WASHINGTON Feb 13 Virginia should tap its
reserves and lottery funds, as well as use unspent money from
various accounts to make up for falling revenues, newly
installed Governor Terry McAuliffe said on Wednesday.
The grim outlook for a state that has thrived fiscally in
recent years comes days before the legislature begins finalizing
a $96 billion proposed budget for the next two years. Budget
committees in both chambers are expected to release their
spending plans for Virginia on Sunday.
In a news release posted late Wednesday, McAuliffe, a
Democrat who took office last month, said total revenue fell 5.9
percent in January, with declines in all major tax sources
except corporate income tax. Through January, the fiscal
year-to-date revenues are down 0.5 percent, compared with
forecasts for 1.7 percent growth.
McAuliffe said January is a significant month for both
individual estimated tax payments and sales taxes collected from
December purchases, which makes the report a harbinger of future
"In order to remain prudent, we must adjust our revenue
estimates downward, which will reduce future risks," he said,
adding that he was recommending lowering the forecasts by $125
million for fiscal 2014, ending on June 30, and by $15 million
for fiscal 2015, starting July 1.
McAuliffe said that in a meeting with state budget leaders
he suggested scrapping a $59.9 million payment to the state's
revenue stabilization fund because the deposit was contingent on
revenue growth in fiscal 2014.
On the other hand, lottery revenues will likely surpass
forecasts by $15.5 million, which can be used to cover public
school costs in the state's budget, he said. In the same vein
there are balances from a former state agency that can be
deposited into the general fund, along with unclaimed funds for
When he left office in December, former Governor Robert
McDonnell set aside $51 million, the state's largest
unappropriated balance since 1991, to provide spending
flexibility. McAuliffe said the state should draw $40 million
from that balance.
Virginia steamed through the 2007-09 recession with few
economic problems because of its proximity to the nation's
capital. Along with being home to a multitude of federal workers
and contractors, the state is the site of many military
Automatic spending cuts known as sequestration and a
congressional budget fight at the end of 2013 caused the local
economy to soften, and Virginia's budget is now hurting. Last
year, revenues fell in February, March, August, and October.
Nonetheless, the state enjoys a triple-A rating from Moody's
Investors Service, which gave it a stable outlook in July.