Virginia budget outlook dimmed by national economy

RICHMOND, VA (WWBT) – As Gov. Bob McDonnell and Virginia's budget writers near a December deadline for the next state budget proposal, the uncertain economy is prolonging existing concerns about Virginia's financial outlook.

In a Thursday morning e-mail to state employees, Chief of Staff Martin L. Kent wrote, "while we are pleased that state revenue has exceeded budget forecasts for both of the preceding fiscal years, our encouragement with regard to Virginia's financial outlook is tempered greatly by the uncertainty of the national economy."

Earlier this year, Kent asked state agencies to submit budget cut proposals of 2, 4, and 6 percent. Those proposals are now under consideration. "Reducing state spending to meet revenue forecasts and capturing efficiencies through reforms to the structure and operation of state government is both a financial necessity and an exercise in good government," Kent wrote.

In an interview Thursday morning, Secretary of Finance Ric Brown said several "big ticket" items get more expensive in the next budget cycle, including education, medicaid, and Virginia Retirement System spending. As a result, layoffs in the state workforce are included in several scenarios, but no final decisions have been made.

"We've got strategies that do involve layoffs," Brown said, adding, "Can't promise that there won't be, but we're trying to avoid that as much as possible."

A raise for state workers is unlikely, Brown said.

In his e-mail, Kent also referenced forthcoming action from the congressional Super Committee which could have a "disproportionate impact on Virginia" depending on which decisions are made by a November 23 deadline.

"I understand that this latest in a series of budget reductions is a cause for concern among some in state government, but I want to assure you that the Governor and I remain committed to listening to and addressing the needs of Virginia's state workforce," Kent wrote.

"It is a balancing act. I mean that's what the budget is," Brown said.

Gov. Bob McDonnell will unveil his budget proposal to state lawmakers on December 19th.

Copyright 2011 WWBT NBC12. All rights reserved.