Gov. offers modest hike in budget

RICHMOND, Va. (AP) - Gov. Bob McDonnell's cautious revisions to Virginia's two-year budget target modest spending increases for indigent health care, conditional raises for teachers and a $128 million deposit into the state's rainy day reserves.

McDonnell tempers forecast revenue over the next year. He's wary of an economic shock that would slam Virginia if Congress doesn't agree on deficit reductions and avoid a year-end "fiscal cliff."

His midpoint amendments for year two of the $80 billion budget include $93 million in savings state agency chiefs recommended for their departments.

Overall, the budget spends about $211 million more than it cuts. That includes almost $59 million for 2 percent teacher raises, provided legislation passes making it easier to fire incompetent teachers.

It also seeks $70 million to hold down state employee health insurance rates.