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Virginia reports drop in revenue
State revenues lower than expected for MayDate published: 6/16/2009
RICHMOND --State revenues slipped further in May, leading Gov. Tim Kaine to say he'll re-examine the revenue forecast by mid-August so he and lawmakers have more time to shore up the 2010 state budget.Secretary of Finance Rick Brown said tax collections for May--a big month for state revenues--were nearly 16 percent lower than they were in May 2008, and more than 9 percent lower than expected for the year to date. In a letter to Kaine, Brown said the economy continues to be weak, and that most revenue sources are lagging behind their forecast levels while individual tax refunds have increased dramatically. The decrease puts the 2009 budget year (which ends June 30) at $300 million lower than Kaine and legislators thought it would be during the legislative session. Kaine said the shortfall will be made up through a combination of reduced spending by agencies, savings from money agencies don't spend by the end of the fiscal year, and a $168 million unallocated balance that was set aside when lawmakers wrote the two-year budget. Much of that, $105 million, comes from federal stimulus money. "We will be able to manage this," Kaine told reporters yesterday. He already told agencies in early May to reduce their spending and to expect further cuts after the 2010 fiscal year starts July 1. He announced yesterday that he will also do a revenue re-forecast before mid-August, much earlier than normal. The revenue forecast is a prediction of how much money the state is likely to have, and it's reached by Kaine's administration with the help of economists and business leaders. In a typical year the forecast is done in the fall, in advance of the governor writing a budget in December. Last year, as the recession was hitting and state revenues were dropping, Kaine did a re-forecast earlier in the fall. This year, he says he'll have a new revenue forecast ready by the time he makes an annual mid-August budget presentation to the legislative money committees, so that he and lawmakers will have about 10 months left in the fiscal year to deal with any cuts that must be made. "It's easier to find these savings over a 10-month window than over an 8-month window," Kaine said. He said he's not looking at more layoffs of state workers right now, although that could change after the revenue re-forecast in August. Kaine said there are some signs of slight improvements in the economy, but "they are still not a trend" and that the 2010 budget year is likely to be a difficult one. Chelyen Davis: 540/368-5028
Date published: 6/16/2009
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