Drawing a distinct contrast with federal government, McDonnell said Virginia was able to make the difficult decisions and steep budget cuts needed to survive the economic downturn because it focused on the state's priorities rather than politics.
"I think this is the result of bipartisan cooperation here in Richmond, where we have agreed to tone down the rhetoric and to make the tough decisions through a conservative budgeting and fiscal restraint," McDonnell told lawmakers.
McDonnell announced an additional $234 million in leftover funding Thursday, which when added to an earlier surplus of $311 million brought the state's total surplus to $545 million.
About $30 million of the surplus will be placed in new fund to make up for federal spending the state expects to lose. The rest will be put into the state's rainy day fund, pension fund, natural disaster reserve and other programs in need of extra cash.
Virginia's ability to generate a surplus after years of multibillion-dollar budget deficits puts it in a much stronger position than its neighbor to the north, Maryland, where officials are still clawing to close a $1.6 billion budget gap.
The difference has translated into Virginia being consistently ranked among the top states for business while Maryland is often left behind. Just this week Virginia claimed top spots in rankings for business friendliness and job growth; Maryland didn't even make the lists.
A spokeswoman for Maryland Gov. Martin O'Malley defended the state's handling of the budget, saying it would end the year with a surplus. Comptroller Peter Franchot is expected to announce the final revenue figures for Maryland's last fiscal year around Labor Day.
Some critics in Virginia also note that the Old Dominion had slashed services deeply, passed on costs to local governments and shortchanged the state pension fund to generate the surplus about which McDonnell was boasting.
"We've had a slight uptick in revenue, but we're losing [stimulus] money. We've got these bills in the drawer we're going to need to repay," said Michael Cassidy, president of the nonpartisan Commonwealth Institute for Fiscal Analysis.
McDonnell denied relying on budget trickery.
"This surplus is simply a matter of fact, not politics," he said. "In fact, it's a matter of math."
Brian Hughes contributed to this story.