Virginia for the third straight time ended its budget year with a surplus, though the extra $129 million is less than past surpluses.
While the state appears to have turned the corner after a financially devastating recession, Gov. Bob McDonnell cautioned Monday that the economic progress could be undone if Washington doesn't nix plans for deep defense cuts.
"We have a lot at stake here," McDonnell said.
The state's fiscal year, which ended June 30, closed with at surplus of at least $129.2 million, a figure that could rise when the state releases the final estimates of government operating costs over the next two weeks.
The latest surplus is on top of a $403 million surplus in 2010 and an extra $544.8 million in 2011.
The surplus was due in part to higher-than-expected income and sales tax proceeds in a state that has a relatively low unemployment rate of 5.7 percent and where workers contributed to a 5.4 percent growth in state revenues over the past year.
"We are beginning that process of recovering in a big way," McDonnell said.
Most of the surplus -- about $78 million -- will go to Virginia's rainy day fund, as required by the state constitution. Those reserves, tapped during the recession, have grown from $295 million to $690 million under McDonnell.
McDonnell called on Congress and President Obama to avoid more than $500 billion in Pentagon cuts over the next 10 years that could kick in automatically, starting in January, unless lawmakers and the White House can strike a new budget deal. A state as reliant on defense spending as Virginia should not be held hostage to election-year politics, he said.
"Let's get this done. Don't wait until after the election," McDonnell said. "This is going to be an election issue anyway."