Virginia’s Revenue Stabilization Fund
"Rainy Day Fund"
This exhibit highlights Virginia’s nationally recognized Revenue Stabilization Fund, commonly known as the Rainy Day Fund, which was established in 1992 during Governor L. Douglas Wilder’s administration. Faced with a significant revenue shortfall shortly after taking office in 1990, Governor Wilder prioritized long-term fiscal stability and worked with the General Assembly to pass a constitutional amendment creating the fund. It was the first of its kind in the United States to be incorporated into a state constitution.
The exhibit traces the evolution of the fund from its inception to the present, highlighting its role in stabilizing budgets during recessions, facilitating strategic investments during economic recoveries, and protecting core services for Virginians. Through cycles of deposits and withdrawals, the Rainy Day Fund has exemplified careful financial management. Over time, it has become a model for other states that want to build budget resilience and safeguard public priorities in uncertain economic times.
Editorial excerpts chronicling the evolution of Virginia’s Rainy Day Fund, paired with a historic photograph from the Wilder Collection.
Virginia’s Revenue Stabilization Fund
This is the proposed Executive Budget of Virginia for the 1990-1992 biennium, submitted to the General Assembly in January of 1990 by Governor Gerald L. Baliles (1986-1990). The final year of Baliles' term as Governor saw the country in economic recession, leaving Virginia with a large budget deficit that incoming Governor Douglas L. Wilder inherited.
Courtesy of:
Baliles, G. L. (1990). Executive Budget of the Commonwealth of Virginia 1990-92. The Library of Virginia, Richmond, Virginia.
https://lva.primo.exlibrisgroup.com/discovery/fulldisplay?context=L&vid=01LVA_INST:01LVA&search_scope=MyInstitution_noAER&tab=LibraryCatalog&docid=alma990002620800205756
Editorial excerpts chronicling the evolution of Virginia’s Rainy Day Fund, paired with a historic photograph from the Wilder Collection.
A Washington Post article reports that Governor Wilder proposed deeper budget cuts to address Virginia’s $1.9 billion deficit, including early retirement incentives for up to 4,600 state employees, program reductions, and a $137 million reallocation of lottery revenues. The plan explicitly rules out tapping the state’s Rainy Day Fund.
Courtesy of:
Harris, J. F. & Baer, D. P. (1990, December 17). Wilder proposes deeper budget cuts. The Washington Post.
https://www.washingtonpost.com/archive/local/1990/12/18/wilder-proposes-deeper-budget-cuts/728ba9db-0e3d-49fa-aca6-dc3dd1a562fa/
Click here to view the photo from this exhibit item in the Wilder Collection.
Editorial excerpts chronicling the evolution of Virginia’s Rainy Day Fund, paired with a historic photograph from the Wilder Collection.
A Washington Post article reports that Governor L. Douglas Wilder accepted legislative conditions attached to his proposed $200 million Rainy Day Fund, designed to address a $2.2 billion state budget crisis. Under the compromise, Wilder would be required to use the fund instead of making further program cuts if the economic forecast due mid‑August failed to improve. The fund represents an unappropriated balance of tax collections, reaching the full $200 million only if left untapped through June 1992.
Courtesy of:
Baker, D. P. (1991, February 21). Wilder accepts key compromise. The Washington Post.
https://www.washingtonpost.com/archive/local/1991/02/22/wilder-accepts-key-compromise/cd669658-0c7b-41b3-9f54-e928ae7d1e01/
Click here to view the photo from this exhibit item in the Wilder Collection.
A JLARC report outlines the proposal to create a Revenue Stabilization Fund (Rainy Day Fund) in Virginia, designed to offset future revenue shortfalls by requiring deposits during strong revenue years and restricting withdrawals to major downturns. Prompted by a $2.2 billion shortfall during Governor Wilder’s administration, the fund was envisioned as a constitutional safeguard. The report recommends a cap at 10% of key revenues, mandatory deposit formulas, and strict withdrawal thresholds to maintain fiscal discipline.
Courtesy of:
Governor L. Douglas Wilder’s 1992–1994 budget closed a $567.1 million shortfall without raising taxes. While the Rainy Day Fund was not yet active, the inclusion of $9.1 million in unappropriated funds reflects an early commitment to building fiscal reserves and protecting essential state functions.
Courtesy of:
Wilder, L. D., Timmreck, P. W., & Washabau, K. F. (1990). Executive Budget of the Commonwealth of Virginia 1992-1994: Summary. The Library of Virginia, Richmond, Virginia.
https://lva.primo.exlibrisgroup.com/permalink/01LVA_INST/altrmk/alma990002620800205756
This appendix details agency-level funding changes under Governor Wilder’s 1992–1994 budget. Amid a significant shortfall, the proposal preserved vital services without raising taxes. Though lacking a formal Rainy Day Fund, it set aside $9.1 million in unappropriated funds, signaling emerging fiscal reserve practices.
