Virginia faces $1.5 billion budget deficit; what that means for our region

FILE - In this July 13, 2015 file photo, Virginia Gov. Terry McAuliffespeaks during a news conference at the Capitol in Richmond. (AP Photo/Steve Helber, File) (Copyright by WSLS - All rights reserved)

ROANOKE (WSLS 10) - The commonwealth is staring down one of its worst budget deficits in recent years.

Now, Governor Terry McAuliffe says we need to prepare for some tough decisions. He says the budget shortfall puts raises for state workers on the line.

He blamed the deficit on the poor performance of withholding and sales tax collections, along with a lack of skilled workers.

"The truth is that today in Virginia, we have 36,000 high-paying jobs in Virginia open today because we don't have workers with the right computer and math skills to fill them. As I've told many of you individually, we either fill those jobs, or those companies will move to other states. It's that simple," McAuliffe said.

McAuliffe suggests expanding Medicaid in the state would bring in more federal dollars, which would help with the short-fall, but Republican lawmakers are against the strategy.

Local delegates explain a different take on the matter from both Democratic and Republican leaders.

"We cannot assume that the remainder of the fiscal fix will be easy or short, we must prepare ourselves for tough decisions ahead," McAuliffe said.

One of those tough decisions is whether to fulfill the promise of state pay raises. Legally, since there is a budget deficit, those appropriates can't be made.

This is an added burden for local school districts who already granted those raises.

Local Republican Delegate Greg Habeeb said he has already spoken to local school superintendents about the issue.

"Teachers who got their annual contracts have already begun getting those pay raises. Well now if that contingency isn't met, the localities are still on the hook," Habeeb said.

Now that state money that was once promised isn't coming in, teacher pay raises could land on the bill of the school districts.

Although Virginia saw a 2.3 percent job growth this year, Habeeb said the focus needs to change from job creation to driving up what those jobs pay.

"While our unemployment has been going down, the average monthly wages has been going down as well," Habeeb said.

Delegate and Democrate Sam Rasoul said it's crucial to raise the minimum wage.

"To think we have people working full time, but still living in poverty in the richest country in the world, obviously those individuals still have to receive government assistance," Rasoul said. "So when we have debates about what people should be making, we need to keep that in mind."

While the outlook for state raises is looking grim, Rasoul says there are other options including dipping into the state rainy day fund that's an estimated $750 million.

"We cannot use the whole rainy day fund at one time. The maximum we can use is half at one time," Rasoul said.

Both Rasoul and Habeeb said that is a likely solution; however, it won't make up the entire difference in the deficit.

Other expenditures promised to Southwest Virginia including an expansion of Virginia Tech Carilion Research Institute and Eldor Corporation are safe and will remain unchanged.

There could be changes coming to the expected budget between now and the new fiscal year, although they aren't expected to be major.

The revised revenue forecast is expected to be released September 1.

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