In the hushed privacy of Gov. Tim Kaine's formal conference room, Richmond Fed President Jeffrey Lacker was somewhat bearish. Robert Hardie, an investment expert, more so.

The varying economic outlooks -- laid out at Monday's closed meeting of Kaine and his fiscal advisers, and reported, fly-on-the-wall style, by several in attendance -- troubled another participant: Sen. Janet Howell, D-Fairfax.

Howell, a budget writer, compared the situation to a souvenir snow globe: Shake it, and the tableau therein is obscured.

But it's not just Virginia's economic picture that's cloudy. So, too, is the strategy for dealing with its consequences. Kaine is bracing for a budget shortfall that could balloon an additional $3 billion. That's atop $2 billion erased by earlier spending cuts. What's Kaine to do?

A first step: a drawdown from the rainy-day fund. It is brimming with about $1 billion. But there are limits on how much Kaine can grab, and when. Perhaps $500 million is available; maybe a bit more, but not until next year -- and only with the General Assembly's OK.

Kaine can harvest $250 million by scrapping pay raises for about 100,000 public employees. They're due 2 percent later this year and an additional 2 percent in late 2009.

Yanking cash for bricks and mortar maybe could save $300 million. To keep that construction on track, lawmakers could authorize more bonds -- repaid, of course, with interest.

Squeezing public education -- something Kaine says, oddly, he won't consider until next year's gubernatorial-election cycle -- would yield big bucks.

Cuts beginning in October could be disruptive, coming shortly after kids have returned to school. But education, overall, is too large a hunk of the total budget -- about half -- for it not to surrender something.

It's estimated Virginia annually spends about $200 million on nonmandated school programs, including Kaine's expanded prekindergarten for 4-year-olds.

And there's $90 million a year for 18 Northern Virginia school divisions in fattened reimbursements for teacher salaries.

Recalibrating the public-school funding formula could generate $300 million a year if basic costs were split 50-50 between the state and its localities. Currently, Virginia covers 55 percent; counties and cities, 45 percent.

But local governments -- also facing acute budget problems, given their limited tax powers and pressure on such existing revenue sources as the real estate tax -- would brand that shift and shaft. The same could be said of a raid on $200 million in anti-crime aid.

Freezing Medicaid reimbursements to doctors, by one estimate, might generate $20 million to $40 million. Seizing interest income from some state agency accounts is possibly good for $10 million.

And let's say Kaine, now perusing agency spending-cut proposals, opts for an across-the-board reduction of 5 percent. That produces perhaps $400 million.

All of the above, some of which is harsh medicine, could -- depending on how one finesses it -- save about $2.5 billion. Problem solved?

Maybe. Unless someone summons the courage to junk the really radioactive stuff: $160 million in estate-tax repeal, $200 million in tax breaks for land preservation and $950 million a year in car-tax rollbacks.

You can bet good money Kaine won't.
Contact Jeff E. Schapiro at (804) 6496814 or jschapiro@timesdispatch.com. Watch his video column Thursdays on inRich.com. Listen to his analysis Fridays at 8:33 a.m. on WCVE radio (88.9 FM).