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Virginia Budget Planners Stay Conservative In Light Of Fiscal Cliff

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Virginia officials are proceeding with caution as they prepare to adjust the state budget for the upcoming General Assembly session. The uncertainty about tax and spending issues in Washington is causing some pessimism about the state budget.

It's not been the best of times, but revenues have grown modestly. But state leaders are still bracing for the worst of times because Virginia would be hit hard by sequestration defense cuts if the country goes off the "fiscal cliff" in january.

While state leaders are hopeful that federal budget problems and the fiscal cliff will be resolved, if it doesn't, the resulting job losses would cause dips in income, corporate, and sales tax revenues, says Gov. Bob McDonnell. That's why he asked agencies to prepare 4 percent spending cuts.

"That doesn't mean I'm going to actually cut them 4 percent," he says.

McDonnell has told lawmakers that his budget adjustments, which are due next month, may not be the final word.

"By the time the General Assembly reconvenes in mid-January, the situation may be changed and we may have to make some more significant adjustments than we've made in the past simply because the federal landscape is changing so quickly," McDonnell says. "And most of the concerns that were expressed today by the legislators and the business community relate directly to what's going on in Washington, D.C., and how it affects Virginia."

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