State Revenues Down

VHCA (5/24/2007)

At the House Appropriations Committee meeting this week, Secretary of Finance Jody Walker reported that state tax revenues are coming in below projections, indicating a slowing of the state’s economy.  Projected revenues may result in a budget shortfall of between $200 million and $300 million in the current first year of the $74 billion biennial budget.

The darkening revenue picture may force Governor Kaine to impose spending cuts on state agencies, perhaps postponing or reducing certain programs. Or, he could even cut promised state services to balance the current budget.

Revenues were expected to grow by 6.5 percent this year over the last year but through April revenues had increased just 3.6 percent over the same period a year earlier.

Of particular concern to long term care is that the Administration is currently developing the next biennial budget which will be introduced in the 2008 General Assembly.  If state tax revenues do not pick up, the Governor may have to consider cutting core services, including Medicaid funding, in the next biennial budget.