Virginia governor proposes budget cuts and no tax increase

By Anita Kumar and Rosalind S. Helderman
Washington Post Staff Writers
Tuesday, January 26, 2010

RICHMOND -- Virginia Gov. Robert F. McDonnell recommended Monday postponing equipment purchases, keeping vacant positions open, spending money from a tax amnesty program and reducing the state's contribution to the retirement plan to pay for his new spending proposals.

But the new governor's first round of budget cuts introduced by news release included only one-time trims and shifts in money, not long-term policy changes, to help make up for the state's multibillion-dollar budget shortfall.

The cuts are designed to offset $50 million of ambitious and costly proposals McDonnell (R) made last week to create jobs and spur economic development, including programs that lure businesses to the state, new investments in the tourism, wine and film industries, and reviving the economically distressed Southside region.

It was McDonnell's first set of budget cuts since taking office Jan. 16. Virginia faces a $4.2 billion budget shortfall over the next two years in the worst economic crisis since the Great Depression.

McDonnell opposes raising taxes, including Democratic former governor Timothy M. Kaine's proposal to raise $2 million by increasing the state's income tax, and Democrats are eager for McDonnell to provide other possible cuts.

"As I understand them, I can find nothing to find fault with here,'' said Sen. R. Edward Houck (D-Spotsylvania), a member of the Senate Finance Committee. "But the real issue is, where are the $2 billion in cuts? We need the governor to give us guidance on those cuts."

McDonnell will not submit a revised two-year budget to the General Assembly, as is the usual practice. Instead, he has said he will submit a series of budget amendments and inform lawmakers of his priorities.

He had expected to submit budget amendments last week but postponed the announcement. He told reporters and legislators that he would submit a series of other cuts to make up for the remaining shortfall.

McDonnell proposes saving $500,000 by eliminating a maintenance reserve fund, $4 million by not filling vacant positions at the Department of Correctional Education, $1.2 million by deferring equipment purchases at the Department of Corrections and $5 million from an additional federal grant for a food stamp program.

He also recommends spending $21 million collected through last year's tax amnesty program and collecting an additional $25 million through reducing the state's contribution to the retirement system.

"I'm pleased he's making some recommendations and sending down some amendments to implement the ideas he's laid out,'' said Del. S. Chris Jones (R-Suffolk). "This is a beginning, but we have a very long way to go. I look forward to the administration offering ideas on how we can close the shortfall."

Last week, McDonnell proposed doubling the amount of money spent on the governor's opportunity fund, a program designed to lure businesses to the state; increasing tourism funding by $7.2 million over the next two years; and spending $2 million to open offices in growth markets in China, India and the United Kingdom.

"This is the most important issue currently facing our state, and it deserves our full attention,'' said Lt. Gov. Bill Bolling, who serves as the state's chief jobs creation officer. "These legislative initiatives and financial investments will send a message that we are serious about getting Virginia's economy moving again."

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