Budget outlook bleak

State budget outlook bleak

By Chelyen Davis

Date published: 11/18/2009

RICHMOND

Staffers for the House Appropriations Committee told its members yesterday that the weak economy, increasing mandatory spending on Medicaid and other programs, and the drop-off when federal stimulus money goes away, all combine to create a shortfall of $2.6 billion to $2.7 billion in the next two-year budget.

"These budget numbers are scary and they're stark, and they're going to have a grave impact on the citizens of the commonwealth," said Del. Bud Phillips, D-Castlewood.

House Appropriations staff director Robert Vaughn said he predicts additional revenue reductions of $250 million to $300 million for fiscal year 2010, which also impacts budgets through 2012 that are predicated on 2010 revenues.

Federal stimulus money, which helped prevent deeper cuts earlier this year, will fall off in 2011, deepening Virginia's budget hole.

And replacing cutbacks in federal Medicaid money means that part of the budget, a major driver of spending, will balloon.

Vaughn based his predictions on a revenue estimate from Gov. Tim Kaine's office in August. That estimate predicts small revenue growth by 2011 and 2012, but Vaughn said growth would have to be around 9 percent--double the forecast--to cover the potential shortfall in the budget.

Vaughn said that while the economy does seem to have hit bottom, recovery will be slow and uneven, and that it could take up to three years to recover the jobs lost in the recession.

Kaine has cut the budget several times in the past few months--nearly $6 billion was cut from the budget that ends next July--but he will have to cut even more in budget proposals that he announces in December. Lawmakers in the House and Senate will then put their own stamp on budget cuts during the legislative session, which starts in January.

Kaine's economic advisors are meeting next week to discuss the economy and whether another revenue reforecast is needed.

Vaughn noted that a number of budget areas were largely exempted from Kaine's cuts--things like K-12 public education, corrections, aid to individuals, financial aid, debt service and payments to localities.

He told committee members they could save about $100 million by cutting agencies 10 percent, and $250 million by cutting 15 percent.

But that would also mean dramatic cuts to services, especially in health and human resources and corrections.

One delegate suggested the legislature save some money by holding a 45-day session in 2010 instead of the scheduled 60-day session.

Committee chairman Del. Lacey Putney, I-Bedford, warned delegates that they'll have to make "difficult choices" and that he hopes members will help propose specific cuts.

"What I don't want is generalized statements of cutting waste and eliminating efficiency," Putney said. "Neither of those is a line item in the budget."

Chelyen Davis: 540/368-5028
Email: cdavis@freelancestar.com

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Date published: 11/18/2009

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