Lack of Va. Budget Rattles Cash-Strapped Agencies

Kaine Makes Plans to Keep State Running

RICHMOND, June 6 -- Virginia agencies have begun to run out of money as the end of the fiscal year approaches without a new state budget in place, prompting promises by Gov. Timothy M. Kaine (D) and the legislature to pay workers, keep services operating and avoid a government shutdown July 1.

Officials disclosed new warnings Tuesday that popular programs such as car tax relief are short of cash and that the payroll for state workers is uncertain. Still unclear is the fate of the state services that most Virginians interact with every day, such as Department of Motor Vehicle offices, state-run liquor stores and state parks.

In recent days, Kaine has acted unilaterally to soften the blow for some agencies by authorizing loans and emergency payments from the treasury. But those actions have sparked a confrontation with the state's Republican attorney general over the governor's powers.

"I am not going to let Virginians suffer because of inaction," Kaine said at a news conference. "The Constitution doesn't contemplate legislative inaction draining all the blood out of the executive and judicial branches."

The state's top financial official warned in a letter to senior lawmakers that there soon will be no money to reimburse local governments for the popular program that lowers car tax rates for most Virginians.

"The comptroller estimates that he will be out of cash by early next week," Secretary of Finance Jody M. Wagner wrote Friday. "We assume localities will be contacting their senators and delegates to find out how the Commonwealth intends to deal with this problem."

In addition, Wagner wrote that on June 25 the state's 100,000 workers will begin a two-week pay period with no guarantee that they will be compensated for their efforts once the period ends.

"We must give employees assurances that they will be paid for their work," she wrote. "This adds urgency to the final enacted budget being done by June 23."

Lawmakers have been deadlocked for months over taxes, funding for transportation and the state budget. Despite some halting progress, budget negotiators for the House of Delegates and Senate continue to bicker and exchange sharply worded letters.

That sniping continued Tuesday as the two chambers struggled but eventually reached agreement on an emergency plan proposed by House leaders to provide money for the car tax program. Budget negotiators resumed very tense face-to-face meetings Tuesday evening with little progress reported.

Kaine acknowledged that his office has begun "comprehensive" contingency planning involving specific instructions to state agencies about whether they should continue operating normally, scale back operations or shut down.

He declined to share details of those plans, however.

"There will be a time when I will present . . . what is my precise plan to carry out the powers that I have under" the state Constitution, Kaine said.

Kaine received fresh support from the Republican lieutenant governor, Bill Bolling, who said that practical considerations should trump legal concerns about the governor's authority.

"If the roles were reversed, I'd do the same thing," Bolling said. "I'd say: 'If the doors are going to get shut, I ain't shutting them.' "

But Attorney General Robert F. McDonnell Jr. (R) continued to resist that position. "The Constitution of Virginia makes it clear that it is the obligation of the legislature to appropriate funds," McDonnell spokesman J. Tucker Martin said.

Kaine is scheduled to meet in New York on Wednesday with representatives of Wall Street credit rating agencies concerned about the state's debt payments.

Kaine said he will tell them "we are having a cooperation and compromise challenge" but the stalemate will not affect Virginia's creditworthiness.

The mood in the state capital was sour Tuesday as lawmakers, lobbyists and administration officials began talking openly about the possibility that a budget would not be in place by July 1.

"Everyone's been going along thinking this is not going to happen," said Rob Lockridge, the Richmond-based executive assistant to the University of Virginia's president. "Now, a lot of things are coming together. This is really a 'how could this be happening?' moment."

At their monthly meeting Monday, Virginia Tech officials might ask the Board of Visitors to empower the university's president and the board's executive committee to decide how to continue school operations should money run out, university spokesman Larry Hincker said.

"The belief then, as well as now, was that this was going to get resolved," he said. "I think that people are beginning to ask questions about what will happen next."

Lawmakers, too, seemed increasingly agitated about the possibility of having to explain a shutdown. After months of complaining that constituents seemed disengaged, lawmakers have started to get a flood of worried questions, particularly from state employees.

"They want to know if they're going to get paid," said Sen. Phillip P. Puckett (D-Russell). "I'm getting that question at least once a day."