WASHINGTON - Virginia Gov. Timothy Kaine yesterday proposed issuing $350 million of tax-exempt bonds as well as tapping about $490 million from the state's rainy-day fund, implementing a 30-cent per-pack cigarette tax increase, and cutting more than 2,000 jobs to close a nearly $3 billion revenue gap in the state's two-year budget.

The revised shortfall is almost $400 million more than the $2.5 billion he predicted just two months ago for the state's $77 billion biennial budget.

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