Virginia state agencies are told to show impact of possible budget cut.

RICHMOND -- Virginia finance officials yesterday sent instructions to all state agencies requiring them to spell out the potential impact of, and submit plans for, a possible 3% budget cut.

The preparations for possible cuts in discretionary spending follow an announcement earlier this week than revenue collectoins are growing at a rate of only 1.9%, compared with an earlier estimate that they would grow 3.1% for the year.

"We're acting out of an abundance of caution," said Paul W. Timmreck, the state's finance director. "We're very concerned about the stall in the national economy and what it might mean for Virginia."

Agencies have until Dec. 2 to respond. Meanwhile, Gov. L. Douglas Wilder is scheduled to release a revised revenue forecast on Dec. 16.

The figures released this week, which tracked revenues received between July 1, when the 1992 fiscal year began, and October, were the first for the fiscal year that had not kept pace with the annual estimate. All were computed on a fiscal-year-to-date basis.

Sales tax receipt continued to disappoint state officals, having fallen 2.3% from 1991 levels.

Officials, who had forescast in August that sales taxes would grow at a rate of 1% this fiscal year, attribute the lackluster performance to continued weak consumer spending and low levels of construction.

Even though sales tax receipts are below last year's at this point, officials are counting on a strong performance in the January through March quarter.

Corporate income tax receipts also are down significantly, dropping 8.3%. Officials in August forecast growth in corporate receipts of 5.8%.

Despite the bad economic news, some bright spots provided encouragement to state officials.

Net individual income tax receipts grew 4.5% through October, even though receipts for October itself were 1.9% lower than those for October 1990.

Other positive signs being cited by state officials are an increase in nonagricultural employment and longer average production work weeks.

In September, nonagricultural employment grew by 16,800 jobs above the level in August. Also in September, the average production work week lengthened from 40.9 hours to 41.2 hours, a possible signal that the state economy is in the early states of a recovery.

Finally, the state unemployment rate in September was 5.2%, compared with the 6% rate Virginia experienced in July.

"Suffice to say, we're looking at a much different situation than we saw during the 1980s," Mr. Timmreck said, alluding to a period when revenues showed robust annual growth. "When you get three straight years where revenue growth is not commensurate with population growth and inflation, it's got to be tough."

He said the task of state officials is made tougher by the fact that a good chunk of the Virginia budget is devoted to localities and education.

He said localities already are into their fiscal years, making it more difficult to find savings there.

Moreover, "You don't have many people standing up and applauding cuts in education," Mr. Timmreck said.

Excluding funds for localities and education leaves little else to cut.

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