Va. budget plan would shrink general spending to 2006 levels

By Rosalind S. Helderman and Fredrick Kunkle
Washington Post Staff Writer
Wednesday, March 10, 2010; B01

RICHMOND --Virginia will do less for its residents, and expect local governments and private charities to do more, under a new state budget likely to have an impact for years to come.

With Virginia facing what lawmakers say is the grimmest financial picture in memory, the House of Delegates and Senate adopted budgets last week that would shrink general spending to about $15 billion, or no more than was spent four years ago. In other words, Virginia would spend about the same amount on services as it did when there were 100,000 fewer residents and many fewer were in economic distress.

Now, as the annual legislative session draws to a close, leading delegates and senators are negotiating serious differences between the two spending plans, with hopes of agreeing on a final document before the scheduled adjournment Saturday.

Negotiators could raise fees to soften the blow of the cuts, but they are not expected to increase taxes, heeding Republican Gov. Robert F. McDonnell's threat to veto any new levies that he believes would hurt families struggling in the poor economy.

Regardless of the final tinkering, lawmakers from both parties say the unprecedented contraction of state spending is sure to be felt from Leesburg to Lee County. Hospital wings could close. Schools would probably reduce teaching staff. Criminal defendants who cannot afford an attorney could appear in court without one. Private hospitals and nursing homes would pay more to provide health services to the poor and elderly. Funding for the arts might be left entirely to the private sector for the first time.

Or, if Virginians insist on saving certain programs, local governments will increasingly be forced to maintain them, perhaps by raising property or other taxes.

"What you see is a very significant reduction in the role the state will play as a funder of services that Virginians have come to expect," said Michael Cassidy, executive director of the Commonwealth Institute for Fiscal Analysis. "At its core, what this budget represents is a stepping back from the state's role as a funding partner."

Many Democrats believe that the state's new spending priorities abandon its most vulnerable residents and will have an impact that could extend well beyond the current two-year budget cycle.

"That's my biggest concern -- that these cuts are never going to come back, and we're just going to leave these people basically helpless," said Del. Robin A. Abbott (Newport News).

But many Republicans believe that the budget crisis offers the long-awaited opportunity to pare down spending in a state that has taken on too much.

"There's no question this is scaling back," said Del. M. Kirkland Cox (Colonial Heights). "I think some of it is structural and won't come back."

Education cuts

In Martinsville, a former textile-manufacturing hub that has the state's highest unemployment rate -- 20.3 percent -- city School Superintendent Scott R. Kizner said his district faces painful choices no matter what negotiators do.

Under the best-case scenario, the Martinsville school district would have to cut 10 percent of its workforce, or 46 positions, including 16 teachers. At the worst, the district would have to let 71 employees go, more than 15 percent of its workforce.

Kizner and other schools advocates have been bracing for the hit, realizing that 35 percent of the state's total general operating budget goes to education and cannot not be shielded in the face of a $4 billion budget gap. But they have been particularly critical of a proposal by the Republican-dominated House to fund several programs for at-risk children as block grants that would be distributed based on a school district's size. They say the new approach and funding cuts would hit hardest on the state's poorest districts, particularly preschool programs in urban areas, while cushioning cuts to suburban districts.

JustChildren, a program of the Legal Aid Justice Center, says proposed House cuts could force cities such as Richmond, Danville and Petersburg to eliminate preschool programs under the Virginia Preschool Initiative.

"The House budget steals from the poor Zip codes to give to the rich," said Angela A. Ciolfi, an attorney for JustChildren.

House Majority Leader H. Morgan Griffith (Salem) said the bleak economic outlook forced the House to cut good programs that were built into school budgets during more prosperous times. The preschool program grew rapidly in the past four years. According to McDonnell, education funding has grown by $2 billion -- 55 percent -- since fiscal 2000.

"When the calf was fat, we added a lot of stuff in," Griffith said. "Are we stepping away from that? Yes, but we're not stepping away from the basic standards."

Griffith said the block grant approach also allowed the House to target broad areas for cuts but allow local governments control over reducing costs to specific programs.

"What's important in Grundy may not be the same thing that's important in Great Falls," he said.

Health care funding

The state spends more on health care each year than on anything other than education. Both the House and Senate have proposed cuts to Medicaid, the federal- and state-funded health program for low-income people.

The Senate, however, has proposed ameliorating those cuts with funds that are likely to be approved by the federal government. Without those federal funds, the program would probably enroll fewer children and pregnant mothers. And without the federal help, reimbursements to Medicaid health-care providers also would drop by at least 4 percent: By the end of the two-year cycle, the state could reimburse hospitals as little as 60 cents for every dollar of care they provide.

The health-care budget would also probably pay for only a few hundred new slots to provide services for the developmentally and intellectually disabled; the state's waiting list for such services already numbers about 6,000 and continues to grow.

The impact, particularly on rural communities, could be dramatic. In the past six years, eight Virginia hospitals have closed their maternity wings, which tend to serve an especially high percentage of women on Medicaid. More closures could follow with further cuts.

"If the state cuts Medicaid, it just drives us into a losing position," said Scott Burnette, president and chief executive of Community Memorial Hospital in rural South Hill. With 72 percent of its patients on Medicaid, the maternity wing might have to close if the program is cut further, forcing some pregnant women to drive an hour or more to Richmond, South Boston or North Carolina to give birth.

"But you can't lose money every year and continue to operate," Burnette said.

Many conservatives applaud attempts to hold the line on state spending on health care, noting that it has been one of the fastest growing areas of state government. General fund health-care spending has risen 76 percent since fiscal 2000.

"We're on an unsustainable path with Medicaid spending," said Ben Marchi, executive director of the Virginia chapter of Americans for Prosperity, which held a rally attended by several hundred on Monday calling for reduced state spending. "Unless we increase taxes or cut back spending, it's going to go broke."

Arts programs

Though the sums are small, the battle over arts funding has become one of the most contentious between the Republican-dominated House and the Democratic-led Senate.

The House has recommended halving state funding for the Virginia Commission for the Arts next year and abolishing all funding the following year, a cut that would affect a variety of cultural programs, including Signature Theatre in Arlington County, the Art League in Alexandria and the Fairfax Symphony Orchestra. The House also suggested eliminating funding for the Virginia Foundation for the Humanities, which sponsors the Virginia Festival of the Book among other programs.

With money scarce, Republicans propose eliminating government's role in areas that they believe are beyond the state's core function, especially the arts.

"There are people who can step in and fund that," said Cox, the House Majority Whip.

The Senate has proposed reducing but not eliminating state spending on the arts.

"Yes, absolutely, the private sector should be involved in the arts," said Beth Temple, a board member of Virginians for the Arts. "But I think government has certain responsibilities to citizens. One, I believe, is to improve quality of life."

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