Gov. Tim Kaine on Monday warned that the state needs to cut millions of dollars in spending and that the budget ax could hit any part of state government, including education and highway funds.
Kaine refused to estimate the size of the state’s coming two-year shortfall until a re-forecast of state revenue is finished in early October.
He didn’t spell out to the Virginia legislature’s budget committees which spending items would be trimmed, though he hinted that school funding “held harmless” in earlier rounds of cuts could be included in the next one.
Money for road construction, which was recently slashed by $1.1 billion in the state’s six-year plan, will need “additional downward adjustments,” Kaine said.
Nearly a month ago, his administration laid out a broad freeze on hiring, contracting and travel for state agencies.
Kaine on Monday offered a somewhat qualified pledge not to raise taxes, saying the state government would continue to weather the economic downturn “without increasing the general fund tax burden on Virginia residents.”
Lawmakers were at odds over what that meant. Del. Frank Hall, D-Richmond, said it could be taken unequivocally as a no-new-taxes pledge. Others thought the statement applied only to levies that went into the general fund, like the sales tax.
“What I hope he means is … ‘people are hurting,’ and I hope the follow-up is, ‘I’ve now decided I’m not going to raise taxes, period,’” said Del. Kirkland Cox, R-Colonial Heights.
Kaine and his new secretary of finance, Richard Brown, outlined a trend of slowing revenue closely tied to the faltering national economy.
Sales taxes grew by an average rate of 0.8 percent between March and the end of the fiscal year in June. Payroll tax receipts increased a scant 1.6 percent during those four months. And Virginia added 33,900 jobs during fiscal 2008, 7,600 fewer than expected.
House Republican leaders predicted an at least $1 billion shortfall in the state’s $77 billion biennial budget. They attacked the governor for delivering neither a shortfall amount nor a specific plan for cuts on Monday.
“What we hear today is just ‘we’re going to get some people together and figure out what’s going on,’” said House Majority Leader Morgan Griffith, R-Salem. “And I think unfortunately when you have an issue where you’re going to have to cut spending, every month that goes by means those cuts have to be deeper, and unfortunately the governor has no action plan.”
Kaine, speaking to reporters after the address, countered that it’s too early to formulate a course of action just weeks into fiscal 2009.
“We have four weeks of data,” Kaine said. “So how are we going to adjust a 24-month budget based on four weeks of data? That wouldn’t be smart.”
