Virginia Braces for Shortfall;Pension Tax Relief May Be Reviewed
A slowdown in Virginia's economy could create a revenue shortfall of between $130 million and $160 million by June 1 and may cause the state to seek additional funds by taking a second look at pension tax relief adopted this year.</br></br>Outgoing Gov. Gerald L. Baliles is scheduled to tell the legislature's money committees on Monday what the latest revenue forecasts are and make recommendations on how to deal with the shortfall.</br></br>A delay in granting pension tax relief is just one possibility the General Assembly may consider when it convenes in January, according to legislators and other officials. Several legislators said the state may have to impose a hiring freeze and withhold pay raises for its workers until the economy turns around.</br></br>Adding to the economic gloom, total revenue for the two-year budget cycle beginning July 1 could be as much as $800 million below earlier estimates, according to several state government sources.</br></br>Baliles said in an interview this week that his successor, Gov.-elect L. Douglas Wilder, will not enjoy the prosperity that greeted Baliles's administration four years ago, but that Virginia will continue to outperform the national economy.