- The Washington Times - Monday, November 13, 2006

RICHMOND — Legislators will have about $600 million more to spend in the 2007 session but should avoid using it for ongoing programs because of economic uncertainty that lies ahead, the House Appropriations Committee was told yesterday.

Robert P. Vaughn, director of the committee’s staff, said it would be prudent to use most of the extra revenue for building projects or other one-time expenditures.

Making midcourse corrections in the current two-year budget will be one of the major items on the agenda in the 46-day session that begins Jan. 10.

Gov. Timothy M. Kaine will outline his budget recommendations for the General Assembly’s money committees Dec. 15.

The state ended the first year of the budget cycle with a balance of $113 million. Mr. Vaughn said continued strength in corporate income tax collections should help boost state revenues by 6 percent this fiscal year, giving lawmakers more money to spread around.

“It’s sort of a nice little bonus because companies are making a lot of money,” Mr. Vaughn told reporters after his presentation to the committee.

Corporate income tax collections posted a double-digit growth in the last fiscal year, an unprecedented fourth straight time, Mr. Vaughn said. Although the traditionally volatile revenue source remains strong, it is expected to level off soon, largely because of the soft housing market. That’s why it’s important not to spend the windfall on ongoing programs, Mr. Vaughn said.

Although the overall Virginia economy remains strong, the housing market and deceleration of federal spending — particularly in Northern Virginia — point to slower growth, the committee was told.

The housing boom of the past few years has boosted tax collections not only through home sales, but also through consumer spending generated by cash-out mortgage refinancing. However, home sales decreased 8.8 percent in the last fiscal year, and sales for the first quarter of this year are 25 percent below the year-ago level for the same period.

Also, Virginians are tapping into their home equity less as the growth in appreciation slows. Mortgage equity withdrawal accounted for 8 percent of disposable income last year and less than 6 percent this year.

Job growth in Northern Virginia is expected to slow because of decreased federal procurement spending. Prelim- inary data shows that federal procurement spending increased about 3 percent in 2005, down from a 19 percent increase the previous year.

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