Virginia Gov. Tim Kaine on Monday refused to rule out a tax increase to help close a yawning budget shortfall and said to expect cuts to health care and education when he releases his final budget.
Kaine met in the morning with the state’s revenue panel to discuss the grim fiscal situation facing the commonwealth. Among the outgoing governor’s last major acts will be proposing a two-year budget running through mid-2012, and Kaine is signaling that this spending plan will be as stark as those before it, if not worse.
“People are going to see an awful lot in this budget that they don’t like,” Kaine told reporters after the meeting. “But look — people are doing it in their families and they’re doing it in their businesses, they’re having to make tough decisions. We haven’t shrank from them and we’re not going to shrink from them in this next round.”
The General Assembly, which will begin its session in January, must approve the budget.
The cuts Kaine proposed for the current year will carry forward into the next two, the governor said. In September, Kaine announced plans to lay off nearly 600 state employees, slash higher-education funding and shutter correctional facilities to close a $1.35 billion shortfall through the end of June.
State finance staff last week predicted that cuts of as much as $300 million more will be needed for this fiscal year. That shortfall is expected to grow to as much as $2.7 billion for the next two years.
“You’re going to see a lot of adjustments to Medicaid, you’re going to see adjustments to K-12” and higher education, Kaine said.
Any potential tax increase included with the governor’s budget will face staunch opposition from a Republican-led House of Delegates — which picked up a handful of seats on the Nov. 3 election — and a new Republican governor who has promised to fight any proposed tax increase.
Kaine said he would not include any cuts that could jeopardize the state’s AAA bond rating or hurt its business-friendly reputation.
“We can’t cut anything that will reduce the strategic edge that we have over other states,” Kaine said.
