UPDATE: Details unclear in Kaine's $1.5 billion budget cuts

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Read Kaine’s full remarks on budget shortfall

Gov. Timothy M. Kaine's address to the General Assembly's money committees yesterday was light on details, such as how many state workers could lose jobs and which governmental services will see the greatest cuts.

Kaine used broad strokes to paint a bleak fiscal landscape -- a $1.2 billion projected revenue shortfall in the fiscal year that began July 1. Coupled with a leftover shortfall from fiscal 2009 of roughly $299 million, Kaine and lawmakers must slash state spending by about $1.5 billion.

"While we have made many tough decisions, we are not done," the governor said, reflecting on about $5.6 billions in cuts to state spending during the past two years.

"We will make these decisions carefully, but they will be painful to those who rely on public services in this most challenging time."

Kaine said he would close this gap, "just as we have in past rounds," by trimming expenses, reallocating unspent balances, taking money from the state's "rainy-day fund," and through focused use of federal stimulus dollars.

Under the Virginia Constitution, the governor can cut up to 15 percent of the state's spending when the legislature is not in session. Kaine has received revised budgets from all state agencies with proposed cuts of 5 percent, 10 percent and 15 percent.

Administration officials expect to announce the governor's cuts shortly after Labor Day.

In response to a reporter's question about education, Kaine said that no part of the budget would be exempt from reductions. Kaine did suggest he might take "a lighter hand" in making cuts to K-12 education than with other areas.

Members of the Virginia Education Association rallied outside the Capitol yesterday to urge the governor to spare public education.

"When you're talking those kinds of numbers, there's nothing that's going to escape," said Senate Majority Leader Richard L. Saslaw, D-Fairfax.

"How much deeper can you go? We've not only eliminated the fat, we're well into the muscle."

The revenue projections Kaine used to estimate the shortfall reflect the most pessimistic forecasts presented to him at recent meetings of economic advisers. Experts had laid out scenarios suggesting revenues for fiscal 2010 could fall short $732 million to $1.5 billion.

After the speech at the General Assembly Building, the governor noted there are positive indications that the 21-month recession is nearing an end. He cited increases in home sales and, in Virginia, a drop in the unemployment rate from 7.3 to 6.9 percent, compared with the national rate of 9.7 percent.

He noted that Virginia, unlike a number of states, has maintained its AAA bond rating and has not been forced to raise taxes or delay payments to vendors, tax-refund checks to residents or paychecks to its 100,000 employees.

But Del. Robert H. Brink, D-Arlington, said comparisons don't change the fact that Virginia faces difficult choices.

"When you're talking about not giving away IOUs like California and not selling the state Capitol, like Arizona, you really don't have much to talk about," he said.

Somber lawmakers on both sides said taking the low-revenue approach was the right course of action.

"He did the right thing in taking the worst-case scenario," Saslaw said. "You've just got to hope that maybe it turns around a tad quicker than what he's planning."

Speaker of the House William J. Howell, R-Stafford, said he is pleased that Kaine "has finally taken a realistic view on the projected budgetary shortfall" that lawmakers will face in next year's legislative session.

"I still think it may be not be the end of the cuts, but I do appreciate the governor doing what he can," said House Majority Leader H. Morgan Griffith, R-Salem.

"I would like to have seen a few more specifics today, but it's a tough job. I understand it's hard to make the cuts," added Griffith, who said he hopes Kaine consults with key lawmakers before making the reductions.

Sen. Thomas K. Norment Jr., R-James City, said he had hoped the governor would have been more specific on what he proposes to cut.

"There's a lot of anxiety out there," he said. "Especially among state employees."