Governor Kaine Announces Revised Budget Revenue Forecast

February 12, 2008

Tuesday Governor Tim Kaine the revised revenue forecast for fiscal years 2008 through 2010, as well as a budget reduction plan designed to deal with the shortfall in state revenue brought on by the national downturn in the economy.

The shortfall for the remainder of fiscal year 2008 and fiscal years 2009 and 2010 totals nearly $1.4 billion.

The Governor’s proposed strategy to meet the shortfall includes increased utilization of the Revenue Stabilization Fund; targeted reductions to the Governor’s initiatives and other programs; percentage cuts to executive agencies; and bonding of capital projects.

While the plan does include some targeted reductions in K-12 education and percentage cuts to some local aid, it does not reduce funding for the constitutionally required Standards of Quality program in K-12 education. The Governor’s plan does not include tax increases.

The revenue shortfall for the remainder of this fiscal year is projected to be $339 million. It is expected to be $520 million in fiscal 2009 and $532 million in fiscal 2010.

A shortfall of nearly $1.4 billion over the remainder of fiscal year 2008 and the 2009-2010 biennium.

“My recommended revisions include an additional withdrawal from the Revenue Stabilization Fund, targeted reductions in spending, and percentage cuts to executive branch agencies,” said Kaine.

Governor Kaine’s plan to address the shortfall in fiscal year 2008 includes utilization of an additional $162 million from the Revenue Stabilization Fund, as well as bonding for existing capital projects, and a mixture of targeted and percentage cuts to executive agencies.

This plan brings the total proposed withdrawal from the Revenue Stabilization Fund to $423.5 million. The withdrawal will leave the account balance at about $800 million.

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