- The Washington Times - Wednesday, December 3, 2008

RICHMOND | Virginia’s projected state revenue losses may be closer to $3 billion than the $2.5 billion previously projected for the next two years, Gov. Tim Kaine, a Democrat, told his economic advisers Tuesday.

The new revenue forecasts were about $100 million worse for the current fiscal year and a further $168 million lower for the 2010 fiscal year, which begins July 1.

Mr. Kaine had already lowered the official state revenue forecast on which the two-year budget is based by about $2.5 billion in October. He ordered nearly 600 state employee layoffs, cut college funding by at least 5 percent, closed some older prisons and postponed state employee raises to deal with the fiscal crisis.

Before closing Tuesday’s meeting to the public, Mr. Kaine said he would seek his advisers’ guidance on whether to further reduce the state’s official revenue estimate based on the new figures. He is expected to present his budget recommendations to the General Assembly’s money committees on Dec. 17.

Despite the dismal figures, Mr. Kaine said there were some bright spots.



In October, he reversed the state operating-fund tax-collections forecast from 2 percent annual growth to a 4 percent decline. The actual decline was 3.1 percent.

Last month, the nation’s major bonding agencies gave Virginia triple-A ratings because of the state’s financial stewardship.

“There were a few little bright spots here and there, but not that many and not that bright,” he said.

Mr. Kaine and other governors met with President-elect Barack Obama on Tuesday morning, and the governor said he was heartened by Mr. Obama’s promise to help states with a new stimulus package and a significant investment in infrastructure.

Mr. Kaine had warned that core priorities that had been protected from cuts, such as public education and Medicaid, would be open for consideration for the next budget because of the tanking economy.

Earlier Tuesday, some key legislators and an administration official agreed that the days of sparing public education and health care services from budget cuts were over.

“Education and mental health rank at the top, and the two areas that shouldn’t be touched are those two, but we may have to touch them,” Senate Finance Committee Chairman Charles Colgan, Prince William Democrat, told reporters and editors attending the annual Associated Press Day at the Capitol, organized by the AP.

Delegate Phil Hamilton, Newport News Republican, said sparing public education, which takes up about a third of the general fund budget, would be fiscally irresponsible. He said savings likely could be found by reducing administrative costs, reorganizing the way remedial education is funded and consolidating purchasing among superintendent regions - measures that shouldn’t affect the classroom.

The lawmakers - and the four men eyeing the governor’s office next year - said there was no support for raising taxes during the bad economy. The legislators also said they didn’t sense any desire to reinstate the estate tax or the repealed portion of the car tax to help balance the budget.

Revisiting the 2005 repeal of the estate tax imposed posthumously on the holdings of the very wealthy would be better than taking money from schoolchildren, said Robley Jones, a lobbyist for the Virginia Education Association.

“As tough as this recession is, it’s hard for me to think that the place for us to balance the budget is cutting back on the training we’re providing for the next generation,” Mr. Jones said.

Mr. Hamilton, a budget conferee, said it would be much more difficult to find cost savings in the Medicare program.

Virginia already has one of the most difficult programs to qualify for in the nation, he said. And if reimbursements to providers - which he called “woefully inadequate” already - are decreased, they might stop treating Medicare patients.

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