Anyone still unsure about whether the economic headlines merit concern by the man on the street beyond his tax liability for the federal bailout of Wall Street probably got convinced when Gov. Tim Kaine announced steps to address the state budget shortfall. Kaine is laying off nearly 600 workers, holding another 800 jobs open, and postponing pay raises for state workers who get to keep their jobs. The governor also is cutting appropriations for colleges and closing six correctional facilities.

The administration doesn't see any reason for optimism in 2009. Forecasters predict modest growth in 2010, but that likely will not suffice to close the gulf between tax revenue and projected expenditures. The crisis in the financial sector also has implications for the state's retirement fund, and for obligatory payments into that fund. Virginia might have been one of those states that relied on overly optimistic assumptions.

But that is the case across the board, not just concerning the Virginia Retirement System. When Kaine presented his fiscal plans to the General Assembly last December, his finance secretary at the time said, "This is not an optimistic budget." It was not pessimistic, either -- or at least not pessimistic enough. How could it have been? Very few could have foreseen the recent stock-market plummet or the seizing up of the credit markets, and even those who did warn of trouble ahead did not expect it to be so wide and deep.

At least Virginia does not stand in such precarious circumstances as California. Chalk that up to the Old Dominion's generally responsible stewardship. Unfortunately, good stewardship alone will not get the commonwealth over the current hurdle. More cuts are probably on the way. Kaine says they might have to include areas he so far has held harmless, such as education -- a principal beneficiary of heavy investment during the past several years. No Virginian hopes things will come to such a pass, but everyone should prepare for the possibility that they might.