The Commonwealth's balance sheet is in an extremely strong position. The projected combined balances of the Revenue Stabilization Fund and Revenue Reserve Fund will total more than $3.8 billion by FY 2023 year end and more than $4.2 billion by FY 2024 year end, up from $791.9 million at the end of FY 2019. FY 2022 year-end balances in the Water Quality Improvement Fund totaled $113.3 million, a 228 percent increase of FY 2019 totals, and the year-end balance in the Transportation Trust Fund totaled $2. 7 billion, a 66 percent increase over FY 2019. Additionally, actions authorized by the 2022 General Assembly provide an additional $1.0 billion to the Virginia Retirement System, raising the funded status to its highest level since 2008. Virginia's long-term liability burden is low and well managed. Tax supported debt issuance is carefully monitored through both constitutional limitations and stringent institutional practices. Likewise all of the Commonwealth's debt is fixed rate.

Recent conservative budget actions have positioned the Commonwealth well for the future, including a $4.1 billion revenue cushion in FY 2023. And despite recent record budget surpluses, we must continue to carefully balance the risk of potential economic downturns against current spending needs. We have, and will continue to, prudently safeguard our financial position and protect our triple-AAA credit rating while recognizing that funds entrusted to the stewardship of the Commonwealth belong to taxpayers and not the government. With this overarching principle in mind, we submit the following analysis and recommendations.