Local Commentary

Delegate Scott’s Richmond Report




Tough Budget choices coming

On Monday, the House Appropriations Committee met in one of its regular update meetings.

There will be two more this year, ending with the Governor’s Budget Amendment recommendations in mid-December.

It is clear that severe cuts will be necessary after the Assembly re-convenes on January, 14. The Governor sent his new Secretary of Finance, Ric Brown to brief the Committee on actions he has taken and some he suggests should be taken.

The Governor’s fall revenue forecast each year is the starting point for the Budget proposals. This year the Governor accelerated the process so that the General Assembly would have the benefit of the input from a wide spectrum of economists, business leaders and industry, particularly housing industry,

Leaders.

Beginning with a meeting of housing industry representatives on August 1, followed by a meeting of consumer spending and auto industry experts on Sept. 5, the Governor convened a meeting of the Governor’s Advisory Board of Economists (GABE) on Sept. 10.

On September 23, the Governor’s Advisory Council on Revenue Estimates (GACRE) met.

From these discussions, the Governor offered two possible economic outlooks for the remainder of fiscal 2009 and fiscal 2010, which begins on July 1, 2009. Both scenarios differed from the official forecast used in the Budget passed early this year. They both anticipated a mild downtown in fiscal 2009, but no recession. A sluggish rebound in fiscal year 2010 was predicted.
Because the members of GACRE were split, the Governor used a combination of standard and slower growth projections in making his October revenue forecast. It is anticipated that the Commonwealth’s revenues may very well fall below revenue collections in FY2008.

As a result of his revenue projection, the Governor proposed spending cuts of $323 million, including cuts to state services and programs. He also proposed converting capital projects worth approximately $250 million to bonded indebtedness, thereby reducing the funding needed in FY 09 and FY2010 to debt service. He recommended no cuts to the state share of public education funding, but did reduce funds for operating several outdated correctional facilities, and he suggested adding some more prisoners to local jails. In addition, he did recommended reducing funds to Virginia public colleges and universities, including community colleges.

As in the past, the Governor will present his formal Budget amendments in mid-December. Public hearings will be held throughout the Commonwealth and in Richmond in late December and early January.