- Associated Press - Monday, November 28, 2016

RICHMOND, Va. (AP) - Gov. Terry McAuliffe said Virginia’s economy is improving enough to avoid some of the toughest budget cuts being considered.

McAuliffe told reporters Monday that he and other state officials are “cautiously optimistic” about the direction of the state’s economy, in part because of an increase in payroll tax revenues in recent months.

“We clearly don’t have to cut as much as we thought at one point,” McAuliffe said following a private meeting with state budget officials and business leaders. He declined to make public any details about the budget he’ll propose to the General Assembly in December.

This summer, the governor scrapped planned raises for state employees and announced that “tough decisions” were in store to account for an estimated $1.5 billion budget shortfall. He asked agency directors to plan for 5 percent cuts, and warned public universities to prepare for significant losses in state funding.

Virginia’s unemployment numbers have improved, but state budget officials said national defense cuts have led to fewer high-paying jobs, while younger, lower-paid workers are replacing retiring baby boomers.

The governor and others said business leaders remain uncertain about the presidential election’s impact on Virginia. Donald Trump’s promises to increase military and infrastructure spending could be a boon for the Old Dominion, but his promises to shrink the federal workforce could hurt Virginia more than many other states.

“Virginia’s economy is solid, no matter who is in charge in Washington, but there’s still uncertainty there,” said GOP Sen. Emmett Hanger, who runs the state Senate’s budget committee.

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