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Warner Maps Major Projects for 2005

Budget Plans for Transit, Health Reflect Rising Revenue

By Michael D. Shear and Chris L. Jenkins
Washington Post Staff Writers
Saturday, December 18, 2004; Page B01

RICHMOND, Dec. 17 -- Virginia Gov. Mark R. Warner (D) on Friday proposed spending the fruits of a growing state economy on new road and transit projects, health care, higher salaries for state workers and reduced taxes on groceries.

In a speech to members of the legislature's budget-writing committees, Warner also pledged to put additional money away for a rainy day and warned lawmakers against becoming so giddy over Virginia's prosperity that they spend more than the state can sustain in the long run.

John M. Bennett, left, secretary of finance, speaks with Virginia Gov. Mark R. Warner as the governor waits to present his 2005 budget to legislators. (Steve Helber -- AP)

Highlights of Proposal

Gov. Mark R. Warner's proposed budget amendments include these spending plans:

• $824 million to finance transportation proposals, including $140 million for a fund to encourage private partnerships, $80 million for new rail cars and buses, $80 million to help local governments take over road building, $23 million for railroad improvements and $147 million for other projects across the state.

• $259 million to pay for the rising cost of health care, including a 9 percent increase in the number of children, elderly and disabled enrolled in Medicaid.

• $229 million for the state's rainy day fund, including a set-aside of $135 million required by law when the economy is growing rapidly.

• $120 million for education, including $54.8 million for teacher salaries, $20 million to help local systems build schools, and $50.8 million to help colleges and universities meet enrollment growth.

• $53 million to give state employees and college faculty a 3 percent raise, effective in November 2005, and $32.6 million to offset health insurance premium increases for state workers.

"The budget amendments I outlined today are fiscally responsible," Warner said in kicking off the budget debate that will begin in earnest when the 2005 General Assembly session convenes Jan. 12. "They make smart investments in transportation, economic development and better schools."

Warner's proposals, which would amend the state's two-year budget at its halfway mark, are based in part on about $918 million in tax collections that are higher than expected. If the amendments are adopted by the Republican-led assembly next year, the state's operating budget would be about $26.33 billion over two years.

The budget would add $824 million to finance transportation proposals, $259 million to pay for the rising cost of health care, and $120 million for education, including teacher pay raises. The environment would get $35 million, and the police and firefighters would get $15.5 million. State workers and college faculty would get raises totaling $53 million. Other, smaller programs would get increases. For example, Warner includes about $2.8 million for more inspectors and higher Medicaid rates at assisted living facilities.

He said the budget will also include a $229 million payment to the state's rainy-day fund.

"There's a lot of the lawmakers who share the concern that we have to be fiscally conservative," Warner said. "The challenge will be as we get into a session during an election year, will they work with us to hold the line on spending." All 100 seats in the House are up for election in 2005.

Unlike a year ago, when Warner's proposal for a $1.2 billion tax increase sparked a long and bitter lawmaking session, the governor this year has sought to accommodate the opposition party. His proposal to roll back the grocery tax matches bills submitted by Republicans.

Senior legislators in both parties and both of the major candidates for governor reacted warmly to Warner's budget recommendations, saying they largely conform to their own priorities.

"I strongly support these ideas that will help create opportunity for Virginians and improve the economy," said Attorney General Jerry W. Kilgore, the likely Republican nominee for governor.

Lt. Gov. Timothy M. Kaine, his likely Democratic opponent, said the governor's proposals take "a fiscally responsible approach to funding Virginia's core obligations while protecting the long-term stability of state finances."

Del. L. Preston Bryant Jr. (R-Lynchburg), who helped lead a group of moderate Republicans in support of tax increases, said the governor's budget remains faithful to the goal of that effort.

"It provides some tax relief while preserving needed cash for investment in infrastructure that our changing economy and growing population needs," Bryant said.

Key lawmakers who opposed Warner's tax plan this year said they had little major disagreement with the governor's proposals.

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