VIRGINIA LEGISLATORS 12/1/02

VHCA

The good news in Virginias revenue picture is the negatives are less negative.  The bad news is that because fiscal experts and budget analysts see no improvement likely until the fall of 2003, the money committees have embarked on analyses of where deep cuts can be made in the state budget in January.  Leaders of both political parties say that the defeat of transportation referenda in Northern Virginia and Tidewater halted any serious discussion of even modest tax increases.  They see deep cuts as the only way to balance the budget.

It becomes increasingly difficult to protect those things that have been our highest priority,education, health care, public safety and tax relief, said Committee Chairman John Chichester at the Senate Finance Committee Retreat held in late November.  We cannot be the funder of last resort.  Recognize that we are embarking on fundamental changes in our funding relationshipsand that we may have reached the point where we cant afford anything but the highest and best uses of state resources that has implications for public safety and human resources.

The Finance Committee estimated that the state faces a total of $500 million in unavoidable cost increases, including a $159 million increase in Medicaid funding, a $128 million increase in the nearly $1 billion cost of car-tax relief, and $36 million in increased public school costs due to higher student enrollment.  Costs of state employee health insurance, indigent care, and services for at-risk youth are also rising, while income from housing out-of-state prisoners in state prisons has fallen sharply.

Governor Warner has already cut $858 million this year, but is still faced with preparing a budget reflecting additional cuts of over $1 billion.  The House Appropriations Committee and the Senate Finance Committee are also trying to determine where they will make cuts if they dont like the Governors proposals which he will announce on December 20th.