(The Center Square) – Virginia earned a B in a new financial report, though its main government operations recorded a $472 million annual deficit.

Truth in Accounting ranked Virginia 12th nationally in its Financial State of the States report. The nonprofit found Virginia had $22.4 billion more in available assets than needed to cover its obligations, including unfunded retirement benefits.

A year ago, Virginia’s main government operations brought in nearly $5 billion more than they recorded in expenses. In fiscal 2025, expenses exceeded revenues by $472 million. It was the only annual deficit shown in the commonwealth’s 10-year financial comparison.

The annual figures count revenues and expenses when they are earned or incurred, including some costs paid later. The B grade looks more broadly at the assets Virginia has available to cover what it owes.

Virginia reported about $77.1 billion in revenues and $77.6 billion in expenses for the year ended June 30, 2025. Revenues were down about $1.1 billion from the year before. Expenses grew by about $4.4 billion.

Those figures cover regular government services and operations such as the Virginia Lottery and Alcoholic Beverage Control Authority. Public colleges and universities are reported separately.

Sheila Weinberg, founder and CEO of Truth in Accounting, said lower individual and corporate income tax revenues contributed to the decline.

Expenses increased for education, transportation, individual and family services, and the lottery.

“If this trend continues, the state may face increased pressure to manage its budget, control spending, or identify additional revenue sources to maintain long-term fiscal stability,” Weinberg told The Center Square.

Virginia’s financial report says tax revenue was lower largely because it owed more in individual income tax refunds. Spending increased on education assistance, early childhood programs and Medicaid.

For its broader assessment, Truth in Accounting calculated Virginia had $82.6 billion in assets available to cover $60.2 billion in obligations. The $22.4 billion difference amounted to $7,100 per taxpayer under its methodology.

The group said college and university surpluses helped improve Virginia’s overall finances. Investment returns of nearly 10% also helped reduce unfunded retirement obligations.

Weinberg cautioned that the surplus depends on strong investment markets. She said keeping a cushion would help Virginia weather a downturn and warned against treating the money as a windfall for spending or tax cuts.

Separately, Gov. Abigail Spanberger’s office announced Tuesday that Fitch Ratings, Moody’s Ratings and S&P Global Ratings affirmed Virginia’s highest bond ratings with stable outlooks.

“Virginia’s finances remain strong, with General Fund revenue collections generally in line with the forecast,” Finance Secretary Mark Sickles said in the announcement.

The bond ratings focus on whether Virginia can repay its debt. Truth in Accounting compares available assets with what the commonwealth owes. Treasurer David Richardson said the strong bond ratings help Virginia borrow at lower interest rates, saving taxpayers money.