- The Washington Times - Thursday, May 30, 2002

RICHMOND Virginia will miss its revenue forecast for the fiscal year that ends June 30, forcing the state to use all of its $133 million cushion, plus deeper cuts that agencies have been asked to make, including layoffs, Finance Secretary John Bennett said.
Because of soft tax collections and income-tax refunds exceeding expectations, the state would have to experience unrealistic growth in its income-tax withholding collections for May and June, Mr. Bennett told the House Appropriations committee on Tuesday.
"When you consider all those factors, then making the forecast is a long shot. In fact, we're not going to make the forecast," he told the budget-writing panel.
Gov. Mark R. Warner, a Democrat, two weeks ago asked state agency chiefs to look for deeper cuts than the 3 percent reductions they had been asked to make in January, after learning that April revenues were down 11.1 percent from collections for the same month a year ago.
Mr. Bennett estimated then that the state government would have difficulty keeping its forecast that overall revenues for the fiscal year that ends June 30 would be 1.7 percent lower than the previous fiscal year.
Since the administration sought the additional cuts, agencies have pared about $20 million from their operations and payrolls, with more needed to close the gap, Mr. Bennett said.
The announcements continued a year of fiscal woe that began with an impasse last year that prevented the legislature and Gov. James S. Gilmore III from amending the second year of the biennial budget and would end with forecasts of revenues $3.8 billion short by 2004.
The current fiscal year shortfall alone is estimated to be about $1.3 billion.
Refunds are running well ahead of pace this year, and the $75 million the state has on reserve to pay them may not be enough, Mr. Bennett told the dismayed legislators.
"Almost certainly, we will exceed $75 million in refunds in May and June," he said.
The state was hoping to find about $137 million in help from accelerating sales-tax payments from some of the state's largest collectors of the tax a proposal Mr. Gilmore, a Republican, made that the legislature approved and that had some businesses across the state seething.
Tax Commissioner Kenneth W. Thorson said about 6,600 businesses, or "dealers," will be required to pay what amounts to one additional monthly installment of sales taxes by June 25 for people who mail their payments or June 30 for those who file electronically.
"With that, the state will effectively have 13 paydays this year," said Delegate John A. "Jack" Rollison III, Prince William Republican. "Will we ever be able to get off this treadmill of advance payments?"
The program is intended to last until 2012.
Should state agencies not find sufficient savings to match revenues, then it's up to Mr. Warner to begin cutting from unrestricted areas in the state's general operating fund.
"We don't believe that will be necessary," Mr. Bennett said. "There's not going to be chaos."
The state's constitution does not allow Virginia to finish the year with insufficient funds.

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