WHAT WE FOUND

• Virginia’s total operating budget, including general and non-general funds, was $81.8 billion in FY23, which is 2.5% ($2.1 billion) less than the previous year. The decrease is because of a large decline in the amount of federal COVID-19 relief funds appropriated in FY23 compared with FY22.

• Non-general fund appropriations (about 64% of the total operating budget) declined 10 percent ($6 billion) in FY23 because of the decrease in COVID-19 relief funds from the American Rescue Plan Act (ARPA) of 2021. Appropriations of federal COVID-19 relief funds were $1.4 billion in FY23 compared with $9.2 billion in FY22.

• General fund appropriations (about 36% of the total operating budget) were 15 percent ($3.9 billion) larger in FY23 than the previous year, in part, because of above-average revenue growth. DOE and DMAS had substantial increases in general fund appropriations ($2.0 billion and $1.2 billion, respectively). In addition, deposits of “surplus" general fund revenue were made into the Revenue Stabilization Fund, the Water Quality Improvement Fund, and the state’s retirement fund.

• Three agencies—DMAS, DOE, and VDOT—received half of total appropriations in FY23, similar to recent years. Two agencies—DOE and DMAS—received half of general fund appropriations. These three agencies administer some of the largest programs in the state budget: Medicaid, K–12 education, and highway construction and maintenance.

• Over the past 10 years, Virginia’s operating budget grew 7% per year, on average, not adjusted for inflation. Non-general funds grew 8% per year, and general funds grew 6% per year. These average growth rates are slightly higher than in prior 10-year periods measured. A majority of total budget growth is because of growth in the non-general fund budget, primarily implementation of Medicaid expansion. The large amount of federal COVID-19 funds provided in FY22 does not overly influence the 10-year averages because it was only for one year.

• Adjusted for growth in population and inflation, the total budget grew an average of 4% per year during the 10-year period; the non-general fund budget increased an average of 5% per year; and the general fund budget increased an average of 3% per year. The adjusted general fund growth is higher than in previous 10-year periods because of “surplus" general fund revenues in FY22 and FY23.

• The majority of budget growth was concentrated in a few agencies and programs between FY14 and FY23. Ten agencies (out of 149) accounted for 67% of total budget growth, with DMAS and DOE accounting for 43%. Ten budget programs, mostly within the core functions of health care, education, and transportation, accounted for 65% of total budget growth. These largest agencies and programs have a higher share of total budget growth than reported last year because a substantially smaller amount of federal ARPA funds were appropriated to central appropriation in FY23 compared with FY22.

• General fund budget growth was even more concentrated by agency and program. Ten agencies accounted for 71% of general fund budget growth with two agencies—DOE and DMAS—accounting for more than half of general fund growth.

• Some agencies have had very large percentage increases in general fund appropriations since FY14. Most of these agencies are relatively small so their growth made up a small proportion of total general fund budget growth. Though a relatively small agency, DCR made up 3.2% of general fund growth because of sizable mandatory deposits to the Water Quality Improvement Fund.