Kaine revises budget after projected deficit
Office of the Governor Timothy M. KaineTo offset the increased deficit, Kaine proposed a revised budget that includes further spending cuts and emphasizes the need to tap into the revenue stabilization fund.
In October when the initial budget was proposed, Kaine's administration forecasted a $641 million shortfall. He then proposed $400 million in spending cuts to help offset the shortfall. Due to a rapid slump in the economy in December and January, the projected shortfall has increased and a revised budget became necessary.
"The revenue came in considerably short (of) what was projected," said Gordon Hickey, deputy press secretary for Kaine.
The shortfall in the state revenue collections is a result of a slump in the national economy, which has affected Virginia citizen's ability to pay their taxes. The state revenue collections depend on both withholding taxes, such as money withheld from a paycheck, and non-withholding taxes, such as sales taxes. For that reason, Kaine did not want to raise taxes in order to fix the shortfall.
"He's never taken a pledge saying, 'read my lips I will not raise taxes,'" Hickey said. "Regular citizens are facing some difficulties so that's not a good time to raise taxes."
Instead, Kaine tried to "spread the pain," Hickey said, and make spending cuts where he felt would be necessary.
These cuts include a 2 percent cut to funding for higher education from 2009 to 2010. Reductions to Virginia Tech would total a little over $8 million between now to 2010.
Kaine's revised budget, however, is still just a proposal. On Sunday, the House released its own proposal of a revised budget. Jeff Ryer, spokesman for H. Morgan Griffith, House majority leader, said the House's revised budget restored the $70 million cut to higher education.
"Our greatest dissatisfaction is that he took money from existing programs and responsibilities, like higher education, in order to expand on his newer initiatives, like his pre-kindergarten program," Ryer said.
The spending cuts will not affect the proposed spending increases for mental health services stemming from the April 16 shootings.
"The governor has left that alone as well as the House and Senate proposals," Hickey said. "So that spending looks pretty solid right now."
The spending cut will also not affect the medical school and research institute building being built in a joint effort between Carilion Medical Center and Tech.
"It's my understanding that all of the different proposals from the Senate and House all include the funding to build the medical school research institute building," said Eric Eanheart, spokesman for Carilion. "We don't anticipate anything that would delay the building."
In addition to these spending cuts, Kaine proposed to take $432.5 million from the revenue stabilization fund instead of the $261.1 million proposed in October.
The revenue stabilization fund, also known as the "rainy day fund," was established during Doug Wilder's term as governor of Virginia, and was used by former governor Mark Warner in 2004 for the same reasons Kaine is proposing. After withdrawing $432.5 million, the rainy day fund would be left with $800 million.
Hickey explained Kaine had high hopes that both of the houses would agree on a new revised budget that better accommodates the shortfall.
