Nov 24, 1:27 PM EST

Gov. McAuliffe says Virginia economy 'perilous'



RICHMOND, Va. (AP) -- Gov. Terry McAuliffe said Monday that Virginia's economy is in a "very perilous" situation with potential federal defense cuts looming and that he's open to eliminating tax relief programs - including one that partially offsets the state's much maligned car tax - to fill a state budget gap.

"Everything is on the table," McAuliffe said. "We ought to have that ability to talk about every issue out there."

He and state lawmakers met with heads of several large companies Monday for a regularly scheduled meeting to discuss the state's economic outlook.

The state covers some of the cost of the personal property tax on cars with reimbursements to city and county governments. The idea of ending that reimbursement was floated at a Senate Finance Committee retreat this week.

Committee Co-Chairman Sen. Walter Stosch said he doubts the plan "has much of a prospect," but McAuliffe said he's glad lawmakers are at least open to discussions on ending certain tax preference programs.

Next month, the governor is set to introduce a spending plan to bridge a $322 million budget gap. McAuliffe said that his staff has been scouring the state budget for places to cut and that he's open to considering eliminating tax relief programs to balance the state budget. The state offers various tax credits, some of which lawmakers have criticized as ineffective giveaways.

The governor and top lawmakers wouldn't discuss the details of discussions with some of the state's top business leaders, but House Appropriations Committee Chairman S. Chris Jones said the executives told lawmakers to be cautious in their budgeting for next year.

McAuliffe said that as the No. 1 recipient of federal defense spending, Virginia is particularly vulnerable to automatic spending cuts known as sequestration.

"We face huge headwinds," he said.

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