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Va. budget shortfall means no raises for teachers, state employees

FILE - In this Jan. 13, 2016 file photo, Virginia Gov. Terry McAuliffe gestures as he delivers his State of the Commonwealth Address before a joint session of the 2016 Virginia Assembly at the Capitol in Richmond, Va. (AP Photo/Steve Helber, File)

WASHINGTON — Gov. Terry McAuliffe broke the bad news to the General Assembly’s money committees Friday morning in Richmond that the state’s budget is in the hole by about $1.5 billion over two years, and he warned state lawmakers to brace for “tough decisions ahead.”

The projected shortfall for the current two-year budget is $1.2 billion. But that’s in addition to shortfall of about $280 million carried over from the budget year that ended June 30.

The governor told state lawmakers the budget problems are being driven by lower income and sales tax revenue collections than what was anticipated.

As for plans for filling the gap, McAuliffe said he’s planning to take up $125 million that would have been used to give pay raises to teachers, state workers, deputies and other state-supported workers in 2017. Instead it will now go to pay down the budget shortfall.

Also the governor is hoping to use part of the state’s $630 million rainy day fund — officially known as the Revenue Stabilization Fund) — to help close the gap. But that will have to be approved by the general assembly during its upcoming session in January.

Sen. Tommy Norment, a Republican who represents Virginia’s third district and who co-chairs the Senate Finance Committee, said the money committees will start immediately to work to find cuts.

“This is not something that will be put off and procrastinated on,” he said.

Norment warned the rainy day fund is not going to be a panacea to continue fixing the budget shortfalls, especially if the U.S. Congress fails to come to a budget deal and another round of across-the-board federal budget cuts, known as sequestration, goes into effect.

If Virginia lawmakers keep drawing down money from the fund, it will be very difficult to replenish it in the future, Norment said. He said he sees 2018 as being more financially problematic.

The Associated Press contributed to this report.

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