In what will now be no surprise, Virginia Gov. Terry McAuliffe is expected to inform members of the General Assembly’s top money committees today that Virginia is facing a budget shortfall in the range of $1.5 billion.

As the Richmond Times-Dispatch reported, “The governor will reduce anticipated revenues by about $850 million in the current fiscal year in response to a shortfall of almost $270 million in the year that ended June 30 and increasing pessimism about growth in income and sales tax collections. He will reduce projected revenues in the second year by about $630 million.”

Whether this expectation of reduced income will come with a mandate from the governor for reduced spending at state agencies remains to be seen.

Clearly, this is not welcome fiscal news, and it will lead to some tough spending choices by legislators. Such belt-tightening at the state level will certainly have all area localities on notice, as local budgets are set in part based on anticipated revenues from the state.

This is not just a Richmond problem — it is a very local issue as well. One of the big items to watch is teacher salaries and funding from the state for proposed increases. The Washington Post reports a source close to the situation as saying, “We are going to try to hold teachers’ salaries, but other than that, everything is on the table.”

We expect a quote like that got the attention of every administrator at each county, city, and school division in the region, and well it should.

So what is the root of the problem? The Post notes that the state took in a record amount ($18.3 billion) of revenue in the fiscal year that ended on June 30, but that amount “was a 1.7 percent increase in revenue, far less than the 3.2 percent increase the state budget office anticipated.”

The RT-D reports that “the biggest concern this year is lagging income tax collections withheld from payroll, which accounts for almost two-thirds of general fund revenue.”

So, is Virginia’s economy on the right track or not? It depends on whom you ask. Sen. Charles William “Bill” Carrico Sr., R-Grayson, told the Post, “I think they’re finally admitting what we have been saying all along: You’re going around announcing you’ve brought more jobs to Virginia, yet you’re losing more high-paying jobs than any governor.”

Brian Coy, a spokesman for the governor, “acknowledged that the state is grappling with difficult economic conditions in which growth isn’t translating into as much revenue as it might have in the past.”

Whatever the cause, the solution to falling revenues is to lower expenditures, as the commonwealth does not operate (thankfully) like the federal government. Indeed, as the state’s own Department of Planning and Budget reflects on its web page under the “Budget Execution” tab:

“The Commonwealth begins each Fiscal year with of goal of implementing the budget as passed by the General Assembly and signed into law by the Governor. The Code of Virginia allows the Governor to make certain adjustments to the Budget. Changes in Federal legislation, inclement weather and uncertain revenue collections, are just a few examples of events that may require adjustments to the budget in order to maintain the balanced budget as required by Virginia’s constitution.”

The devil will be in the details but the goal is clear and required. That is why today’s announcement by Gov. McAuliffe is important to all citizens, not just politicians in Richmond.