Courtesy of:
Wilder, L. D., Timmreck, P. W., & Washabau, K. F. (1990). Executive Budget of the Commonwealth of Virginia 1992-1994: Detail Appendix. L. Douglas Wilder Collection, L. Douglas Wilder Library, Virginia Union University, Richmond, VA.
https://collections.wilderlibrary.com/Documents/Detail/executive-budget-1992-1994/29795
A bill for proposed amendments to the appropriation of funds for the 1992-1994 biennium, submitted to the General Assembly of the Commonwealth of Virginia by Governor L. Douglas Wilder on December 18, 1992. The amendment significantly increases the amount of unappropriated funds in the budget.
Courtesy of:
Wilder, L. D. (1992). The Budget Bill (1993 Session Amendments): Communication from the Governor. The Library of Virginia, Richmond, Virginia.
https://lva.primo.exlibrisgroup.com/permalink/01LVA_INST/altrmk/alma990002621720205756
A bill for proposed appropriations for the 1992-1994 budget, submitted to the General Assembly of the Commonwealth of Virginia by Governor L. Douglas Wilder on January 8, 1992.
Courtesy of:
Wilder, L. D. (1992). The Budget Bill: Communication from the Governor. The Library of Virginia, Richmond, Virginia.
https://lva.primo.exlibrisgroup.com/permalink/01LVA_INST/altrmk/alma990002613500205756
An act by the General Assembly of the Commonwealth of Virginia to place a proposed constitutional amendment on the 1992 ballot to etsablish a Revenue Stabilization Fund. If approved by the voters, it would be enacted on January 1, 1993. The Revenue Stabilization Fund would collect some funds from state tax revenue to give the state a funding cushion in case of deficits and shortfalls.
Courtesy of:
H.B. 443, 1992 Biennium, 1992 Reg. Session (Virginia 1992). The Library of Virginia, Richmond, Virginia.
https://lva.primo.exlibrisgroup.com/permalink/01LVA_INST/altrmk/alma990002574400205756
An act by the General Assembly of the Commonwealth of Virginia to amend the Code of Virginia to establish a Revenue Stabilization Fund, contingent on voter approval in the 1992 election. The act requires the Governor to set aside money in the budget for the fund beginning in the 1994-1996 biennium.
Courtesy of:
H.B. 444, 1992 Biennium, 1992 Reg. Session (Virginia 1992). The Library of Virginia, Richmond, Virginia.
https://lva.primo.exlibrisgroup.com/permalink/01LVA_INST/altrmk/alma990002574400205756
Legislative impact statement for HB 444, which establishes the Revenue Stabilization Fund. The first deposit to the "Rainy Day Fund", projected at $26.7 million, would be required for the 1994-1996 biennium. The statement also estimates how much would have been contributed to the fund during fiscal years 1981-1995 under the proposed formula.
Courtesy of:
Governor Lawrence Douglas Wilder, Records of the Policy Office: General Assembly Legislation, 1990-1993. Accession 35539, State government records collection, The Library of Virginia, Richmond, Virginia.
https://lva.primo.exlibrisgroup.com/permalink/01LVA_INST/altrmk/alma9917790909705756
Submitted in December 1993, this was the first Virginia budget to include the constitutionally required Revenue Stabilization Fund. Governor L. Douglas Wilder’s proposal set aside $15.7 million in unappropriated funds, marking a significant institutional step toward long-term fiscal stability and reserve-building.
Courtesy of:
Wilder, L. D. (1993). 1994-1996 Executive Budget of the Commonwealth of Virginia. The Library of Virginia, Richmond, Virginia.
https://lva.primo.exlibrisgroup.com/permalink/01LVA_INST/altrmk/alma990002620800205756
Editorial excerpts chronicling the evolution of Virginia’s Rainy Day Fund, paired with a historic photograph from the Wilder Collection.
A Roanoke Times article reports that in 1993, Virginia allocated nearly $80 million in excess tax revenue to its newly established Rainy Day Fund. The piece emphasizes that despite looming projected budget shortfalls of $500–$700 million, the fund’s strict constitutional limits prevent its use for such deficits. The article highlights that the fund was created following a $2.2 billion budget gap in 1990 to serve specifically as a buffer against future economic downturns.
