By Anita Kumar
Washington Post Staff Writer
Wednesday, September 9, 2009
RICHMOND, Sept. 8 -- Virginia Gov. Timothy M. Kaine announced Tuesday that he will eliminate 929 jobs, including 593 through layoffs, close three correctional facilities and cut as much as 15 percent in aid to colleges and universities to make up for a $1.5 billion budget shortfall.
Kaine (D) did not propose raising taxes, and limited cuts to K-12 education and local government, but he did trim aid to police and sheriff's departments by 5 to 7 percent.
Most of the state's 102,000 employees will be required to take a one-day furlough in May, and its contribution to their retirement plans will be reduced in the final quarter of the year to save more than $104 million.
The announcement marks the fourth time since the two-year budget began in July 2008 that Kaine has scaled back the state's forecast for tax and fee revenue as Virginia suffers from the worst economic downtown since the 1930s.
"Like all citizens and all businesses, we are having to tighten our belt," Kaine said at an afternoon news conference filled with reporters and lobbyists on Capitol Square.
Kaine will make many of the changes immediately, including increasing fees, such as those to make a state park reservation by telephone or file campaign finance disclosure reports by paper. But he must seek legislative approval to borrow $280 million from the state's rainy-day fund.
All savings must be made by the end of the fiscal year in June.
"We knew there was going to be blood everywhere, but this seems to be a reasonable plan," said Sen. Janet D. Howell (D-Fairfax), a member of her chamber's Finance Committee and a budget negotiator, after she was briefed by Kaine on the cuts.
Kaine's proposal includes cuts to almost all state agencies, although higher education and corrections will suffer the brunt of them.
Colleges and universities will be cut 13 to 15 percent, but Kaine said he will ask the federal government for permission to use stimulus money to restore some of the trims, resulting in a decrease of 7.7 percent. The schools might consider layoffs or tuition increases to make up for the loss.
Two prisons, in Brunswick and Botetourt counties, and a juvenile correctional center in Natural Bridge Station will shut down. Inmates will be transferred to other prisons or kept in local jails.
Dana Schrad, executive director of the Virginia Association of Chiefs of Police, said local police and sheriff's departments and the Virginia State Police will lose a combined $56 million this year, in addition to taking more inmates into crowded local jails.
"This hurts," she said.
Schrad said that large departments might be able to absorb the cuts but that the others will suffer. Some small departments might be forced to close altogether, she said.
Virginia's announcement comes as other governments in the region continue to wrestle with the recession's effects.
Late last month, Maryland Gov. Martin O'Malley (D) announced a second round of budget cuts to cope with a $700 million shortfall that emerged just weeks into the new fiscal year. The cuts included 205 layoffs, furloughs of up to 10 days and more than $200 million in state transportation aid and other assistance for local governments.
D.C. Mayor Adrian M. Fenty (D) has eliminated about 1,900 jobs and supported increases in parking meter rates and sales, cigarette and gas taxes to close a $666 million shortfall over the next three years.
In Virginia, state revenue projections have been lowered by $7 billion since July 2008, resulting in deep cuts in education, law enforcement and health care and the elimination of hundreds of jobs. An infusion of federal stimulus money helped the state avoid deeper trims.
This shortfall reflects $1.2 billion from this fiscal year, combined with $300 million carried over from the previous fiscal year. Lawmakers put aside $160 million last year for future economic problems, which will be used this year.
Kaine spent weeks reviewing recommended trims of as much as 15 percent from each state agency. He said one of his top priorities was to cut as little as possible from public schools, most of which opened for the year Tuesday.
Robley S. Jones, director of government affairs for the Virginia Education Association, said funding will be reduced by about $171 million. "He did as much as he could to spare K-12," Jones said.
State revenue collections fell 9.2 percent last year -- the most significant drop in modern history -- because of dramatic reductions in individual and corporate income tax collections and a decrease in recordation taxes, sales taxes and lottery money.
State revenue collections are projected to fall 1.6 percent this year. It is the first time revenue has been projected to decline for two straight years.
Many legislators have long accused Kaine of being overly optimistic when it comes to the state's finances. No one said that Tuesday.
House Speaker William J. Howell (R-Stafford) called the cuts "a first and essential step" in addressing the budget shortfall and praised Kaine for not proposing a tax increase.
"In the midst of this economic recession, increasing the financial burden already being borne by Virginia families and businesses through higher taxes would only serve to prolong an economic turnaround and weaken any recovery," Howell said.
About 450 state employees have been laid off since October, and hundreds of others have been transferred or demoted.