McAuliffe expected to announce $1.5 billion shortfall

McAuliffe expected to announce $1.5 billion shortfall

RICHMOND, VA (WWBT) - In what could be one of the largest shortfalls in Virginia's history, Gov. Terry McAuliffe is expected to announce a budget gap around $1.5 billion Friday morning.

McAuliffe discussed the situation Thursday, after initial reports began to disclose preliminary numbers of a potential downward economic forecast.

The shortfall in Virginia's $105 billion budget lasting from July 2016 to June 2018 is largely attributed to weaker than expected revenues from withholding income taxes and sales taxes. McAuliffe also blamed the financial situation on changes to the economic landscape nation-wide.

"The issue we're having to deal with is we see a lot of older folks retiring with high wage jobs," McAuliffe said in an interview with WRVA Radio. "They're being replaced with a lot of part-time or lower paying jobs."

The governor is set to disclose exact numbers and potential strategies to balance the budget in an address to Virginia's joint House and Senate Money Committees Friday at 8 a.m.

The situation further diminishes the possibility of raises for state employees in the foreseeable future.

"We all want it, Democrats and Republicans," McAuliffe said. "These are such hard-working folks, and in legislation sent to me, there was a trigger, and if we didn't hit a number, it was automatically taken off the table."

In 2014, Virginia anticipated a $2.4 billion budget gap, but revenue projections turned out to be far too pessimistic. Cuts and adjustments to the budget then resulted in a $550 million surplus.

Forecasts now may not turn out to be as dire in the coming months, but the state is required to balance the budget.

"When we talk about going forward, we are taking a very conservative approach," McAuliffe said. "I would rather take a conservative approach than have to spend money in the end. This is what happened two years ago. We ended up having the biggest surplus in Virginia history."

The surplus was the largest in raw dollars, but not inflation-adjusted figures.

"This is not a political issue," McAuliffe said. "We have a Republican budget, this is the budget they sent to me and we jointly agreed on. So we're trying to do the best we can."

Copyright 2016 WWBT NBC12. All rights reserved