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Do budget cuts equal recession? page 2
Chmura: Congress' ineptitude hurting economy

Date published: 1/6/2013


Gov. Bob McDonnell, who spoke after Chmura, also upbraided federal leaders for continually fighting until the last minute over major fiscal policies, saying Washington is in "a crisis in being able to govern effectively."

"This unprecedented uncertainty creates enormous hardships for you and for the private sector," he told the banking group.

It also creates uncertainties in state budgeting. When he proposed amendments to the state's two-year budget last month, McDonnell said he had tried to make the budget as flexible as possible, and put aside some cash reserves, because state leaders don't know what federal budget cuts might become reality.

Now that Congress has put off dealing with the sequestration cuts, state lawmakers might finish out their 45-day legislative session--which starts Wednesday--without a clear idea of how the state's budget could be affected by federal budget cuts.

McDonnell told reporters after his speech that he and his staff are still reading the fiscal cliff bill to see how it might affect the state, and that state leaders will have to wait and see what happens with the sequestration cuts.

"I thought we'd have clearer resolution" by now, he said.

McDonnell said he doesn't think the General Assembly will have to postpone its budget work to await the federal government, though. He pointed out that while the session is due to adjourn before March 1--the sequestration deadline--he will have until April to propose additional budget amendments if necessary.

"The best thing to do is just be conservative, be cautious" in budgeting, McDonnell said, adding that federal budget cuts are expected to happen, even if the sequestration cuts themselves are averted. "There is no outcome that is not going to be painful for Virginia."

Chelyen Davis: 540/368-5028
Email: cdavis@freelancestar.com

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