- The Washington Times - Wednesday, December 19, 2001

Gov. James S. Gilmore III today will tell legislators during a formal presentation of his two-year, $51 billion budget that Virginia is expected to have a $2 billion revenue shortfall over the next two fiscal years.
Mr. Gilmore, a Republican, is expected to tell the House of Delegates and Senate budget committees that across-the-board spending cuts of 5 percent to 6 percent at all state agencies are needed, sources said. About $500 million of the nearly $1 billion "rainy day" fund also is expected to be tapped to fill the gap as part of Mr. Gilmore's final budget.
In addition, Virginia's economy is projected to recede by 1.4 percent through June 30, the end of the current fiscal year. The economic report comes on the heels of Gilmore administration announcements that the state faces a $1.3 billion revenue shortfall this fiscal year.
"There is not a lot of good news," one source with extensive knowledge of the budget said of Mr. Gilmore's expected announcement.
Mr. Gilmore, who leaves office Jan. 12, has revealed in the past week several key provisions of his budget, including the final phase-out of the car tax by June 30, 2004, the end of the two-year budget cycle.
He also has proposed taking out $927 million in bonds to pay for new college construction, spending $20 million for anti-terrorism and security efforts, issuing $16 million in bonds to pay for a new state emergency-operations center and creating a $380 million pay package for state employees.
Sources with knowledge of the budget said the $2 billion shortfall forecast for the 2003-04 budget is a rollover from the current shortfall and a reassessment of previous revenue forecasts of 7 percent economic growth.
One budget sourcesaid Mr. Gilmore has no intention of micromanaging the spending cuts agencies make, saying "there is still fat in the state budget" and suggesting that most of the cuts will be made by not filling vacant positions.
Included in the budget will be full funding for the Standards of Learning (SOL) test that all Virginia public school students are required to pass for promotion to the next grade level.
Mr. Gilmore also will propose that a portion of the proceeds from the sales-use tax earmarked for the transportation trust fund be directed to the state's general revenue fund.
The half-cent portion of the tax dedicated to the trust fund is expected to raise $386.4 million this year, and 78.2 percent or $302 million goes to highway projects. Under Mr. Gilmore's plan, that loss of revenue would be made up with the issuance of bonds.
Mr. Gilmore is predicting an economic recovery, sources said. He forecasts 4.3 percent economic growth for 2003 and 5.5 percent growth for 2004.
During a meeting yesterday with editors and reporters at The Washington Times, House Speaker S. Vance Wilkins Jr., Amherst Republican, said legislators should be careful about relying on long-term budget forecasts.
Mr. Wilkins said the budget, which likely will be amended by the Republican-controlled General Assembly and Gov.-elect Mark R. Warner, a Democrat, before taking effect July 1, will not have a lot of new spending.
"We're going to be struggling to survive," Mr. Wilkins said.
During a press conference yesterday in Richmond, Mr. Warner said the Gilmore administration has been relying on "one-time fixes" to patch the budget.
"And we continue recently to rely on one-time fixes that may get us through the next six months, but may or may not get us through the next biennium," Mr. Warner said. "I don't believe this is the way government should be structuring its finances."
Delegate Brian J. Moran, Alexandria Democrat, said Mr. Gilmore's budget is "more politics as usual."

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