Virginia's Revenues Continue to Drop

VHCA (5/15/2009)

The Kaine Administration announced this week that state tax revenues are not reaching the projections upon which the latest State Budget amendments were based.  This continued revenue shortfall has caused Governor Kaine to instruct state agencies to operate under “austere” financial considerations and cut back on spending wherever possible.

Secretary of Finance Richard Brown told the House Appropriations Committee on May 12th that tax revenue would have to grow by two percent in May and June to hit the revenue forecast that underlies the Budget expenditures for the rest of state fiscal year 2009.  A two percent growth appears unlikely given the continued economic decline.

Agencies have also been told to prepare plans to reduce existing appropriations in SFY 2010 (beginning July 1st) and to reduce base budgets for the SFYs 2011 and 2012.  The Governor will begin to develop his final biennial budget in mid to late summer.

This is the fourth time Governor Kaine has asked state agencies to cut back.  Despite multiple and significant spending cuts, state employee layoffs, a state employee pay freeze, use of nearly $500 million from the “rainy day” fund, and $1.5 billion from federal stimulus funds, Virginia continues to struggle to balance its budget.

VHCA will challenge any changes proposed for Medicaid funding as the Administration addresses the continued economic crisis.