Central Virginia- Delegate Christopher K. Peace (R-Mechanicsville) joined members of the House Appropriations and Finance committees along with Virginia House of Delegates Appropriations Committee Chairman Lacey E. Putney (I-Bedford) as he convened the two-day 7th Annual House Appropriations Committee Retreat at the General Assembly Building at the State Capitol.  At the retreat, state lawmakers explore a variety of emerging issues, many of which will be addressed during the upcoming 2010 General Assembly Session.

 

The retreat's focus is primarily on the state of the economy and its impact on Virginia's finances.  Delegates and staff, joined by outside experts including the President of the Federal Reserve Bank of Richmond, also will discuss the budgetary outlook for the Commonwealth, along with the current conditions of the housing sector and consumer spending; state debt management practices; a comparison of the Virginia Retirement System benefits to other states and what other states are doing in terms of benefit modifications; and rounding out the agenda - federal health care reform and what it may mean for Virginia.

 

Previous retreats have provided value to legislators in preparing the Committees for the upcoming General Assembly Session.  The retreat allows legislators the opportunity to explore a variety of emerging issues, many of which they will be asked to deal with during the upcoming Session.

 

Over the next two days committee members will engage in several panel discussions in which the Committee staff, along with outside experts, will discuss a variety of issues including the economic and budgetary outlook of the Commonwealth, along with the current conditions of the housing sector and consumer spending; State Debt management practices; a comparison of the Virginia Retirement System benefits to other states and what other states are doing in terms of benefit modifications; and, they will finish off the retreat with a discussion of health care reform and what it means to Virginia.

 

Last winter the lawmakers remained concerned with the fiscal 2010 revenue estimates, which were revised downward by the Governor during the mid-session reforecast in February from 6.7% to 4.4%.  Sensing that the economy would remain sluggish and employment losses would continue, the General Assembly prudently set aside about $150.0 million or 1% revenue growth.

 

As it has turned out, that set aside was clearly not enough of a buffer.  Virginia finished fiscal year 2009 $300.0 million less than forecasted and fiscal 2010 has been revised downward to negative 1.6%.  Since introduction of the 2008-10 budget in December 2007, lawmakers have dealt with a cumulative revenue shortfall of approximately $6.3 billion.  While the U.S. economy technically has emerged from the recent Recession, it would appear that the recovery will be long, gradual, and uneven.  Consumer confidence remains weak and while job loss is abating, the fact remains that consumers are still worried about more job losses over the next 12 months.  Virginia typically out-performs the U.S. economy, but is not immune from the nation's problems.

 

Legislators and attendees learned through the day's presentations that Virginia's economy is still in transition and that payroll withholding, which represents 60 percent of the state's general fund revenues, is currently at negative growth.  It appears that for the first time ever payroll withholding growth may actually be less than the previous year, or at the very least, flat.

 

Based on year-to-date revenue collections, it would appear that further revisions to Virginia's fiscal year 2010 revenue forecast will be warranted and the Commonwealth will see those revisions in the Governor's budget amendments on December. 

 

Although the Governor has reduced spending; in order to close out the budget for the current fiscal year additional spending reductions will be necessary.  Lawmakers will need to continue to make adjustments to the current year budget and brace for a sizeable budget gap in the 2010-12 biennium.  It will fall on the General Assembly to continue to make significant reductions that are ongoing and structural.

 

"I remain committed to making difficult choices.  Many of these choices may not be popular, but, will be necessary if we are to balance our budget within the constraints of our available revenue stream," stated Delegate Peace. 

 

Members of the House money committees look forward to working with Governor Kaine in the closing months of his administration as he prepares his final budget and to working with Governor-elect McDonnell and all of the Members of the General Assembly in developing long-term structural reforms in state spending without a tax increase, which would just further burden the consumers during this economic downturn.

 

For more information about the complete agenda and copies of all presentations, please visit  http://hac.state.va.us/.