Courtesy of:
Winston, B. (1993, July 13). Rainy Day’ Fund Gets a Boost. The Roanoke Times, 1C.
https://scholar.lib.vt.edu/VA-news/ROA-Times/issues/1993/rt9307/930713/07130192.htm
Click here to view the photo from this exhibit item in the Wilder Collection.
Editorial excerpts chronicling the evolution of Virginia’s Rainy Day Fund, paired with a historic photograph from the Wilder Collection.
This article, sourced from Inside Nova, article reports on a House committee’s approval of a budget plan addressing Virginia’s $882 million revenue shortfall. The plan includes spending cuts to state agencies, higher education, and local government, while protecting K–12 education. It outlines one-time measures such as lottery proceeds and deferrals. The article notes that an earlier $1.55 billion gap was closed in part by drawing from the state’s Revenue Stabilization Fund (Rainy Day Fund), indicating its continued role in budget balancing.
Courtesy of:
Martz, M. (2014, September 16). House committee swiftly approves budget bill. Inside Nova.
https://www.insidenova.com/news/politics/stafford/house-committee-swiftly-approves-budget-deal/article_19e3bca0-580a-5f67-b3b5-5d1e68176746.html
Click here to view the photo from this exhibit item in the Wilder Collection.
Editorial excerpts chronicling the evolution of Virginia’s Rainy Day Fund, paired with a historic photograph from the Wilder Collection.
A Washington Post opinion article titled “Best State in America: Virginia, for its rainy-day fund” praises Virginia’s fiscal discipline, particularly its method of setting aside surplus revenue during good years to weather downturns. The state’s rules compare short- and long-term tax revenue growth—especially from sales, income, and corporate taxes—and save the difference. It notes that during the Great Recession, Virginia used approximately $2 billion from its Rainy Day Fund, with policy requiring that only half of future shortfalls be covered by reserves—the rest must come from spending cuts or tax increases.
Courtesy of:
Washington Post Editorial Board. (2014, July 25). Best state in America: Virginia, for its rainy-day fund. The Washington Post.
https://www.washingtonpost.com/opinions/best-state-in-america-virginia-for-its-rainy-day-fund/2014/07/25/aad3e1fa-1284-11e4-9285-4243a40ddc97_story.html
Click here to view the photo from this exhibit item in the Wilder Collection.
Editorial excerpts chronicling the evolution of Virginia’s Rainy Day Fund, paired with a historic photograph from the Wilder Collection.
This opinion article, originating from the Winchester Star, reflects on the creation and purpose of Virginia’s Revenue Stabilization Fund (Rainy Day Fund), emphasizing its constitutional origins and role in safeguarding the state against economic downturns. It argues that the fund was never meant to support routine shortfalls but to preserve essential services in times of crisis. The author expresses concern over political efforts to tap the fund for non-emergency needs, potentially weakening its long-term fiscal purpose.
Courtesy of:
Theis, C. F. (2015, February 6). Open Forum: ‘Rainy day people’. The Winchester Star.
https://www.winchesterstar.com/opinions/open-forum-rainy-day-people/article_36dd9de8-bd37-55b8-a77f-fb9fcdc17dd9.html
Click here to view the photo from this exhibit item in the Wilder Collection.
Editorial excerpts chronicling the evolution of Virginia’s Rainy Day Fund, paired with a historic photograph from the Wilder Collection.
This article, sourced from the George Mason University Mercatus Center, highlights Virginia’s Revenue Stabilization Fund (Rainy Day Fund) as a strong model due to its constitutional funding requirements and withdrawal limits. However, it warns that the fund’s diminished balance may leave Virginia fiscally vulnerable in the face of a major recession.
Courtesy of:
Gonzalez, O. & Norcross, G. (2017). Are Virginia’s Attempts to Save for a Rainy Day Fund Enough? Mercatus Center, 1.
https://www.mercatus.org/economic-insights/expert-commentary/are-virginias-attempts-save-rainy-day-enough
Click here to view the photo from this exhibit item in the Wilder Collection.
A Pew Charitable Trusts fact sheet outlines best practices for state Rainy Day Funds, emphasizing their fiscal importance in offsetting revenue declines and bolstering resilience during downturns It recommends maintaining a dedicated stabilization account, depositing extraordinary or above-normal revenues, such as Virginia’s policy of saving 50% of surplus relative to its six-year average, and defining clear, objective withdrawal criteria and risk-based savings targets.
Courtesy of:
N/A. (2020, March 12). How to Effectively Use State Rainy Day Funds. Pew Research.
https://www.pew.org/en/research-and-analysis/fact-sheets/2020/03/how-to-effectively-use-state-rainy-day-funds