- The Washington Times - Tuesday, May 12, 2009

RICHMOND — State revenues for April are well short of even their scaled-back forecasts, and Gov. Tim Kaine is telling state agency chiefs to tighten spending even more.

Mr. Kaine said Monday that state general fund receipts could be about $150 million below the state’s budgeted general fund target of about $14.6 billion for fiscal 2009.

The governor did not prescribe specific cuts, nor did he dictate a percentage of agency budgets to be pared, a step he has taken three times since the current budget took effect last July.

“I’m telling them they have to be austere,” Mr. Kaine told reporters. But unless the state’s revenues brighten substantially in the final two months of the fiscal year, more specific cuts are likely, he said.

Based on early reports, continued weakness in the most vital state revenue sources will drive state tax collections down to about 8.5 percent to 8.8 percent below their 2008 levels.

Appropriations in this year’s budget are predicated on the official forecast that 2009 revenues will decline only by about 7.3 percent from last year.

The official May revenue report, reflecting April tax receipts, is not due until the end of this week, but Mr. Kaine briefed legislative leaders on the problem last week. The May report is an important guidepost because it reflects a critical time for filing state income taxes, which are due May 1, said Finance Secretary Richard D. Brown.

“This is make-or-break time as to whether you make your estimates,” Mr. Brown said.

Virginia’s constitution does not allow the state to end a budget year in a deficit. Because the budget that Mr. Kaine and the General Assembly amended in April projects a $160 million unspent balance, it would be applied to any shortfall.

But without that cushion to carry forward into the next budget, next year’s General Assembly and a new governor will have to be far more ruthless than even in this year when finalizing the 2010 budget, legislative budget experts and Mr. Kaine’s top money advisers agree.

In the current budget alone, the official revenue estimate has been cut from a flat growth of 1.3 percent to a decline of 7.3 percent as Virginia and the rest of the nation experience the worst economic tailspin since the Great Depression.

Spending from the general fund, which covers basics such as public education, law enforcement and public health, was cut from $16 billion to $14.6 billion.

The shortfall would have totaled about $3.7 billion if not for about $1.5 billion in federal economic stimulus money, spending cuts that include layoffs, a state employee pay freeze and the use of nearly $500 million from the state’s “rainy day” reserve fund.

Mr. Brown said early data show that the April decline was “fairly broad based” across the state’s most important revenue sources: income and sales taxes.

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