- The Washington Times - Tuesday, May 30, 2006

RICHMOND — Gov. Timothy M. Kaine and legislative budget negotiators said yesterday that they hope to have a budget substantially complete within one week.

Mr. Kaine travels to New York June 7 to meet with Wall Street agencies that set the state’s credit rating. He said the agencies will want assurances that last-minute budgeting hasn’t become the norm in Virginia government.

“Virginia needs to have a deal either in hand or in sight,” Mr. Kaine said. “I need to be able to look at them with conviction and say that a budget deal is in hand.”

Mr. Kaine, a Democrat, spoke with the 11 budget negotiators — five senators and six House members — yesterday morning just before they began several days of negotiations.

Never in modern Virginia history has the government come this close to the expiration of a fiscal year on June 30 without a new budget in place to fund state operations.

A deep dispute between the Senate and its call for $1 billion a year in additional money for road, rail and transit projects and the House, which rejected the new taxes altogether, caused the delay.

The regular legislative session ended March 11 with no sign of a compromise. A breakthrough emerged last week when the Senate agreed to drop its transportation-funding demand long enough to draft a regular budget, provided that the House agrees to take up the issue again later this year.

House Appropriations Committee Chairman Vincent F. Callahan Jr., Fairfax County Republican, said he and Senate Finance Committee Chairman John H. Chichester, Stafford County Republican, think they can resolve remaining disputes — largely over capital outlay — in time for Mr. Kaine to assure Wall Street firms that the state’s fiscal processes are sound.

“John and I both told him that we’re very optimistic that we can get this wrapped up in the next week,” Mr. Callahan said.

Each June, Virginia’s governors travel to New York to meet with leaders and analysts for the major firms that rate the creditworthiness of governments. Virginia enjoys a rating that has never been blemished, which entitles the state to the lowest interest rates available for paying off bonds used to finance some long-term construction projects.

Two years ago, one of the three major bond-rating firms, Moody’s, threatened to downgrade Virginia’s credit rating for the first time. That helped Gov. Mark Warner, a Democrat, win passage of a $1.4 billion tax package that repaired structural imbalances in the state tax code and ended nearly three years of budget shortfalls that reached $6 billion.

Now, Mr. Kaine said, the bond agencies will want to know whether protracted ideological skirmishing could impair state government’s ability to reliably enact budgets and pay its bills and debts on time.

“I have to tell them in a very direct way that government will continue,” Mr. Kaine said.

He said the bond agencies aren’t so concerned about one tardy budget on June 7 as they are about whether it is a trend, “the exception or the rule. The fact that the legislature has done this three times in the past six years will certainly be something they will ask about.”

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