McAuliffe (D), who has made expanding and diversifying the state’s economy his top priority, highlighted the upside of Virginia’s budget picture: The state took in a record $18.3 billion in revenue in the fiscal year that ended June 30.
But that number represented a meager 1.7 percent increase in general-fund revenue. The budget was based on a projected 3.2 percent increase.
“Although these results indicate that our economy continues to grow in the wake of the recession and sequestration, they also underscore the necessity of continuing our work to diversify the Virginia economy and create more and better paying jobs in the state,” McAuliffe said in a statement. “We are having significant success bringing more than 135,000 net new jobs to the Commonwealth that are helping to buoy our revenue collections, but we have more work to do to build the new Virginia economy that will result in greater opportunity and budgetary certainty in the future.”
Republicans used the numbers as an opportunity to skewer McAuliffe, who often touts the state’s low unemployment rate as proof that Virginia’s economy is “booming.”
“The shortfall proves that Virginia’s economy is not booming, despite several suggestions to the contrary,” House Majority Leader M. Kirkland Cox (R-Colonial Heights) said in a statement. “While the unemployment rate might make for a good press release, the truth is Virginia’s economic outlook is worrisome. The shortfall reveals underlying economic trends that we must be cognizant of as we move forward.”
McAuliffe stressed that he has taken steps to respond to lower revenue. He has tentatively scheduled meetings of the Joint Advisory Board of Economists on Friday and the Governor’s Advisory Council on Revenue Estimates on Aug. 15 to develop a new revenue forecast for the two-year budget cycle that began July 1.
“The economy is significantly weaker than top-line unemployment figures suggest, and the revenue shortfall is ample evidence of that,” House Speaker William J. Howell (R-Stafford) said in a statement. “In the long term, we must redouble our efforts to diversify and strengthen Virginia’s economy.”
In the short term, Howell said, House budget leaders would begin working with Finance Secretary Ric Brown to address the shortfall.