- The Washington Times - Wednesday, June 7, 2006

RICHMOND — Gov. Timothy M. Kaine said yesterday that representatives of Wall Street agencies that determine the state’s credit rating did not seem alarmed by the General Assembly’s protracted budget impasse.

Mr. Kaine and the legislature’s lead budget negotiators — Sen. John H. Chichester of Stafford County and Delegate Vincent F. Callahan Jr. of Fairfax County — met with officials of the three major bond-rating agencies in New York and briefed reporters when they got back to Richmond.

The governor said the representatives questioned them about the budget debacle but “seemed generally satisfied” with the Virginia delegation’s optimism that a deal will be completed before the fiscal year ends June 30. But he added, “They told us they’d be watching.”

When the General Assembly deadlocked on the budget two years ago, Wall Street threatened to downgrade Virginia’s AAA bond rating, which allows the state to borrow money at the lowest interest rates. The rating was preserved after lawmakers agreed on a $1.4 billion tax increase.

Mr. Kaine said a “structural imbalance” in the budget prompted the 2004 warning. He said that is not an issue in this year’s stalemate, which centers on funding for transportation.

The agencies are happy with Virginia’s overall fiscal condition, Mr. Kaine and the lawmakers who accompanied him to New York said.

“We’re in good financial shape,” said Mr. Chichester, who predicted a budget compromise will be reached in “a couple of weeks, if not sooner.”

A couple of weeks would push the government to the brink of a possible partial shutdown, although the Democratic governor has repeatedly pledged to use emergency powers to maintain essential state services if a new budget is not in place on July 1.

Attorney General Robert F. McDonnell, a Republican, is expected to release an opinion today stating that the governor does not have the power to spend state money unless it has been appropriated by the General Assembly.

Mr. Callahan and Mr. Chichester, both Republicans, said they think the Virginia Constitution does give the governor authority to keep government running.

Mr. Kaine said his optimism that such unprecedented action will not be required is based on “kind of a gut feeling” about the budget negotiators.

“They have more at stake than anyone,” he said.


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