In prepared remarks today to the money committees, Governor Tim Kaine announced that the revenue shortfalls for the 2007 FY totaled $234 million, with revenue growth only 4.9% as opposed to the anticipated 6.5%.
The housing sector, which started slowing last fiscal year, continues to struggle. As you know, most of our metropolitan areas are experiencing significantly slower housing sales and fewer new housing starts. As a result, recordation tax revenues are down 16.1 percent from last year. The cooling housing market also contributed to reduced sales tax and corporate income tax growth.
Slowing income growth, together with increased utilization of the land preservation tax credits contributed to the 21.6 percent increase in income tax refunds this year.
And it gets worse.
The revised fiscal year 2008 forecast, combined with the fiscal year 2007 shortfall of $234 million, leaves us with an aggregate revenue shortfall of $641 million to address immediately.
In order to address the issue, the Governor is looking to reduce the operating budgets of all agencies by five percent. All fiscal year 2008 non-state agency grants will also be reduced five percent. Moving ahead into the next biennial budget, the Governor will be looking at “programs to see if there are any that should be changed or discontinued,” as well as ways to increase efficiencies.
As I said earlier today, it ain’t gonna be pretty.
VIVIAN J. PAIGE | All Politics is Local 
Well, that’s better than $400 million….
I’ve never liked the easy management decision to do “accross the board” cuts as a method to balance operating budgets.
Give her a few months and complete budgetary access and I’d bet Vivian could find the necessary savings in bloated departments and maintain funding levels in critical areas.
I believe Finance Secretary Jody Wagner will do a fine job in figuring out what needs to be cut and what needs to be prioritized. But thanks for the vote of confidence 😉
Of course, if she needs some help, I’d be happy to pitch in 😀