It is always a rainy day for Gov Tim Kaine

Fuzzy math indeed from Gov Kaine. Appropriations Committee Chairman Vincent. F. Callahan Jr calls out Kaine on the error.

Statement of Chairman Vincent F. Callahan, Jr.
-- Regarding Errors by Kaine Administration relating to State Budget Shortfall --

RICHMOND, VA – Virginia House of Delegates Appropriations Committee Chairman Vincent. F. Callahan Jr. (R-Fairfax) today issued the following statement regarding the $295 million forecasting error – amounting to about half of the total $641 million anticipated budget shortfall – that has contributed to Governor Kaine suggesting a withdrawal from the Commonwealth’s Revenue Stabilization (or “Rainy Day”) Fund:
“In testimony before the General Assembly today, the characterizations by Governor Kaine and Administration officials about the origins of the current budget shortfall were disappointingly incomplete.
“The state is facing a cumulative revenue shortfall of approximately $641 million for Fiscal Years 2007 and 2008.  While we all would prefer to have continued surpluses, the fact is that 46% of the shortfall is not the result of an emerging economic crisis, but is directly attributable to the forecasting inaccuracies by the Administration.  
“Specifically, this portion of the state budget shortfall is being driven from the payment of refunds in excess of the forecast due to the Land Conservation Tax Credit ($175 million) and errors in calculating interest earning to the general fund ($120 million).  These inaccurate projections totaled $295 million.  
“Unlike the recession earlier this decade, where the state actually collected less revenue, the challenge today is to build a budget that assumes moderate revenue growth in the 2008-10 biennium.
“To responsibly manage the anticipated $641 million budget shortfall, it is both premature and perhaps totally unnecessary to drawn down the state’s ‘Rainy Day’ Fund, which is currently fully funded at $1.3 billion.  The General Assembly has spent the last four year replenishing this fund.  We should adhere to the intent of the law and only use it to respond to a severe economic downturn, as opposed to proposing to errors in the revenue forecast.  In fact, if these forecasting errors had not occurred, the triggers required by the state’s Constitution would not be met.
“Prior to drawing down the state’s ‘Rainy Day’ Fund, sound management practices would dictate that we thoroughly scrutinize the budget and make the necessary hard decisions on what should be funded and what should not.  Likewise, we should not commit scarce taxpayer dollars to new programs.  Rather, spending decisions ought to be aimed at maintaining a structurally balanced budget for the future.”  

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