It's a $1.5 billion shortfall for Va.

RICHMOND - Virginia now finds itself in a $1.5 billion hole, Gov. Timothy M. Kaine said Wednesday.

Kaine, a Democrat, told the General Assembly’s money committees that revenue for the current fiscal year looks to be down $1.2 billion, which comes on top of a $300 million shortfall from the past fiscal year.

This will mean cuts in state services, and possibly layoffs, that Kaine said he will detail early next month. Last month, he directed state agencies to prepare proposals on cutting their budgets by 5 percent, 10 percent and 15 percent so that decisions can be made quickly.

“We will make these decisions carefully,” Kaine said, “but they will be painful to those who rely on public services in this most challenging time.”

Virginia Education Association lobbyist Robley S. Jones said the organization that represents 60,000 public school teachers is resigned to cuts as long as they are restored when the recession ends.

“We understand there are problems with the budget,” said Betsy Reid of Manassas, one of about 200 members rallying outside the State Capitol. “We don’t want to see cuts, but if they do, they can’t be permanent.”

This is the first time that the Old Dominion has seen declining revenue for two years in a row, Kaine said, calling the current climate the “most difficult economy since the Great Depression.” The state had already absorbed $5.6 billion in revenue shortfalls since the two-year budget took effect July 1, 2008.

Prince William area lawmakers greeted Wednesday’s news with responses as sobering as the dire information Kaine presented.

“We have to face this shortfall, and face it head on and cut where we have to cut,” said Senate Finance Committee Chairman Charles Colgan.

The Manassas Democrat said he thinks most all state services could be on the chopping block.

One main reason for that, Del. Jackson H. Miller noted, is that, unlike the federal government, Virginia cannot carry debt over from one budget to another.

“We have to balance the budget, and so I know we’re going to dig in our heels and do it,” said Miller, who represents Manassas, Manassas Park and western Prince William.

In looking at future years, Del. Robert G. “Bob” Marshall said the state needs a commission, similar to the one that advised the federal government on closing military bases, to make sure that the government is always running at its leanest level.

That way, when legislators encounter such situations, “we can address them without cutting core services.”

The western Prince William Republican also said he opposed the use of federal stimulus funds as a one-time state budget fix because that strategy gives false hopes to residents that later have to be dashed when that money is gone.

“The gap between the expectation and the revenue is going to be even larger,” Marshall said.

Del. L. Scott Lingamfelter said he hopes that, instead of making across-the-board cuts, Kaine makes choices that “absorb the pain” of the shortfall without putting state employees out of work.

“It doesn’t make any sense to lay people off and then put them in the unemployment line,” the Woodbridge Republican said.

The real problem, though, Lingamfelter said, is that Kaine’s administration put out revenue forecasts in previous years that were too optimistic. Then lawmakers made budget decisions based on those “too rosy” estimates of incoming tax money.

“They had rosy forecasts because they wanted to buy glitzy programs like universal day care and other things,” Lingamfelter said. “We warned them that this was inappropriate to do, and now those chickens have come home to roost.”

Staff writer Jonathan Hunley can be reached at 703-369-5738. The Associated Press contributed to this story.