Virginia is on track for a revenue surplus of $500 million, according to presentations Secretary of Finance Aubrey Layne gave to legislators in the General Assembly this week. Layne was cautiously optimistic when describing Virginia’s financial situation, saying that many jobs have come back, and the housing market is booming.
“This all adds up to a very good performance for the first ten months of the year,” he said in a Tuesday presentation to the Senate Finance and Appropriations Committee. “We’re going to have a surplus that’s at least half a billion dollars and I think there’s an upward bias.”
Layne said that the U.S. GDP dropped by seven percent due to COVID-19 closures, but COVID-19 spending under the Trump and Biden administrations put in four times that amount to compensate.
“That is very stimulative, and a lot of the things we’ve been seeing has been going to asset prices,” he said, citing stocks and housing prices.
He noted that unemployment increased in April even as employers have trouble filling jobs, especially in restaurants.
He expressed caution about inflation. He said that across presidential administrations, big spending in the wake of crises has led to an increase in the federal deficit, which is linked to inflation.
“I think the biggest risk to the economy is no longer the pandemic,” Layne said. “I believe we are now switching from the effects of the pandemic as we come out of this to what impacts, if any, inflation may have on us and what that may mean to policy. And I think that’s a bigger risk than the COVID pandemic going forward.”
Layne said nationally, commodities prices were going up, including lumber and petroleum. Other prices are going up too.
He said, “In addition to the economy growing, so are rising prices, energy prices in particular. But other prices are rising and that is continuing to go up as core inflation continues to rise.”
He concluded, “I know it’s a lot of information but most of it is good with just a little bit of caution for the future.”
Layne gave the same presentation to the House of Delegates Appropriations Committee on Monday.
Delegate Glenn Davis (R-Virginia Beach) told The Virginia Star, “Virginia did not fare as bad as feared during COVID, that the policies during the Trump administration were very helpful, and as a point-in-time shot, Virginia is in a relatively good position today. However, we were warned that, based upon policies of the Biden administration, there could be negative impacts to Virginia’s economy and small businesses.”
Later during the meeting Monday, Chief Workforce Development Advisor Megan Healy gave a presentation on new labor laws that are going into effect. Davis said that, combined with the caution from Layne, was concerning.
“It’s very concerning the presentation we were given for the health of Virginia’s economy and for the future of small business in Virginia,” he said. “Also, the additional presentation on the new labor laws and the enforcement of these labor laws being thrown on top of small businesses just beginning to recover from COVID is extremely concerning as well.”
Davis said, “I’m not quite ready to tell small businesses to run away from Virginia yet but I would say that if anyone needs to understand how important it is that Republicans take back Richmond this November and not at a later date, all they have to do is listen to the presentations given to us on Monday.”