RICHMOND – Virginia’s government will need to slash another $1.5 billion in spending as a prolonged recession depletes state tax revenues, Gov. Tim Kaine said Wednesday.
Revenues will fall $1.2 billion short this fiscal year, on top of a $300 million deficit left over from fiscal 2009, the governor told budget-writers in the House and Senate.
The shortfalls will prompt cuts that “will be painful for those that rely on public services at this very challenging time,” Kaine said.
Kaine said he would detail specific spending reductions in early September.
He already has tasked agencies with finding ways to trim their budgets by as much as 15 percent, including through layoffs.
Republicans lawmakers, who have long criticized Kaine for overly optimistic revenue projections, on Wednesday shifted to a conciliatory posture.
“I would have liked to see a few more specifics today” on cuts, said House Majority Leader Morgan Griffith, R-Salem. “But it’s a tough job.”
While slowing job losses, a rebounding stock market and improving housing market may serve as signs “that the recession may be coming to an end,” Kaine did not express much hope that an economic upswing would be reflected in the state’s tax revenue any time soon.
Revenues for fiscal 2009, which ended in June, fell 9 percent over the year before, the worst recorded drop in Virginia history.
“We should continue to make tough decisions about expenses and revenues in the hopes that our works in this regard should set the stage for a stronger recovery,” Kaine said.
