By JIM NOLAN

TIMES-DISPATCH STAFF WRITER

Virginia Gov. Timothy M. Kaine has issued a sweeping series of spending cutbacks in state government in anticipation of budget shortfalls.

Kaine has imposed a hiring freeze on all state agencies except for those jobs pertaining to public safety, health, natural resources and higher education.

Kaine imposed a similar hiring freeze in early 2007, at the first hint of a slowing economy and reduced state revenues. Both hiring freezes restrict the hiring of new employees without approval of the supervising cabinet secretary.

The edicts came in a memo dated yesterday and sent to the heads of state agencies by Kaine Chief of Staff Wayne M. Turnage.

It also warns of possible layoffs.

"I also ask you to critically assess the need for current wage employees to ensure that their continued employment is mission critical," it states.

Kaine is also directing state agencies not to enter into, or renew, consulting contracts unless they are "absolutely essential and critical to delivering services" that can't be performed by the existing workforce.

All discretionary travel and training has been frozen unless it is designated for "mission-critical services."

In addition, discretionary equipment purchases have been suspended.

The memo comes in response to a preliminary report on state revenues prepared by Secretary of Finance Jody M. Wagner.

Wagner's report states that the slowing economy over the last six months mean the state will have to make "significant downard adjustments" in the revenue forecast it used to prepare the state's $77 billion, biennial 2009-2010 budget.

"As he has in the past, the governor is directing each of you to immediately take steps to reduce discretionary spending," states Turnage's memo, a copy of which was obtained by the Richmond Times-Dispatch.

"This will undoubtedly result in some short-term difficulties for your agency, but given the nature of our fiscal situation, it is critically important that we implement strategies that hold the promise of long-term savings."

Virginia ended fiscal year 2008 on June 30 with a tiny budget surplus. A memo today from Wagner to Kaine warns that "significant downward adjustments to the revenue forecast for the current biennial budget cycle that started July 1, 2008, are to be expected during the fall revenue forecasting process.

"Declining employment levels, slower income growth, lower consumer confidence, and the continued downward trends in the housing market" drove the revenue shortfalls, Wagner said.

Wagner's memo further states that state agencies should expect "further budget adjustments" to compensate for the expected reduction in general fund revenue.

On Aug. 18, Kaine is scheduled to address the joint meeting of the House Appropriations Committee, the House Finance Committee and the Senate Finance Committee to review the final results of 2008 year revenues and address anticipated shortfalls in the coming two-year budget.

Wagner said preliminary data suggest the state ended fiscal year 2008 with a small budget surplus of $5.4 million. But the downward economic trends point to the need for action.

CHENNAI: Even as interest rates are inching up and inflation soaring, the LIC Housing Finance Company is confident of growing ahead of the industry's average growth rate, a top company official here said.


Interacting with the media here after inaugurating a housing exhibition Friday, R.R. Nair, CEO LIC Housing, said: "This year, too, we are seeing better growth. Last year, we grew 38 percent when the whole industry logged just 9 percent growth."

For the current fiscal, LIC Housing is targeting disbursement of Rs.100 billion - up by Rs.10 billion over the previous fiscal.

According to Nair, the company's lending rates are linked to the prime lending rate (PLR) of banks.

"We have increased our lending rate just by 50 basis points in the recent times," he added.

Nair does not foresee higher defaults owing to increasing interest rates.

He said the housing market is currently active with serious buyers with speculators receding for now.
According to another official, the demand for premium-end apartments is slowing down while the mid-segment apartments continue to move.

Looking at the project financing, he said the company's project funding is just 5 per cent of its overall book size.
Last year, the company funded projects to the tune of Rs.13 billion.

LIC Housing Finance Ltd (HFL), country's second largest housing finance company, is planning to float a new subsidiary company to sell all the financial products. The new company called LICHFL Financial Services Ltd, is expected to commence its operations in the next two to three months.
Speaking to reporters after inaugurating LIC Housing Finance's 11th property exhibition "Ungal Illam" at Chennai R R Nair, director and chief executive, LICHFL said that the new company will be a 100 per cent subsidiary of LICHFL. He added, it will not not be a capital-intensive.


LICHFL Financial Services will sell financial products including home loans, mutual funds, LIC's insurance policies, credit cards and other third party products. It will distribute only LICHFL's home loans.


The new company will be based in Mumbai and Shobhana Murali who was heading LIC's corporate communication will head the new company. During the current year, it will start with 10 branches in metros and important cities and in the next two years will expand it to 65 places.


LICHFL registered a 38 per cent growth in loan disbursements in 2007-08 at Rs 7,071 crore, higher than the industry's average growth of 8-9 per cent. Total sanction was Rs 9,000 crore. Target for the 2008-09 is Rs 10,000 crore disbursement and Rs 12,000 crore sanction, said Nair.