Like many other states, as Virginia's tax coffers continue to fall short of forecasted growth estimates, legislators face extraordinary pressures to produce a balanced budget.
According to Secretary of Finance Jody Wagner, there is an estimated $680 million "hole" in current budget estimates. Members of the House Appropriations and Senate Finance committees have the unenviable task of creating a sustainable budget under these pressures.
Why have budget estimates missed their mark?
The downturn in the housing sector is credited for the majority of lost revenues in the state budget. VAR has repeatedly warned legislators of the risks posed by continued reliance on unpredictable recordation tax revenues. These tax monies, paid by either the buyers or sellers of residential and commercial properties, are dramatically affected by the natural ebbs and flows of the real estate market.
Governor Timothy Kaine has recommended cuts to state agency budgets, cuts to non-state agency budget appropriations and drawing money from the state's rainy day fund. House and Senate Republicans have already expressed serious concerns about using the rainy day fund to balance the budget and will instead recommended further cuts to state spending.