Live Video app for Facebook by UstreamGov. 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. To watch the speech live, click in the video player above.

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.

Later Monday, McDonnell will be in Franklin County to make a "significant announcement" about a new way to help agricultural business. That appearance is scheduled for 4 p.m. at the Homestead Creamery.

 Here is the news release from Governor McDonnell’s office:

Governor Bob McDonnell unveiled his proposed amendments to the 2012- 2014 budget in a speech to the Joint Money Committees of the General Assembly this morning in Richmond. The governor's budget amendments capitalize on $92.7 million in agency savings, reductions in spending of $431.6 million and conservative budget forecasting to focus resources on addressing Virginia’s transportation challenges, education reforms, health care program and reserves. The amendments target state spending on the core functions of government, and on policies most directly tied to job creation and economic development, while not raising taxes.

Virginia revenue estimates, adjusted for a standard minus outlook, expect general fund revenues to grow at 3.6 percent in FY 2013 and 3.8 percent in FY 2014. Overall, the governor’s budget amendments result in a net increase in overall spending for operations of $211.4 million, including 75 amendments from either targeted or agency reduction plans for a savings of $92.7 million, 75 individual amendments which decrease spending by a total of $431.6 million, and 204 amendments which increase spending by a total of $735.7 million for the biennium.

The spending increases focus on six major themes for improving Virginia’s financial health, including:

•         Provide adequate funding for core services and reduce structural imbalances and gimmicks

•         Increase liquidity to guard against future economic uncertainty and the potential impact of federal spending reductions

•         Increase support for instructional spending on public education

•         Continue investments in higher education

•         Improve funding for transportation

•         Improve support for localities

The full text of the governor's remarks to the Joint Money Committees can be found by clicking here.

Speaking about the budget amendments, Governor McDonnell said, “In these difficult times for Virginia and our country, state governments are called upon to lead the nation in fiscally responsible decisions that address the core concerns of our citizens without rhetoric, unsustainable spending practices and gridlock as displayed by our leaders in Washington. The Commonwealth has a longstanding record of working across party lines to demonstrate fiscal responsibility, accountability and restraint in our stewardship of the people’s resources.

 “Since the beginning of this administration, we have eliminated $6 billion in budget shortfalls and turned those into 3 years of surpluses totaling nearly $1.4 billion, even in the face of slow growth in our tax revenues. We have not raised taxes. We have invested historic new funding into transportation and job creation, and we have made the tough choices about where limited taxpayer dollars should be directed to best spur private-sector job creation, resulting in the lowest unemployment rate in the Southeast, and the second-lowest rate east of the Mississippi River.

“The budget amendments that I am presenting today reflect the core priorities of government and our administration. They recognize the realities of this economy and the looming uncertainty that budget gridlock in Washington and the fiscal cliff are having on our economy. Yet they look forward to building upon our legacy of conservative and sound budget decisions to lay the groundwork for the future of our great Commonwealth. These amendments use the resources gleaned through agency savings, sound management practices and prioritizing our spending to reform, restructure and reinvest in programs that make government more efficient, effective and accountable. They fund key budget areas like education and transportation that lay the foundation for a prosperous future for our citizens. And they enhance cash reserves and liquidity as insurance to provide us flexibility in addressing the potential impacts of uncertain federal spending while maintaining Virginia's critically important Aaa bond rating.”