RICHMOND
Warning that Virginia's economy is slowing, the Kaine administration on Thursday ordered the state government to stop nonessential hiring and travel and said deeper budget cuts may be in store.
The actions came amid reports that revenues from Virginia's two largest sources - the sales tax and individual income tax - are growing at a slower rate than expected when the General Assembly approved a new state budget in March.
The "troubling trend... compels the governor to initiate actions that could mitigate some of the budget difficulties that the Commonwealth likely faces over the next biennium," Wayne Turnage, the chief of staff for Gov. Timothy M. Kaine, wrote in a memo to state agency heads.
He said Kaine is reviewing proposals to cut agency spending by as much as 1.5 percent.
The governor may reveal his plan on Aug. 18, when he is scheduled to make an annual summer address to the General Assembly's money committees.
Sales and individual income taxes provide for 72 percent of the general fund budget, which supports education, public safety and health programs.
The state ended its budget year on June 30 with a $5.4 million surplus in its $17 billion general fund.
Since March, however, revenues from state income tax withholdings on paychecks have grown only 1.6 percent from the same period in 2007, and sales tax proceeds have expanded by 0.8 percent. That indicates that wages, employment and consumer spending are lagging, according to Richard Brown, director of the Department of Planning and Budget.
The trend is ominous for the new state budget, which went into effect on July 1 and is based on assumptions that revenues from individual income taxes will grow by 5.2 percent and sales tax proceeds will increase 1.6 percent.
Virginia's budget, under law, must be balanced. Any falloff in revenues must be matched with a cut in spending.
Brown said most states are experiencing financial problems similar to Virginia's.
Warren Fiske, (804) 697-1565, warren.fiske@pilotonline.com
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no matter what
Republicons will not happy unless it's their way or no way.
Shellgame....
Someone please explain the shellgame theory. Localities collect 30%(?) of the car taxes directly, the state pays the localities the remainder. When Gilmore was in office we had surpluses beyond belief and it was prudent to return state tax money to the taxpayers who "over paid". Now, we have a governor and prior governor that can't wait to spend the huge surpluses and then cry that they still don't have enough. Funny that now because of huge socialist over committment, Timmy is calling for stemming spending on "non-essentials". LOL...you mean to tell me that we have non-essentials hiding in the budget blackhole? Whoduv thunk.
Surplus?
Sounds like all the doom and gloom the democrat group spewes is just hot air. See what happens when you cut spending?
The state hires people for non-essential jobs? If it's non essential, then get rid of it. Government waste at it's best. Hire a person that is non-essential. Wonder how many of non-essential employees are already being paid?
Jim Gilmore
Well, what Gilmore could've done was actually respond to the changing economic conditions and scale back that shell game that he called "eliminating the car tax."
But you know, why don't we just eliminate the Virginia Department of Transportation? I'm sure that would save a couple of dollars in these tough economic times.
Familiar Economy
I remember when under Gov. Gilmore the economy was doing great. The state surplus was so huge even the "big government" types couldn't argue against giving tax dollars back. Then it happend. Like NOW the ENTIRE country was in recession. Capital gains tax streams disappeared, 401k investments went into the toilet, and consumers stopped spending(eroding sales tax revenue). Gilmore wasn't responsible for 9/11,the global economic panic as we went to war in Afghanistan, or the poor national economy that included Virginia.
Gilmore was publicly blamed for things beyond his control and Warner credited for an economic recovery. It remains to be seen if Kaine will suffer the same unfairness for today's economy. Somehow, I doubt it.
Creative Accounting
"the new state budget, which went into effect on July 1 and is based on assumptions that revenues from individual income taxes will grow by 5.2 percent and sales tax proceeds will increase 1.6 percent"
Ummm...since home prices are down, gas and food prices are up, unemployment is up, and not too many people are getting wage increases that match, why would the state PLAN for 'increased' tax revenue? People are either losing jobs, or their companys are saying there is no money for raises. People aren't spending more, they are just having to spend more for certain things like gas, food and utilities. It just seems wrong to wrap your budget around an anticipated 'increase' or growth, when the entire country is in economic crisis. And it's been that way waaaay before March when the budget was approved. If anything I think they would have taken into consideration a possible decrease. Better to be s
BOHICA
Better grap your wallets. Sounds like a tax increase again!
The first nonessential
That should be cut is our Famous Govonors Pre-kindergarden babysitting service program he instituted with the surplus from the Transportation Budget. This was one program that never should have seen the light of day but with this govoner no welfare or handout program is to expensive just raise taxes again on the working families who are straining already.