State lawmakers have found ways to overcome a $1 billion shortfall in spending money for the next fiscal year. Sandy Hausman reports that their plans will be relatively painless for taxpayers, but could leave Virginia in the lurch if we have another recession.
The Virginia Senate and House have come up with different plans for addressing the budget gap, but they generally agree on three ways to cover state expenses. First, they suggest getting more than half the money from a rainy day fund. At the Commonwealth Institute for Fiscal Analysis, director Michael Cassidy says that was an easy political decision.
"If lawmakers chose not to use the state’s rainy day fund, instead they chose to cut $567 million from state services, that would really be a huge challenge, especially to areas that we know are critically important like education, health care and public safety."
But, he warns, the rainy day fund will fall to about a quarter of a billion dollars – down from $1.2 billion before the last recession. Should the economy take another downturn, Virginia could be in serious financial trouble.
Lawmakers also plan to delay pay raises for most state employees and will institute a series of programs to save or generate additional dollars.
"Things like providing a tax amnesty program in order to draw in more tax revenue."
Cassidy says the state is facing these shortfalls so often that lawmakers should consider a major overhaul of our outdated tax code.