- Associated Press - Friday, May 30, 2014

RICHMOND, Va. (AP) - Virginia state senators are planning to meet early next month to discuss a potential $1.35 billion budget shortfall.

The lawmakers are reviewing potential spending cuts in light of new, lower-than expected tax revenue forecasts, the Richmond Times-Dispatch (http://bit.ly/1oSwgRx ) reported.

Leaders of the Senate Finance Committee met Thursday to discuss making sure the state can use up to $675 million from a rainy day fund to offset the revenue shortfall.

Senate Finance Co-Chairman Walter A. Stosch, R-Henrico, said lawmakers will meet again June 9 for more budget discussion. He said the state needs to pass a budget before July 1 so it can access the state’s Revenue Stabilization Fund, or rainy day fund. Without an enacted budget, lawmakers might not be able to access rainy-day money.

Democrats and Republicans have been deadlocked on passing a budget for the next two years because of disagreement over whether the budget should include Medicaid expansion.

The budget shortfalls have increased the urgency for a budget solution.

Democratic Gov. Terry McAuliffe’s administration announced last week that lower-than-expected tax collections, particularly from capital gains, could leave a $300 million to $350 million budget hole for the current fiscal year that ends in June.

House Appropriations Committee Chairman S. Chris Jones, R-Suffolk, sent a letter to local governments Wednesday informing them that the shortfall for the coming two years could be $1 billion.

“While we will not know the final revenue numbers until the end of June, it appears very likely that the commonwealth could face a significant revenue shortfall for the current and next fiscal years,” Jones said in his letter.

He added that the state’s rainy day funds “could mitigate the impact of these reductions on local governments.”

Senate Finance Committee member Sen. John Watkins, R-Powhatan, estimated the shortfall could be as high as $1.4 billion.

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Information from: Richmond Times-Dispatch, http://www.timesdispatch.com