White House Stimulus Bill Projections by state
Virginia's budget continues to bleed cash, giving up another $821 million, but the loss will be offset by more than $1 billion from President Barack Obama's stimulus package.
While warning of more economic uncertainty and continuing pressure to control public spending, Gov. Timothy M. Kaine is telling the General Assembly the federal handout means additional reductions may be unnecessary to balance the recession-racked $77 billion two-year budget.
"What this means near term is we don't have to make any more cuts," Kaine said after releasing a revised forecast yesterday showing steep reductions in tax collections for the remainder of the spending cycle that ends June 30, 2010.
The continuing retreat in salesand income-tax revenues will push Virginia's revenue shortfall to at least $3.7 billion, before factoring in the stimulus cash.
With federal funds heading to Richmond, Kaine and lawmakers are expected to begin rewriting revisions to the budget, the defining characteristic of which remains austerity, including layoffs and a nearly $500 million drawdown from the rainy-day fund.
Though Virginia's total take under the Obama economic kick-start plan still is uncertain, the state is anticipating more than $800 million for Medicaid, which provides health care for the aged and poor.
That burst of funds from Washington frees the state from enacting even deeper money-saving restrictions in Medicaid because of the defeat of Kaine's $154 million proposal to double the cigarette tax from 30 cents per pack to 60 cents.
Virginia is anticipating an additional $216 million -- federal cash that, Kaine said, he and the legislature generally can spend as they see fit.
Legislators are welcoming the economic-stimulus dollars, though the politicians signaled they could have sharp differences over how the money -- a down payment toward a fix that could exceed $4 billion -- should be spent. The Obama administration still is fashioning rules on how the money is used.
"The question is, now how do you appropriate the dollars that are before us?" said Sen. William C. Wampler Jr. of Bristol, ranking Republican on the Senate Finance Committee.
The committee's chairman, Sen. Charles J. Colgan, D-Prince William, urged caution. With the economy still in decline, "We have to make this money last for a long time," he said. "So some of it should go to the bank."
In the House Appropriations Committee, the vice chairman, Del. Phillip A. Hamilton, R-Newport News, expressed doubts the federal aid can buoy the economy. Rather, Hamilton said, it "is just backfilling" existing holes in the budget.
Kaine and lawmakers in both parties said the assembly should be able to complete most work on the budget in time for the legislature's scheduled Feb. 28 adjournment.
However, officials said it is possible -- particularly with the Obama administration still working out details of aid for education and transportation -- that the assembly may have to extend its spring session in April to finalize the budget.
Contact Jeff E. Schapiro at (804) 649-6814 or jschapiro@timesdispatch.com.
Staff writer Tyler Whitley contributed to this report.
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