Virginia Gov. Terry McAuliffe, in an attempt to balance the state’s $1.5 billion budget shortfall, plans to eliminate planned pay raises for state employees and teachers and will ask the General Assembly to dip into the rainy-day fund to keep funding intact for education, public safety and Medicaid.
“There will be no program cuts to public education, Medicaid for our families most in need, nor our core public safety services,” McAuliffe (D) said in a statement Thursday. “We did not kick our budget problems to local governments by reducing payments to cities, counties or towns. These are obviously difficult decisions to make and there may be more to come, but I am confident that the progress and investments we are making today will put Virginia on course for strong growth well into the future.”
McAuliffe will also again attempt to persuade the Republican-led General Assembly to approve Medicaid expansion, which he said would free $211 million a year in state money spent on mental health care and hospital care for the uninsured. But the GOP has previously blocked expansion in 2014 and 2016.
State Sen. Ryan T. McDougle (R-Hanover), chairman of the Republican caucus, said it is highly unlikely that legislators will change their minds because they worry the federal government could drop its subsidy of the insurance in the future.
“I don’t think it’s a prudent move,” he said. “The governor is out of office in 14 months, and we have to deal with the budget consequences for many more years.”
Virginia has an $861 million budget hole for fiscal 2016 and 2017, and a projected $654 million shortfall for fiscal 2018, due to lower-than-expected payroll and sales tax receipts. Employment grew in Virginia in fiscal 2016, but jobs lost were high-paying defense-contracting and federal jobs. The growth came from lower-paying and part-time positions filled by younger workers.
McAuliffe said he will also ask state agencies to trim their budgets by $73 million, cut 26 existing jobs and eliminate 300 vacant positions. Grant payments will be delayed. Discretionary spending will be cut. Other difficult decisions may be coming, he added. He plans to address the fiscal 2018 shortfall when he submits his budget proposal in December.
McDougle said he would not favor cuts to law enforcement, but nothing should be immune as lawmakers weigh budget trims. He said the legislators may look to delay one-time expenditures and consider issuing debt rather than paying cash for certain projects that he preferred not to name.
Del. S. Chris Jones (R-Suffolk), chairman of the House Appropriations Committee, pointed out that the House helped preserve education funding and is putting more money into the state’s retirement system. But the growth of the state’s general fund budget has not kept up with inflation, he said. The state expected a 3.2 percent growth in general fund revenue but saw only a 1.7 percent growth in fiscal 2016.
“We’ve taken a prudent, cautious approach to budgeting. The bottom line is we need to get the economy back on track and get growth going again,” Jones said.