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Fiscal cliff talks at capitol

December 7, 2012 12:10 am

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U.S. Senator-elect, Timothy Kaine (D-Va.) gestures during a speech at the Capitol as part of AP Day at the capitol Thursday. He talked about the pending federal 'fiscal cliff.'

BY BOB LEWIS

BY BOB LEWIS

AP Political Writer

RICHMOND

--Even if Congress reaches a deficit-reduction agreement to avert the end-of-year "fiscal cliff," Gov. Bob McDonnell said Thursday his amended budget will include some of the $130 million in cuts state agency chiefs recommended a week ago.

McDonnell told journalists attending the 11th annual AP Day at the Capitol that he feels he has to include the cuts because less federal money is coming to Virginia no matter what happens. The suggested 4 percent cuts were submitted the governor by state agency directors.

The governor faces a Dec. 17 deadline for submitting midpoint revisions to the state's two-year, $80 billion budget to the General Assembly, a task he said he will finish Friday. Congress has until Jan. 1 to reach a deal to avert draconian military and discretionary spending cuts, also known as "sequestration."

"Look, there's not going to be a [federal deficit-reduction] deal by Friday, so I've got to go in with the best knowledge that I can," he told a gathering at the state Capitol of journalists from news organizations served by The Associated Press.

"I know that even under the best of circumstances--even if sequestration is eliminated and replaced in some way--and even if these (fiscal) cliff issues are resolved, there is going to be less money coming from the federal government for every state in the country, and Virginia will be disproportionately affected because we are disproportionate recipients right now," he said.

Per capita defense spending is highest in Virginia--home to the Pentagon and to numerous bases, including the world's largest U.S. Navy base in Norfolk. The state's economic engine, the Washington, D.C., suburbs, is rich in private companies that rely heavily on defense and government contracts and with households who work for them or directly for the U.S. government.

Democratic Sen.-elect Tim Kaine, who also addressed the event, said he believes Congress is likely to adopt a stopgap before the deadline "to avert some of the most potentially catastrophic effects of the defense and other cuts."

But there won't be a comprehensive deal, he predicted, unless it includes unprecedented spending reductions paired with some increases in taxes, something Republicans have vigorously opposed. Kaine is not sworn in until Jan. 3, after any automatic cuts take effect and federal income tax cuts enacted under former President George W. Bush expire.





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