I don’t know about you, but when Labor Day comes around, it always seems like a New Year to me. All those years of school, I guess!
At any rate September has been a busy, energizing month with campaign appearances, fundraisers and more fundraisers, and the festivals: the Falls Church Fall Festival; Mason District Festival; and Clarendon Day. Lots of good food and booths full of tempting products! And no rain.
Reality does have a way of intruding, however, and this week it was the drop in state revenue that got our attention. The Governor announced his plan of how to deal with projected revenue losses of over $600 million in current year revenues.
A judicious blend of administrative efficiencies, small percentage cuts in certain agency budgets, some small revenue increases in areas such as ABC sales and minimal personnel savings will get the Commonwealth most of the way there this year.
The Governor has also proposed use of the so-called Rainy Day Fund. The most important lesson I learned this week was that this is NOT a “Rainy Day Fund”. That is really a misnomer.
In fact the fund is not available for ordinary hard times when revenue projections must be decreased, but is more properly called, and actually named, the “Revenue Stabilization Fund.”
Thus moneys from the fund are available when there is a sudden, unexpected change in economic conditions after the budget has been adopted by the General Assembly, exactly the situation we find ourselves in this year.
The fund has specific “triggers” that must be met before the reserves can be used and these thresholds have been met this year.
Use of the fund this year means that drastic cuts will not be necessary in the current year,
However, next year the fund will probably not be available because revenue projections will be revised downward before the next biennial budget is adopted.
Good news is that the General Assembly has made major deposits in the fund in the last few years and therefore the Fund is at a record level of about $1.2 billion — and will still be at record levels after the proposed withdrawal.
When the General Assembly meets, a decision will be made on whether to use part of the Revenue Stabilization Fund to balance the books in the current year, or whether to make deeper cuts in services for the current year.
Then the work will begin in earnest as we prepare the biennial budget that begins July 1, 2008. The revenue situation appears to be rather gloomy as the housing market has slowed down so much. That will be an issue to follow in the coming months.