RICHMOND, AUG. 16 -- Pulling state government out of a projected $1.4 billion budget hole will require laying off some employees and canceling salary raises for the rest, as well as a broad range of other cuts that will affect virtually every state program, Gov. L. Douglas Wilder said tonight.
Wilder, in a speech televised live from his Capitol office, also said that state aid to local governments, which makes up about half of all state spending, will be cut.
Northern Virginia governments receive state help to pay for everything from public school instruction to health clinics for the poor, and local officials have warned that the state's fiscal crunch will cause cuts in local programs or higher local taxes or both.
"My program is tough but fair," said Wilder in a speech that was short on specifics.
"It asks for shared sacrifices. And, more than any other time in modern Virginia history, this plan requires government to be more efficient and effective in its use of scarce resources," he said.
Wilder, who in his seven months in office has worked hard to fashion his image as a fiscal conservative, repeated his pledge that he will not raise taxes.
"I do not believe this is a time of crisis," he said. "Rather, for me and my administration, it is a time of challenges."
The specific cuts announced by the governor total $531 million. That means cuts in aid to local governments and in state building construction, for which Wilder did not give specific dollar figures, must make up the other two-thirds of the $1.4 billion savings required.
Wilder's press secretary, Laura Dillard, indicated that the governor may provide more specifics about his plan when he addresses a joint meeting of the legislature's money committees on Friday.
Specifically, Wilder said he wants to:
Reduce state agencies' spending by $375 million during the next two years.
Forgo planned salary increases for about 80,000 state employees, saving $145 million.
Eliminate most of $11 million appropriated for private museums, foundations and attractions.
Divert most lottery profits to essential services, and continue a moratorium on state building construction to which gambling profits earlier had been assigned.
Ask local governments to share in the reductions, but when possible to delay those cuts until the second year of the two-year budget cycle, which begins next July 1.
Wilder pointed out that his plan does not call for any tax increases, and does not call for any reductions in aid payments to the poor and medically needy, or in essential public safety functions.
Virginia Republicans, who were granted response time immediately afterward on most television stations that carried the governor's speech, agreed that Wilder's prescription of aggressive spending cuts rather than tax increases was the right approach.
But the GOP broadcast contended that the fiscal crunch was predictable, the consequence of a decade in which Democrats have dominated fiscal policy through their control of both houses of the state legislature and the governor's office.
Republicans repeated their call for a more open budget process, which would take away power from the few senior legislators who dominate fiscal policy and allow the minority party to play a larger role.
"We've suspected that revenue forecasts were too optimistic, and we've known that the state budget was becoming far too large," said state Sen. Joseph B. Benedetti (R-Richmond).
During last fall's gubernatorial campaign, Republican nominee J. Marshall Coleman accused Democrats of letting spending grow faster than likely revenue, but his complaints were dismissed as partisan rhetoric by Wilder and then-Gov. Gerald L. Baliles.
A few weeks after the election, however, Baliles and his financial advisers warned that the state revenue forecasts had dropped sharply, and that $190 million would have to be pared from the fiscal year 1990 budget.
Since then, every new revenue forecast presented by the state's financial officers has been more dire than the last.
Much of the blame, they said, can be traced to a cooling in the economy of Northern Virginia -- an engine of growth throughout the 1980s -- where Defense Department contracts awarded to "Beltway Bandits" and other high-tech firms are diminishing, and the real estate industry is also ailing.
The Virginia Constitution doesn't allow the state to operate at a deficit. When Wilder and others talk of a "shortfall," they don't mean that the government is in the red, or even that it is raising less money than the year before. What has happened, instead, is that projections for growth in tax revenue failed to meet expectations.
But Republicans said that sound budgeting would allow for swings in the economy. "The state spent every dime it had, and didn't worry about what would happen if the money stopped rolling in," Benedetti said.
The state's two-year budget is $26 billion, but half of that is made up of "non-general fund" revenue -- taxes such as fees on automobiles that are designated for a specific purpose. Most of Wilder's $1.4 billion in cuts, therefore, must come from the $13.1 billion general fund.
Wilder said he may eliminate three state agencies: the Department of Volunteerism, the Council on the Status of Women and the Council on Indians. That would be largely symbolic, however, because they have a total of nine employees.
Wilder, who recently has tried to put part of the blame for the state's budget ills on Baliles, also said the Department of World Trade, which Baliles created with great fanfare, performs a costly duplication of work done by the Department of Economic Development, and will be scrapped.
For the first time last night, Wilder cast the current funding crunch as a long-lasting problem, "not a short-term one from which we will rebound quickly or dramatically. Rather, it likely will last several years."