RICHMOND, Va. (WRIC) — When he addressed state lawmakers on Friday, Virginia Governor Terry McAuliffe delivered a shortfall of more than $564.4 million in the fiscal year 2017 and a $632.7 million shortfall the following year, totaling around $1.2 billion.
The reason, he says? Lower incomes across the state.
“The issue we’re facing and many states are facing is the withholding income,” McAuliffe said. “Older people are retiring at higher wages and they’re being replaced.”
The governor and lawmakers say jobs are being replaced by part-time workers or full-time workers with lower salaries. Originally, forecasters expected the state’s economy and incomes to grow more but are now projecting much slower growth than first thought.
“Not going up at three percent, they’re going up at one percent,” Delegate John O’Bannon told 8News Reporter Mark Tenia.
O’Bannon, who sits on the house appropriations committee, says while it’s concerning, it’s not as bad as the $2.4 billion shortfall the state faced two years ago.
“I think we are in better shape than we were some years ago,” O’Bannon said.
He says they’ll ask state agencies to come up with places they can cut money, but have already taken some action.
“We’ve already had to put the state employees raise on hold,” O’Bannon explained.
As for preventing another shortfall in the future, the governor says it’s about filling positions.
“We’ve got to fill these high paying jobs,” McAuliffe suggested. “17,000 cyber jobs open here now in Virginia, starting pay $88,000.”
The governor says he will protect education from seeing cuts.
“We’ve got to get on the game here in our education to build that workforce of the 21st century,” McAuliffe said.
Meanwhile, O’Bannon says they’ll have to have a tighter grip on the purse strings.
“The message there is that we need to tighten our belts going forward,” he said.
In his address to the House Appropriations and Senate Finance Committees in a joint meeting Friday morning, McAuliffe discussed his plans to alleviate the shortfall.
In his speech, McAuliffe cited temporary jobs as part of the problem.
“The fiscal year 2016 wage and revenue figures underscore the large number of temporary employees in the workforce, a likely sign that our businesses are still looking for assurances that our national recovery is sustainable,” McAuliffe said.
He said that he has taken this trend in hiring into account in revising budget estimates.
“The revised revenue estimates I report to you today have been further reduced to reflect the belief that the trend toward lower paying jobs will continue in the short-term, as well as our concern about next October’s sequestration trigger,” McAuliffe said.
McAuliffe cautioned that the state’s financial fix will be difficult.
McAuliffe also addressed his concern over the state legislature’s refusing Federal funds in the partisan issue of Medicaid expansion.
“Those funds would go a long way in relieving some of the difficult budget actions that lie ahead,” he said. “It’s disappointing to me to think about the $7.95 billion dollars in federal funds that the Commonwealth has forfeited since the start of Medicaid expansion.”
He eventually concluded, “But there are still billions of dollars available to us every year moving forward if we work together on an efficient and sensible solution to our healthcare and budgetary needs.”
Stay with 8News for updates to this developing story.