Virginia could face a budget deficit and spending cuts if the economy does not improve, according to the commonwealth’s latest revenue report.
Through April, Virginia’s revenues grew 3.6 percent, well below the 6.5 percent growth that legislators expected when they approved the $73.8 billion biennial state operating budget.
Secretary of Finance Jody Wagner blamed the slow growth on several factors, including only a small increase in corporate income taxes and a 13 percent increase in individual income tax refunds. The refunds, she told Gov. Tim Kaine in a May 11 letter, “have significantly exceeded expectations, further dampening growth.”
Kaine spokeswoman Delacey Skinner said the governor has directed state agencies to monitor spending and conserve any surpluses they have as the fiscal year nears its June 30 conclusion.
The surpluses will be carried over into the fiscal year that begins July 1.
“We are asking them to be prudent,” she said.
State financial officials will spend the next few months studying economic forecasts and trying to determine the significance of the growth slowdown. Decisions on budget cuts, Skinner said, will not be made until after the studies finish in August.
“We’ll be looking to see if this is a one-time event or if there are significant changes to the economy,” she said.
The Department of Finance’s revenue report said the national economy is slowing down because of high oil prices and a soft real estate market.
Locally, however, the number of jobs in Northern Virginia increased 2 percent in March, the report found.
