THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, December 8, 1995 TAG: 9512080554
SECTION: LOCAL PAGE: B3 EDITION: FINAL
SOURCE: BY WARREN FISKE, STAFF WRITER
DATELINE: HERNDON LENGTH: Medium: 64 lines
Several Republican state senators acknowledged Thursday that Virginia may not have enough money during the next two years to make good on GOP promises to lower taxes and return lottery profits to localities.
``We're in rough shape,'' said Sen. John Chichester, R-Fredericksburg. ``There's not going to be a tax cut and there's not going to be a returning of lottery profits.''
Added Sen. Walter Stosch, R-Henrico: ``These are good ideas but frankly, I'm not optimistic the time is right for them, given our budget constraints.''
The lawmakers made their comments after an informal meeting in which state economists told the state senators that Virginia faces a budget shortfall over the next two years - possibly as great as $450 million.
The bleak outlook essentially agreed with another financial forecast released last week by the Allen administration.
Gov. George F. Allen and many fellow Republicans were singing a happier tune in the midst of heated legislative races when they were promising to cut state income taxes and phase in a five-year plan to return $314 million in annual lottery profits to local governments.
The sudden turnaround spurred several Democrats who lost their Senate seats this fall to suggest that Allen knew throughout the campaign that his plans would be infeasible.
``How could he not have known?'' grumbled Sen. Frank Nolen, D-Waynesboro, who was defeated seeking a fifth term.
About 30 current members of the Senate and half a dozen newly elected members gathered at a Herndon hotel to start a two-day conference on the state budget.
John M. Bennett, clerk of the Senate Finance Committee, projected that state revenues would increase by about $1 billion over the next two years due to economic growth. But the gain, he added, will be outstepped by new expenses that could be as high as $1.5 billion over the next biennium.
Among the demands facing the state are: $240 million in new Medicaid costs, up to $195 million for new prison construction and staffing, $339 million to meet state-imposed education standards for public schools and up to $234 million to cover a cost-of-living increase for state government pensioners.
Bennett said the revenue forecast was based on conservative assumptions about the economy, and that the actual amount of shortfall may be less than $450 million. ``But the bottom line is that you're still going to be forced to cut,'' he said.
Senators were told that the state could face additional duress if Congress, as expected, cuts grants to states in order to balance the federal budget in seven years.
Allen is to present a budget to the General Assembly Dec. 18. The governor won't say if he still seeks to reduce taxes and return lottery profits, although many Republicans believe the administration is backing away from the proposals.
Some Democrats expressed concern that the bleak outlook may make it difficult for them to honor their $200 million campaign pledge to reduce elementary school class sizes. ``We're going to have to fight for it,'' said Lt. Gov. Donald S. Beyer Jr. by CNB