The freshly minted Governor of Virginia is looking to siphon money from state reserves and lottery funds to make up for decreasing revenues. Terry McAuliffe, a Democrat, said, “In order to remain prudent, we must adjust our revenue estimates downward, which will reduce future risks.”
The dismal outlook for the state’s economy is predicated on automatic spending cuts during sequestration and a congressional budget fight at the end of 2013. Virginia progressed quite well during the “great recession” because of its proximity to the nation’s capital. The state enjoyed steady employment with its large pool of active-duty military, civilian Defense Department employees and contractors, and tens of thousands of federal workers.
To offset declines in revenue streams, McAuliffe plans to use approximately $15.5 million in lottery revenues to underwrite public school expenditures. Moreover, he plans to deposit balances from a former state agency and unclaimed funds from other dormant programs into the general fund.
On Wednesday, Governor McAuliffe reported that total revenue fell 5.9 percent in January, with declines in all major tax sources, except corporate income tax. Through January, the fiscal year-to-date revenues are down 0.5 percent, compared with forecasts for a 1.7 percent growth.
In other economic news, Virginia Republicans in a House committee were able to defeat a minimum wage bill that would have raised the lowest hourly pay in the state by two dollars over the next two years, to $9.25. Republicans argued that it would have been a job killer and would have added to the state’s already grim economic forecast.
Nicole Riley, the state director of the National Federation of Independent Business, said in January, “The fact of the matter is that raising minimum wage inevitably hurts young people, first-time workers and those with no or limited skills. However well intentioned, it hurts the people it’s supposed to help.”