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Posted at 10:30 AM ET, 12/17/2010

McDonnell raises Va. forecast by $283M, proposes $191M in cuts

By Anita Kumar
Anita Kumar

Virginia Gov. Robert F. McDonnell said Friday he will revise the state's revenue forecast upward by $283 million -- $134 million in fiscal year 2011 and $149 million in fiscal year 2012 -- because he expects Virginia to collect more tax revenue over the next two years.

"The conservative upward projections reflect stronger than planned growth in income tax withholding and sales tax revenues, good indicators of an uptick in economic activity,'' he said.

In his annual speech to the General Assembly's financial committees Friday, McDonnell asked legislators to approve $191 million in cuts and savings to the state budget to offset the costs for his top priorities of transportation, economic development and higher education.

Some of the cuts and savings include $92 million in savings in K-12 education, $5.4 million in savings at the Lottery, $5 million in cuts for programs to help at-risk youth and families through the Comprehensives Services Act and $32,000 for the State Fair. He also proposes millions in savings at agencies due to efficiences.

McDonnell announced $35 million of the cuts Wednesday, including ending state taxpayer funding of public broadcasting in Virginia. He proposes cutting $2 million in fiscal 2012 and $2 million in fiscal 2013.

He also proposed saving money by, among other things: eliminating four vacant positions in the Department of Forestry ($420,000); continuing agency-wide restrictions in the Department of Health on discretionary spending, travel and hiring ($1.4 million); expanding Medicaid managed-care programs ($3.5 million); and administrative savings at the Department of Social Services ($1 million).

In recent weeks, McDonnell had proposed spending $150 million on roads and bridges, $54 million for economic development, and $58 million in colleges and universities.

The economic development money include $25 million for a research and technology innovation fund and smaller amounts for small businesses, tourism, the film industry and tax credits.

The bulk of the higher education funds would be spent on working toward his goal of awarding 100,000 new associate and bachelor's degrees over the next 15 years through financial aid, grants to virtual schools, and other programs.

State officials have yet to decided what the transportation money will be spent on, but plan to unveil a list of projects next month.

McDonnell also wants to allocate nearly an additional $30 million for behavioral health and developmental services and $39 million for the environment, including nearly $33 million to help clean up the Chesapeake Bay.

Legislators adopted a two-year, $78 billion budget in the spring that cut millions from education, health care and public safety -- curtailing state spending more aggressively than any in generations. But by June, Virginia ended the fiscal year with a surplus of about $404 million.

The General Assembly will consider changes to the state's two-year budget when it returns for its annual legislative session Jan. 12.

By Anita Kumar  | December 17, 2010; 10:30 AM ET
Categories:  Anita Kumar, General Assembly 2011, House of Delegates, Robert F. McDonnell, State Senate  | Tags:  Bob McDonnell, Robert F. McDonnell, Virginia  
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Next: O'Malley won't join McDonnell in calling for quick review of federal health law


I'm very happy with McDonnel's priorities. For too long Virginia has jumped on the bandwagon of "I want, I want it now". When I was a kid our great Commonwealth had a surplus but years of Democrats in office flushed it down the tubes. We need to build it again so that our "rainy day" fund helps ease years of economic unrest or unexpected disaster without causing devestating results.

Posted by: missarielle | December 20, 2010 2:26 PM | Report abuse

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