Governor Announcement Confirms Revenue Shortfall

VHCA (8/21/2009)

Governor Kaine appeared before the General Assembly “money” committees on Wednesday, August 19th to update them on the state revenue shortfall and the amount of cuts that will have to be made to balance the Commonwealth’s current biennial budget.  He said he will announce the details of the cuts shortly after Labor Day.

In total, the Governor and General Assembly must make cuts of $1.5 billion in the current state fiscal year, SFY 2010, which started on July 1.  The revenue shortfall for SFY 2010 is $1.2 billion, and there is a carryover shortfall from SFY 2009 of $300 million.

Governor Kaine said he would make the cuts by trimming expenses, reallocating unspent balances, taking money from the “rainy day fund,” and use of federal stimulus funds.  According to the Governor, “We will make these decisions carefully, but they will be painful to those who rely on public services in this most challenging time.”

The Governor also expressed optimism that the recession has bottomed out, citing slight increases in home sales and a slight decrease in the unemployment numbers. 

Under Virginia’s constitution, the Governor can cut as much as 15 percent of state spending while the legislature is not in session.  He asked all state agencies in July to submit three spending cut scenarios – 5%, 10% and 15%.