Kaine addresses lawmakers on budget shortfall
Story by Chris Graham
freepress2@ntelos.net
Everything is on the table, Gov. Tim Kaine told state legislators today as the two sides began to address a projected billion-dollar shortfall in the current biennial state budget.
“The need to engage in a third major round of budget reductions will mean, by necessity, that all programs — including those previously held harmless — and all available strategies will be on the table for review,” Kaine told a joint meeting of the Senate Finance and House Finance and House Appopriations committees this morning in Richmond.
“We will continue to do all we can to protect core services, but the need for tough decisions will require examination of all areas of state spending,” said Kaine, who indicated that the normally sacrosanct state funding for local education could be among those areas that will come under scrutiny.
It’s the second August in two years that Kaine has had to go over mid-year budget cuts due to the cooling state and national economy. The situation this year is probably the tougher of the two – as Kaine noted in his speech to legislators this morning, economists are expecting declines in real gross domestic product in the fourth quarter of 2008 and the first quarter of 2009, with a muddled employment and housing-market outlook adding to the difficulties.
“The task that lies before us will not be easy. The cuts we have made over the last year — cuts based on solid data and careful prioritization — have been tough. The next round will be more difficult. However, we have met these challenges in the past, and I know that we will work together again to do the right thing. That’s what the ‘best managed’ state does. That’s what a Triple-A state does. It’s the Virginia way,” Kaine said.
Picking up on the working together theme, Del. Steve Landes, R-Weyers Cave, suggested a line of strategies that lawmakers and the administration could work through, including re-examining capital-projects lists for projects that could be put on the backburner in the interim.
“That’s a first step. The other thing is we always get a bump in December even when there’s a downturn because of the holidays and the Christmas season,” Landes said. “I don’t think any of us think that the real-estate market is going to pick up anytime soon. It may the first quarter of the year. That’s what we’ll really be looking at – is how the home sales are, and if that starts going back up, and there’s a good chance that we can weather the storm, or at least minimize what we have to do.”
Del. Chris Saxman, R-Staunton, for his part thinks there is some light at the end of the tunnel. “Gas prices are starting to come down, and money is starting to get into people’s pockets. It’s going to take some time for people to realize that, but I think we’ve bottomed out, and there are some good signs out there that the economy is going to turn around in the third and fourth quarter of this year, which is the first and second quarter of our fiscal year,” Saxman said. “Anything can happen with respect to the economy turning around. We’re not in a recession. And if oil prices continue to trend down, we can fend off any recession from happening, and that’s good news.”
Related posts:
- Kaine, lawmakers still working on budget, transportation fix Story by Chris Graham freepress2@ntelos.net Virginia Gov. Tim Kaine knows that Virginia lawmakers have a tough job. But … A deadline is a deadline is...
- Kaine, Kilgore have eyes on ’05 Story by Chris Graham “Two years ago, or a year ago,” Lt. Gov. Tim Kaine told a Waynesboro audience last month, “if you would’ve...
- Kaine soaks in victory at polls Story by Chris Graham The theme music from “Rocky” played in the background as Tim Kaine and Mark Warner made their way to the...
- Kaine hopeful for roads fix Story by Chris Graham freepress2@ntelos.net When Gov. Tim Kaine first made the call for a June 23 special session on transportation last month, he thought...
- Kaine talks regional growth, I-81 Story by Chris Graham Tim Kaine spent a good part of his day on Wednesday talking about how he wants to take steps to strengthen...
Statement from House Speaker Bill Howell on the budget shortfall situation:
“The news that, due to inaccurate revenue forecasting by the Kaine Administration and the national economic slowdown, Virginia is confronting another state budget shortfall that will reportedly total around $1 billion is very disappointing.
“Frustratingly, many lawmakers – myself included – foresaw this problem last December when the Kaine Administration released revenue forecasts for FY 2010 that were exceedingly optimistic. At that time, we urged the Administration to offer a more realistic, conservative fiscal forecast. The Governor refused, instead choosing to continue proposing new state spending when there were clear signs that the country could be headed into a broader economic slowdown. This combination caused many of us to have genuine concerns about the overall soundness of the Governor’s spending plan and, therefore, the long-term structural integrity of the state budget. Today’s comments by the Governor demonstrated that our earlier concerns were well founded.
“Crafting amendments to the existing 2008-2010 budget of the Commonwealth of Virginia is no easy task and one that requires prompt action. Although the Governor’s focus and attention may be divided, General Assembly Republicans stand ready to fulfill our constitutional obligations to the citizens of Virginia.”
Virginia House of Delegates Appropriations Committee Chairman Lacey E. Putney (I-Bedford) today released the following statement on the current state revenue situation:
“This morning, Governor Kaine informed the General Assembly money committees that he has officially begun the review of the general fund revenue estimates contained in the recently adopted budget for the 2008-2010 biennium. This review is prompted by a slowdown in state revenue collections, primarily in payroll withholding and sales taxes.
“Last winter, I – and other members of the General Assembly – expressed concern that the revenue estimates proposed by Governor Kaine for the new biennial budget appeared to be overly optimistic. As a result of those concerns, Speaker Howell and I wrote the Governor, urging him to convene his board of economist and the business leaders. Of course, this did not occur, although the Governor and former Secretary of Finance Wagner did ultimately revise downward the revenue estimates as we suggested. However, it is now evident that the weakness of the economy is greater than administration officials thought.
“While I applaud the Governor for beginning the revenue review process, which includes calling in leading economists, business and legislative leaders, we all know that these meetings never involve the actual approval by legislators or business leaders of the revenue forecast by specific source. The long-standing purpose of these meetings is for the Administration to seek input from business leaders on the overall economic and business conditions of the Commonwealth, and to ensure that legislative leaders are appropriately informed about these matters.
“Because Governor Kaine has no legal authority to withhold appropriations until a new revenue forecast has been given to the General Assembly, it is my hope that we will receive an updated revenue forecast from him within the next six weeks. We can ill-afford to wait much longer without taking corrective action to align our spending with anticipated revenues.
“In 2004, then-Governor Warner stated that the tax increase approved by the General Assembly would align our longer term revenue and spending requirements. Clearly, this did not work. The fact that state spending continues to grow faster than revenue growth is not indicative of the need for more revenue, rather the need for spending reform. Last session, Governor Kaine continued to press for new spending initiatives despite the looming economic downturn. Obviously, creating new programs without a corresponding reduction elsewhere is a recipe for fiscal disaster.
“I look forward to working with Governor Kaine in developing long-term structural reforms in state spending without a tax increase.”