THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Friday, November 18, 1994 TAG: 9411180472
SECTION: LOCAL PAGE: B3 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: RICHMOND LENGTH: Medium: 53 lines
The state may face a $350 million budget gap next year, largely because of a tax settlement for federal retirees and increased prison spending this year, legislators were told Thursday.
Another reason for the potential shortfall is that a new state effort to collect delinquent taxes is bringing in much less money than expected, Finance Secretary Paul W. Timmreck told the Senate Finance Committee.
Committee Chairman Hunter B. Andrews, D-Hampton, estimated the gap could be about $350 million if revenues don't improve before the General Assembly meets in January. The state's budget for 1994-96 is $32 billion.
``It is a substantial problem that we have to face brought about by the actions of the two special sessions,'' Andrews said.
In July, the Democratic-controlled assembly approved a $340 million settlement with federal retirees who had been taxed illegally. The state must make an initial $60 million payment next March, with the rest of the payments spread over four years.
In September, the lawmakers ended parole and lengthened sentences for violent offenders. Increased prison costs for that plan will be about $130 million next year.
Republican Gov. George Allen sought both special sessions to accomplish two of his top campaign priorities.
Timmreck played down the problems the governor will face in drafting his budget proposal next month.
``We do indeed face a very challenging situation,'' said Timmreck, who has worked on state budgets for 15 years. ``We always face a very challenging situation.''
He said Allen was responding to voters' wishes in his spending priorities.
The administration had been counting on revenues from a new program to catch tax cheats, but Timmreck said the effort is falling short of its goal. The result is a $121 million shortfall in revenues for the 1994-96 budget.
Although the state upgraded its computer equipment and hired 101 more auditors last year, ``we are collecting less money today with more people than we've had before,'' Timmreck said.
Allen has eliminated more than 400 state jobs and wants to cut at least 16,000 positions before his term ends in 1998. ILLUSTRATION: Photo
State Sen. Hunter B. Andrews, D-Hampton, chairman of the Senate
Finance Committee, called the budget gap ``a substantial problem.''
by CNB