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Date published: 7/18/2008
FROM STAFF AND WIRE REPORTS
RICHMOND-- Staggered by a slumping economy, Gov. Tim Kaine's administration yesterday ordered state agencies to curb hiring, travel and purchases, and warned that budget cuts are on the way.In a letter to legislative budget writers, the administration announced that the state barely finished ahead of expenses for the budget year that ended June 30. Finance Secretary Jody Wagner said Kaine would propose "significant downward adjustments" to the new 2009 budget when he addresses the House and Senate money committees next month. It was the strongest warning yet from the state that soaring prices for fuel and food, rising unemployment, continued distress in the housing market and slower income growth will force cuts across state government. At the same time, Kaine's chief of staff, Wayne Turnage, sent a directive yesterday to state agency directors to immediately curb discretionary spending. He ordered that all new hiring be approved directly by the governor's Cabinet secretaries except for critical jobs in public safety, health, natural resources and higher education. Budget-writing lawmakers from both parties said the revenue figures were not unexpected. "We revised the revenues downward as late as February, with the clear understanding that this economy was on a very, very treacherous bumpy road," said Sen. Edd Houck, D-Spotsylvania. "So I think what today signifies is that that road is only becoming more treacherous." "This economy is getting worse, and the commonwealth is just like businesses, families, individuals, we're all feeling the effect." Del. Phil Hamilton, R-Newport News, said lawmakers were concerned about the revenue forecasts earlier this year, and will be prepared to make the tough decisions about potential budget cuts for the next budget year when they return in January. House Speaker Bill Howell, R-Stafford, said the revenue figures bolster his contention that the economy is too weak to support tax increases pushed by Democrats in the recent transportation session. Kaine was in Europe on a trade mission and not available for comment. Revenues barely met expenses in 2008 even though the budget had already been downscaled as a result of declining general fund tax collections. Out of a total general fund budget of $17.2 billion for the 12 months that ended June 30, the state finished with just $5.4 million to spare--a cushion of just 0.03 of 1 percent. --Staff Writer Chelyen Davis contributed to this Associated Press report.
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