RICHMOND, DEC. 17 -- Virginia Gov. L. Douglas Wilder, struggling to close the state's $1.9 billion budget gap, today proposed early retirement for up to 4,600 state employees, sizable cuts in programs and a $137 million raid on lottery profits.
Also today, state Transportation Secretary John G. Milliken disclosed that lower gasoline use and slowed car sales since the Persian Gulf crisis began have cost Virginia's road-building fund $96.3 million -- dictating a new round of cuts that will further delay some long-planned projects and eliminate others.
Projections say Virginia will be unable to collect 14 percent of the money needed to finance its $13.2 billion general fund budget. The revenue shortfall has grown by $491 million in the last four months.
The budget announcements, presented this morning to legislators who are increasingly skeptical of the governor's approach to Virginia's fiscal crisis, are a preface to next month's opening of the 1991 General Assembly. The session will test Wilder's strength at home just as he is promoting himself for national office as a tough-minded leader who can balance budgets without tax increases.
The state's budget woes came to light immediately after a gubernatorial campaign last year in which Wilder and the Democratic ticket boasted about the health of the state's economy.
Today's budget forecasts, by contrast, assume that Virginia is in a recession, and that the state's employment will continue to drop until the third quarter of next year. The manufacturing and construction sectors are expected to be the hardest hit, Wilder said.
Wilder said that after generally outperforming the nation for the last two decades, Virginia's economy probably will lag slightly behind the national average for the next two years in such vital areas as employment and personal income growth.
"Admittedly, the recent eight-year period of expansion exceeded expectations of most economists," Wilder told legislators. "Unfortunately, the same can be said of the current abrupt downturn in the economy."
Wilder's efforts to close the budget gap come as Maryland officials are scrambling to cover that state's $423 million deficit. The state is undertaking almost no new highway projects and narrowly avoided the layoffs of 1,800 employees last week.
Virginia already has laid off almost 800 workers, and state agencies have cut their budgets 5 percent to 10 percent.
To try to close the remaining budget gap, Wilder proposed to make state workers who are age 50 or older with at least 25 years on the job eligible for retirement.
He estimated that 4,600 of the state's 86,000 workers would qualify. He said he expects about a third of them will decide to take their pensions early, saving the state $12 million during the current two-year budget cycle. Union leaders predicted even more may accept the offer.
Wilder said the shortfall also will force him to implement contingency plans drawn up by state agencies to cut their budgets by an additional 2.5 percent this year and 5 percent next year, saving $150 million. The specifics of these cuts will not be made public until after Christmas.
While most of Virginia's revenue sources are flagging, the state lottery is prospering beyond expectations. The administration is increasing its projected profits from the lottery by $137 million, and will continue to take that money to reduce the shortfall rather than spending it on building projects as originally intended. Administration officials said earlier revenue projections had been too conservative.
In the face of declining transportation tax revenue, Milliken said the administration will propose in January a list of projects to delay or delete from the state's six-year building plan. Milliken said he hopes to shield the highest-profile Northern Virginia projects, such as new car pool lanes on interstates 95 and 66, from the budget ax.
More than $300 million expected to go into highway construction has evaporated since Wilder took office .
Wilder's early retirement proposal also would allow local governments to offer similar incentives to their workers and teachers. Eligible state and local employees would have four months to decide.
The early retirement option would save the state an average of about $100,000 per employee during the next five years. CLOSING VIRGINIA'S BUDGET GAP
Gov. L. Douglas Wilder proposed these steps yesterday for dealing with the growth of Virginia's budget shortfall by $491 million over the next two years, which brought the total budget gap to $1.9 billion:
About 4,600 state employees -- each age 50 or older and with 25 years or more on the job -- will be offered early retirement incentives. If about one-third accept, the state will save $12 million.
State agencies will cut their budgets by 2.5 percent this budget year and 5 percent next year to save $150 million.
Higher-than-expected lottery revenue will contribute $137 million.
The governor said he will make recommendations later on how to save the remaining $191 million, but he ruled out raising taxes or tapping the state's rainy day fund.