Expenses outpace state revenues; gap may reach $1.5 billion

[Derechos]

STAUNTON – Budget writers in the House of Delegates were told Tuesday that state revenue growth won’t be strong enough to meet expected cost increases in Medicaid, public education and pension obligations over the next two years, requiring more cuts in state spending.

The state could face a budget gap ranging from $885 million to $1.5 billion for the two-year period that begins July 1, according to a briefing provided to the House Appropriations Committee this afternoon.

At the committee’s retreat in Staunton, Chairman Lacey Putney, I-Bedford, said slow economic growth and uncertainty about federal spending cuts are clouding the state’s fiscal outlook as lawmakers prepare to develop a new state budget. Putney said lawmakers will have to consider targeted budget cuts and reducing or eliminating some programs to balance the state’s books for the upcoming biennium.

“Clearly the budget is about choices and while we all would like to do more, it is times like this that remind us that we have an obligation to get back to the basics of government – to prioritize what government should do, what programs work best and to identify programs that, while worthwhile, can no longer be afforded,” Putney said in his opening remarks at the retreat.

Putney said the House budget would be crafted “with an eye towards minimizing the impact to services for our most needy citizens.”

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Earlier this fall, McDonnell asked state executive branch agencies to submit budget reduction plans ranging from 2 percent to 6 percent. Administration officials said the agency plans would give McDonnell the flexibility to respond to federal funding cuts, decreases in revenue, and other economic factors.

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