Budget Shortfall Forces Va. to Cut Hundreds of Jobs

By Tim Craig
Washington Post Staff Writer
Friday, October 10, 2008

RICHMOND, Oct. 9 -- Virginia Gov. Timothy M. Kaine announced Thursday that he is laying off nearly 600 state workers, closing some prisons and cutting funding for higher education by about 6 percent as the state struggles with one of its worst financial crises in modern times.

Kaine (D) has warned for weeks that the nationwide economic downturn is changing the state's revenue estimates. On Thursday, he put a specific number to that prediction: a $2.5 billion shortfall for Virginia's two-year 2009-10 budget.

"Why is there a shortfall? Businesses are hurting; they are making less money. Citizens are hurting; they are making less money," Kaine said. "When they make less money, they pay less taxes."

Virginia is now expected to take in less money this year than it did last year -- a phenomenon that has happened only twice in the past 40 years.

The 570 layoffs, which take effect immediately, will be scattered across government and the state's higher education system. Kaine said the state will leave vacant an additional 800 jobs.

He said that because most of the layoffs will be in administrative positions, he hopes to minimize service disruptions. But he warned that more jobs probably will be lost in the coming months.

The governor said that Thursday's moves will close about half of the shortfall but that the challenge will be ongoing and will require additional spending reductions. The General Assembly will have to consider some "big policy choices" when it convenes in January, he said. Kaine mentioned the criminal justice system and public education as two possible areas for future savings in the two-year $77 billion budget.

"We are going to have to take a close look at all of our programs and ask the tough questions," Kaine said.

For now, Kaine attacked the most immediate problem: a $973 million shortfall in the current year's budget. In addition to the layoffs, Kaine announced that he is delaying a planned 2 percent pay raise for state employees until next year, transferring $400 million from the "rainy day" reserve fund and slashing spending by about $279 million.

Those cuts follow $1.7 billion in cost reductions the administration made last year.

So far, Kaine said, he is sparing K-12 education from any sizable reduction and is also protecting programs that provide direct services to residents, such as mental health treatment. But he said that could change in the next round of cost savings.

The spending reductions announced Thursday will affect nearly every state agency.

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