Virginia faces a much worse financial picture than previously thought, with shortfalls likely to be several hundred million dollars greater than a recent projection by Gov. Tim Kaine, according to a state Senate estimate.
Senate Finance Committee staffers told lawmakers last week that Kaine’s official forecast of a $2.5 billion gap through 2010 is “understated” and that the shortfall will likely reach $3.2 billion by then, pointing to a longer, deeper recession than earlier thought.
While far from a consensus figure, the estimate by a panel controlled by Kaine’s fellow Democrats was the latest in a string of grim prognostications for Virginia’s $77 billion biennial budget. Finding a way to balance that budget, as Virginia’s constitution mandates, is shaping up to be the single most dominant issue of the upcoming 2009 legislative session.
Kaine already announced millions in cuts that include 567 layoffs, delays to state salary increases, reductions in higher education funding and the closure of older prison facilities. The General Assembly in January will be forced to confront deeper cuts to core services.
Worries especially surround the commonwealth’s job base, which Finance Committee staffers predicted would shrink in both fiscal 2009 and 2010. Kaine’s forecast calls for slight job growth in the second year.
Virginia House members also heard sour news earlier in the week.
“The longer it lasts, ultimately when it becomes a job loss recession, those income tax numbers are going to have a downturn as well,” said Del. Phil Hamilton, R-Newport News, a member of the House Appropriations Committee. “We think $3 [billion to] $3.5 billion [shortfall] is probably in the ballpark.”
Kaine spokesman Gordon Hickey dismissed the more dire predictions as speculation, and said the administration would take another look at the budget after a meeting with his team of economists next month.
“The data will drive the decision,” he said. “When we have more data, we’ll look at the decisions.”
