focused on. One by one, each of the business leaders weigh in on what they expect to happen. Some were more optimistic, some less. This was followed by the legislators. My expectations are slightly more optimistic than the governor’s original conclusions. Many of the other legislators were a little less optimistic. Since we are an advisory council, we will have to wait to see if the governor adjusts his official conclusion until a later date. Using his revenue expectation, the governor will have to adjust his spending plans to match that number. On Dec. 18, he will make these numbers public.

At that point, the House Appropriations and Senate Finance committees will start to carefully comb through those numbers. As well, the governor-elect will do the same. Each member, as well as the new governor, will have the opportunity to make adjustments before the members of those two committees, independent of each other, will sort through these differing priorities. The Senate and the House each vote out differing budgets. Then we will have to settle our differences before sending the agreed-upon budget to a new governor who might want to change a few issues.

If all goes as expected, we will have a new two-year budget by the spring. It is truly a shame that Washington can’t accomplish this, their one most important function.

Frank Ruff represents Lunenburg in the state senate. His email address is Sen.