Report: Va. faces estimated $800 million shortfall over 2 years

Virginia may be looking at an estimated $800 million shortfall during the next two-year budget cycle, according to a new analysis of state financial data by a public policy group.

The report from the Commonwealth Institute for Fiscal Analysis concludes that lagging revenue collections due to a still sluggish economy coupled with a greater demand for social safety net services and the expiration of federal stimulus dollars are challenges for the state.

(A copy of the full report is below.)

Meanwhile, the report notes, officials may have fewer accounting options because the state must replenish its Rainy Day Fund, repay the state retirement system after withholding a previous payment, and pay interest to the fed on its unemployment borrowing.

The report argues that "the state’s best strategy" to ford the choppy economic sea is "a balanced combination of modest spending cuts and new revenue measures to strengthen the revenue recovery."

A "cut-only approach," it adds, "will likely impede our economic recovery and cost both public and private sector jobs."

The "new revenue" term appears to be code for some kind of tax, a verboten option to Gov. Bob McDonnell and many of his Republican colleagues in the House of Delegates.

 "The Commonwealth Institute has long argued for higher taxes and bigger government. They regularly issue reports designed to make their case for more and more government spending. We respect their right to that position, but disagree strenuously with it," said McDonnell spokesman Tucker Martin, who credited the administration's policies with aiding Virginia's economy.

-- Julian Walker

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