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Kaine calls for cuts of $1.5B from Va. budget

Governor says reductions now will help set the stage for stronger recovery later

By Garren Shipley - gshipley@nvdaily.com

Virginia's financial picture has continued to deteriorate, requiring another $1.5 billion to be cut from the fiscal 2010 budget, Democratic Gov. Timothy M. Kaine said Wednesday.

Tax collections have slowed markedly, and the state will likely see a decline in total tax collections for only the fourth time in four decades, Kaine said, speaking to the General Assembly's joint monetary committees.

Administration budget writers earlier this year told legislators to anticipate revenue growth of 4.4 percent. Wednesday's revised forecast is for a revenue decline of 1.6 percent.

There have been some signs of an economic recovery, "but for now, we should continue to make tough decisions about expenses and revenues, in the hopes that our work in this regard will set the stage for a stronger recovery," Kaine said.

"By making tough choices now, the additional dollars that Virginia will see in a recovery can be directed to their highest and best use at the moment -- instead of just being spent to do the same old things in the same old ways," Kaine said.

Cuts, including funding to schools and local governments, are expected in early September.

Total revenue also dropped during recessions in 1991 and 2002, but nowhere near the fall in 2009.

"I stood before you in August 2007 and told you that Virginia's housing market was in decline and that we needed to take steps to reduce spending. Many people didn't agree with my warning about our economic situation then," Kaine said.

No one anticipated the severity of the economic downturn to come, though, he added.

Kaine is engaging in more than a little revisionist history, according to Sen. Mark Obenshain, R-Harrisonburg.

"Amazing," Obenshain wrote in a Facebook note during a recess in Wednesday's special session. "This is the same governor who has not been able to hit the broad side of a barn with his budget [and] revenue projections."

Because they're not allowed to serve consecutive four-year terms, Virginia governors only get one biennial budget that is completely under their control.

"Virginia's 2008-2010 budget -- Kaine's only budget -- has been plagued by indefensible revenue projections from day one, when Kaine's then-Secretary of Finance, Jody Wagner, predicted revenue projection in excess of 6 percent per annum," Obenshain wrote.

Wagner, now the Democratic nominee for lieutenant governor, has defended her team's economic forecasts, arguing that the economic downturn was more severe than anyone could have anticipated.

Indeed, economic conditions weren't nearly as rosy as the projections suggested.

"Shortly before we reconvened in January, with half of [fiscal year] 2009 already behind us, the Kaine administration predicted that the year's total revenue decline would be 4.8 percent," Obenshain said.

Kaine's team revised the numbers down again later, but told legislators that "our tax revenues would turn on a dime and would begin to grow at a 4.5 percent rate beginning in July. It has not," Obenshain said.

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