Governor Terry McAuliffe addressed the Senate Finance and House Appropriations Committees regarding the budget revenue shortfall on Friday. Virginia’s budget shortfall is about $1.5 billion. The shortfall is the result of a lagging economy that generated less tax revenue than expected. Our economy is replacing high paying full time jobs with lower paying part time jobs.
Virginia’s economic outlook is mixed. While unemployment is falling, the underlying indicators paint a bleaker picture.
Since April, Virginia’s economy has lost more than 4,000 jobs, despite a declining or steady unemployment rate. Average weekly wages are also down by more than one percent statewide and nearly two percent in Northern Virginia from this time last year.
Virginia is losing jobs in the manufacturing and professional and business sectors, but adding jobs in the administrative sectors. This means people are trading higher paying jobs for lower paying jobs. The number of involuntary part-time employees is up by more than 20,000 since the start of 2015, and the number of average weekly hours worked is down from this time last year.
Unlike Washington, Virginia’s constitution requires a balanced budget. We will not be able to borrow or print money to cover the shortfall. The official revenue re-forecast is the first step. The governor will present his amendments to the budget in December, which the General Assembly will consider. When the General Assembly returns to Richmond in January, we will balance the budget. We will seek to preserve K-12 funding, protect our investments in higher-education, and maintain our commitment to fully-funding the state pension system.
This is not the first time Virginia has faced a budget shortfall. Since 2008, the Republican-led General Assembly has closed three budget shortfalls totaling $8.6 billion without raising taxes. We have a proven track record of conservative budgeting.
Budget shortfalls are never a good thing, but fortunately they are the exception not the norm in Richmond. Over the last 15 years, Virginia has seen four budget shortfalls. But each time, we have met our constitutional obligation to balance the budget. Virginia has had surpluses in five of the last seven years totaling more than $1.5 billion. These surpluses have allowed us to build up the rainy day fund to deal with shortfalls. Virginia also has the best bond rating of any state in the country. All three credit agencies rate Virginia as a Triple-A investment, and the Commonwealth is the only state that has never been downgraded.
The governor is too optimistic. He has spent enough time talking about all the businesses he has brought to the state. What he really has to look at the new economy. There are plenty of part time jobs available and one of the problems is that Obamacare has caused this. To conclude his speaking on Friday with wanting to expand Medicaid was not the answer either, and the state and its constituents have made it clear, that is not want is wanted or needed.
I believe the state is in an improved position structurally but I’m worried about the economy. We have done the best things possible to set us in a good position. But we need to see more progress in those higher paying jobs. Unemployment has gone down but collections have not kept pace. I will continue to work on a solution with my colleagues and I am awaiting the Governor’s comprehensive report in December.
If you have any concerns, questions, comments or issues that I or my Aide, Jenna, can help you with, please contact us at (434) 821-5929 or email at [email protected]. You can also keep up with me on my Facebook page at www.facebook.com/DelegateMattFariss.