Va. budget shortfall increases, but federal stimulus will offset

Bob Brown/Times-Dispatch

By: Times Dispatch / Staff Reports | GoDanRiver.com
Published: February 16, 2009

Gov. Timothy M. Kaine says Virginia may not have to cut its budget any further, thanks to a rich uncle in Washington.

Kaine, in a noontime interview with reporters, said dollars to the state from President Barack Obama’s plan to jump-start the economy should more than offset a continuing decline in state revenue.

The latest revenue forecast indicates that state tax collections will drop an additional $821 million because of the continuing recession. However, says Kaine, a burst of more than $1 billion from the Obama stimulus package should generate a cushion for the state of slightly more than $200 million.

“What that means near-term is we don’t have to make any more cuts,“ Kaine said.

Before the latest figures, administration officials had estimated Virginia’s shortfall at from $2.9 billion to $3.2 billion. With revenue down an additional $821 million, the hole in the state’s two-year, $77 billion budget is at least $3.7 billion.

There are still many questions surrounding the Obama plan, including funds for transportation and education, Kaine said. The governor said the federal handout should make it easier for House and Senate budget-writers to complete their work in time for the scheduled Feb. 28 adjournment of the General Assembly.

But, Kaine says, the legislature may have to tweak the budget about the same time it returns for its spring session in April.