570 layoffs may just be the start

Media General News Service
Published: October 10, 2008

Think Virginia’s budget headache is bad now—wait until next year.

“It’s going to get worse,“ predicted Del. Phillip A. Hamilton, R-Newport News, vice chairman of the House Appropriations Committee.

Gov. Timothy M. Kaine’s plan for closing a $2.5 billion hole in the $77 billion budget is a pastiche of pain: $324 million in spending cuts, including colleges and law enforcement; 570 layoffs; postponing a 2 percent pay raise for state workers and leaving 870 jobs unfilled.

For Virginians, this will mean, among other things, fewer inspections of factories for air and water pollution; that the Science Museum of Virginia in Richmond will close one day each week; and that state police—already strapped for officers—will delay training prospective troopers.

Kaine said further reductions in employment and spending, including that for public schools and health care—both of which have been largely spared for now—are necessary to balance the budget through the end of the current two-year spending cycle, June 30, 2010.

“Everything is going to be looked at,“ said Kaine, whose four-year term, which ends in 15 months, increasingly has been shaped by retrenchment.

Kaine is pruning the budget because the declining economy is choking off revenue in the state. And while the problem has forced cost-cutting for more than a year, the challenge has accelerated in recent months because of the chaos on Wall Street, the collapse of the housing market and the credit crisis.

Kaine wants the General Assembly, when it returns in January, to approve a $400 million drawdown from the state’s rainy-day fund. He said he could have pulled out an additional $65 million, but wants to reserve it for future use.

Kaine singled out elementary and secondary education as the principal beneficiaries of the latest withdrawal from the emergency cash account.

“While no agency can expect complete exemption from cuts, it is important to protect crucial state services as much as possible,“ Kaine said.

The governor also proposes harvesting dollars by using bonds, rather than cash, to pay for $250 million in construction and carrying over $41 million in unspent funds from the previous biennium.

In recent months, as erosion in the state’s finances quickened, Kaine has attempted to forge a consensus with the state’s divided legislature. For example, Kaine—apparently bowing to the Republican-controlled House of Delegates—has said he will not recommend raising taxes.

Though he would not rule them out entirely, Kaine expressed reservations about delaying or reducing tax breaks, including $200 million in credits to promote land preservation and the $150-million-a-year repeal of the estate tax.

House Republicans, who defend their shrinking majority in elections next year to choose new delegates and a governor, favor more aggressive cuts than those pushed by Kaine and believe the shortfall could grow to $3 billion or more.

Though Kaine is carrying out reductions under his executive powers—he can pare spending up to 15 percent—the 2009 General Assembly may be able to modify them.

In a written statement, House Speaker William J. Howell, R-Stafford, said, “We must not avoid instituting overdue structural reforms that will truly align state spending with limited taxpayer dollars.“

Layoffs of state workers and the delayed pay raise will have special resonance in the Richmond area, home to a large number of Virginia government’s 116,000 employees.

William P. Elwood, executive director of the Virginia Governmental Employees Association, said he doubted workers would ever see the pay increase.

“After having this raise taken back at the last minute, I expect that next time, most state employees will not believe it until it actually starts hitting their bank accounts,“ Elwood said in a written statement.

State employees were due 2 percent pay increase in December, but Kaine wants to push it into next year, when another 2 percent raise is planned. Killing both increases would save $250 million.
Contact Jeff E. Schapiro at (804) 649-6814 or .