Virginia Ceases Spending, Hiring

Gov. Timothy M. Kaine's chief of staff, in a memo, told agencies to stop all but essential hiring, cancel discretionary travel and halt equipment purchases. (By Steve Helber -- Associated Press)

Virginia's budget woes mirror those in other states. In Maryland, Gov. Martin O'Malley (D) is bracing for a $200 million shortfall in this year's budget, even though he and lawmakers approved a $1.4 billion tax increase last year.

"This is not unusual," Wagner said. "I think everybody from the Federal Reserve on down is a little disappointed in the way things are headed."

Kaine (D) is on trade mission in Europe and unavailable to comment.

Del. Phillip A. Hamilton (R-Newport News), vice chairman of the House Appropriations Committee, said lawmakers may withhold some of the money that had been promised to state agencies, local governments and nonprofit organizations.

"It is going to require tough decisions and require us to define core service responsibilities of state government," Hamilton said.

But Hamilton said he is "not surprised" that the Kaine administration may have to revise revenue projections downward.

During the fight over the budget in March, House and Senate Republicans warned that Kaine's revenue projections may have been too optimistic.

Although Kaine revised the projections in February, he said the state would have enough money to fund several of his priorities, including his effort to secure more money to open subsidized pre-kindergarten to more four-year-olds.

"We were raising issues about revenue forecasts early, but the governor still maintained the 6.8 percent forecast for fiscal year 2010," Hamilton said.

Wagner counters that some Republicans pushed to revise revenue projections upward to free up money for projects that interested them.