Established by an Act of Assembly in 1976, the Dept. of Planning and Budget was created through the merging of the Division of the Budget and the Division of State Planning and Community Affairs. The duties of the Dept. of Planning and Budget include: the development and direction of an integrated policy analysis, planning and budgeting process within State government; the development, storage, retrieval and dissemination of data on the social, economic, physical and governmental aspects of the State; the formulation of an executive budget; conduct policy and program analysis for the Governor; the establishment of planning districts and standard metropolitan statistical areas; and the development and operation of a system of standardized reports of program and financial performance for management.

The concept of a "modern budget system" was developed in the early part of the 20th century. In 1916, Governor Westmoreland Davis appointed the Commission on Economy and Efficiency to study the organization and administration of government on both the local and state levels. In 1918, the Commission recommended the creation of a formalized budget system, and the office of the Secretary of the Budget was created by an act of the General Assembly in that same year. The Secretary of the Budget was appointed by the Governor to serve as the Governor's chief budget assistant, with the Governor being the Chief Budget Officer of the state. In 1927, the Division of the Budget was created, with its Director being appointed by the Governor.

The Division of the Budget had responsibility over many areas over the years including: personnel, now held by the Dept. of Human Resource Management; the Insurance Advisory Board, now called the Office of Risk Management within the Dept. of General Services; Industrial Engineering and Grounds and Buildings, now governed by the Dept. of General Services; and records management, now overseen by the Library of Virginia.

In 1976, the Division of Budget merged with the Division of State Planning and Community Affairs to form the Dept. of Planning and Budget.

J. H. Bradford, a native of Alabama, came to Virginia in 1919 to work on Virginia's first state budget and remained as a statistician in the budget office, under the state budget director, LeRoy Hodges. Following Mr. Hodges' resignation in 1924, Bradford was appointed to the position of acting state budget director by Governor E. Lee Trinkle, a position he was later permanently appointed to by Governor Harry Flood Byrd. In 1939, in a political move, Governor James Herbert Price appointed Rowland A. Egger to the position of budget director, giving Bradford a minor role in the budget office. In 1940, the General Assembly created the position of Legislative Director of the Budget with Bradford in mind. Bradford remained in this position until 1942, when Governor Colgate Darden reappointed Bradford as the state budget director, a position he held until his retirement in 1958.