RICHMOND — The state’s budget shortfall may be easing a bit as the economy shows signs of improvement, Gov. Terry McAuliffe said Monday after meeting with a task force of legislators and business leaders.
“I’m cautiously optimistic,” McAuliffe (D) said after meeting with the Governor’s Advisory Council on Revenue Estimates. “We’re making progress on the budget. We’re up for the year from where we thought we’d be.”
The group advises governors on revenue projections, and meets in private so the business executives can share internal metrics and expectations about hiring and other strategies. McAuliffe said attendees included officials from telecommunications, defense, housing, health care and other industries.
Payroll withholding is up 4.3 percent on the year, McAuliffe said, reflecting stronger job growth. Year-to-date state income is higher than budgeted, he said. “We clearly don’t have to cut as much as we thought it would be,” he said.
The state has a shortfall of about $861 million for 2016 and 2017, and a projected gap of about $654 million for 2018. McAuliffe has already announced a round of state budget cuts. Most of the shortfall is because payroll and sales tax receipts have been lower than expected, as newly created jobs have generally paid less than those that have been lost.
McAuliffe declined to talk Monday about how the improved revenue might affect cuts and programs, saying he will unveil his proposed budget on Dec. 16.
Republican lawmakers were similarly upbeat but hesitant to speculate about how the budget might play out. “We work on cash in the bank,” said Del. S. Chris Jones (R-Suffolk), chairman of the House Appropriations Committee. “The first four months [of the fiscal year] have been good. November has been a good month.”
Not all signs are rosy, however. McAuliffe conceded that sales tax revenue remains down. “There are some uncertainties,” the governor said, such as a new presidential administration taking office and the potential for massive federal spending cuts under the mechanism known as “sequestration.”
McAuliffe, who is close friends with Hillary Clinton and was with her on election night, said he is glad that President-elect Donald Trump has talked of increasing defense spending, which would bolster one of the state’s biggest industries. And he said he hopes Trump follows through on promises to spend more on infrastructure.
“I’ve known Donald Trump for 20 years,” McAuliffe said, adding that he sent Trump a letter the morning after the election. He hasn’t heard back yet, although he said he has been in contact with others in the incoming administration.
Asked about Trump’s claims of massive voter fraud in Virginia, McAuliffe bent forward in a hearty laugh, then straightened up. “I apologize,” he said. “I mean, come on. We do not have one instance of that happening.”
He speculated that Trump was referring to McAuliffe’s efforts to restore voting rights to convicted felons, but noted that only about 20,000 new felons were able to vote while Clinton carried Virginia by some 200,000 votes.
State Sen. Emmett W. Hanger Jr. (R-Staunton), co-chair of the Senate Finance Committee, also expressed confidence in Virginia’s vote. “There are gonna be allegations,” he said, but “be sure you got something to back it up with.”