State lawmakers consider more cuts amid weak economy

ROANOKE

Home values continue to tumble, consumer spending and sales tax collections are down and job losses are up.

Overall, the reports from the House Appropriations Committee two-day retreat on Tuesday weren't new. Nor were they encouraging.

Like the rest of the nation, Virginia's financial outlook is bleak in 2009. State budget experts predict an economic recovery to take hold in 2010, with a more evident rebound in 2011.

In the meantime, lawmakers are faced with slashing at least $2.5 billion from the $77 billion biennial budget. Several predicted Tuesday that cuts in state funding for education and Medicaid might be necessary.

Gov. Timothy M. Kaine in October called for some cuts to offset declining state revenues because of the weak economy.

"I believe we may be very close to a $4 billion problem," said House Majority Leader Morgan Griffith, R-Salem.

An updated number may come in December when the governor releases his budget proposal.

In October, Kaine found some savings through state employee layoffs, freezing open positions and reducing cost s at government agencies.

The governor also wants to withdraw $400 million from the state's rainy day fund and borrow money to plug the remaining hole in the current fiscal year budget.

Kaine avoided making cuts in state funding for cities and counties and public education in October, but he and others have warned that tougher choices lie ahead.

"All the low hanging fruit is gone," House Appropriations Committee staff director Robert Vaughn cautioned. "The fact is, 75 percent of these actions were one-time, meaning they will not occur in 2010."

Legislators are concerned that the worst effects of a recession aren't here yet.

"We know the tsunami is coming," said Del. Frank Hall, D-Richmond.

An analysis of public education and Medicaid funding dominated the latter half of Tuesday's session.

Noting that "public education is 34 percent of the budget," Del. Phillip Hamilton, R-Newport News, acknowledged school funding cuts are on the table. "We want to do our best to make sure we minimize reduction of direct aid to students," he said.

Virginia Education Association lobbyist Rob Jones said his group, which represents teachers, isn't "conceding on cuts," and will push legislators to re-instate estate taxes that were repealed two years ago and limit tax credits given for land conservation.

Julian Walker, (804) 697-1564,julian.walker@pilotonline.