- The Washington Times - Sunday, June 30, 2002

RICHMOND Virginia will finish troubled fiscal 2002 barely in the black, but only after months of scrimping, cutting and using up cushions of cash that won't be available for an equally rough 2003, top financial and administration officials said.
The fiscal year ends officially at midnight, but it will probably be mid-July before officials fully assess how badly layoffs and a plummeting stock market ate into the state's revenues, Finance Secretary John M. Bennett said.
"I know we're going to have a substantial revenue shortfall, but we're going to end the year with a positive balance sheet, and we've had to do a lot of things to make that happen," Mr. Bennett said. He said he could not estimate the size of the shortfall for several more days.
The state began looking for cuts and savings early last fall under former Gov. James Gilmore III, a Republican, after the September 11 terrorist attacks sent an already slumping economy into a dive and it became clear that tax collections would fall far short of their budgeted estimates.
Democratic Gov. Mark R. Warner accelerated the belt-tightening when he took over in January, ordering agencies to cut their budgets by 3 percent in the current fiscal year, 7 percent for the year that begins July 1 and 8 percent for the year after that.
Over that time, the administration predicts revenue shortages approaching $4 billion.
This year's balancing act includes $40 million in cuts by state agencies and accelerated sales tax collections by about 6,600 businesses that will bring an additional $138 million into the state's coffers ahead of schedule.
Job cuts are part of the forced austerity, said Secretary of Administration Sandra D. Bowen, but she said she had no precise numbers of layoffs because they are done on an agency-by-agency basis and there is no centralized system for tracking them.
Not all job cuts will result in state employees losing jobs.
For example, the Department of Corrections eliminated about 300 funded positions, but only 16 persons were actually laid off. Thirteen persons retired, four resigned and the rest were either reassigned to comparable positions or took lower paying jobs rather than layoffs.
Mr. Bennett said the pain is likely to be felt more sharply in the coming year, after the state has trimmed the fat from its expenditures and must continue to cut in an economy that shows little promise for improving soon.
"Frankly, I'm more worried about 2003 than 2002. There's going to be a clear ripple effect into 2003. If we're short $250 million in revenue for this year, that means we carry that over into the next year. A dollar not collected in '02 is a dollar not collected in '03, either," Mr. Bennett said.
Adding to his distress over monthly revenue reports that have lagged behind expectations all spring are the problems caused by a falling stock market aggravated by revelations of a massive accounting scandal at WorldCom that threatens to bankrupt the telephone giant.

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