- The Washington Times - Sunday, March 14, 2010

RICHMOND — Legislative budget negotiators finally came to terms on a new bare-bones budget for the cash-strapped state government early Sunday.

The two sides shook hands on a $70 billion two-year austerity spending plan around 1 a.m. It includes the most dramatic cuts to state services and programs in modern Virginia.

The full House and Senate were expected to take up the budget in a final vote before adjournment late Sunday afternoon, one day behind schedule.

That left sleep-starved legislative staffers to toil around the clock to double-check, proof and print the new budget on a night already shortened by one hour from the shift to daylight saving time.

The new budget is without the unpaid days off that were part of the budget initially in December. It provides state workers no pay raise but a 3 percent bonus in 2011 contingent on revenue growth.

It retains substantial reductions in state support to local school districts, but not as severe as the cuts the House sought in its version of the budget a few weeks ago.

Negotiators also resolved last-minute differences over state reimbursements to local jails that hold state inmates, a $10 million gap in the higher education budget and a fleeting flap over how to restore reduced state contributions to the public employee retirement fund.

At one point, the disagreements threatened to derail the talks and leave lawmakers at loggerheads well past Saturday’s scheduled adjournment.

Lawmakers said they want to stay on a schedule that will still allow them to take a final vote Sunday evening.

Legislators and staffers said a key turning point was a substantial softening of deep House cuts to spending for kindergarten through high school.

Delegate S. Chris Jones said the accommodation by the Republican-led House negotiators — with their Senate counterparts led by Democrats — involved allowing school districts “maximum flexibility locally to make changes without affecting classroom instruction.”

The Senate reciprocated by reducing a schedule of new and increased fees that initially topped $300 million.

But the compromise will contain draconian budget reductions, ensuring thousands of government layoffs and pressure on local governments to boost their taxes to preserve some services.

With the cuts, state government’s spending levels from mid-2010 to 2012 revert to those of 2006, an unprecedented rescission of state spending.

The cuts are forced by the worst economic downturn since the Great Depression. Revenues for the new budget are about $4 billion short of their forecast. That is in addition to tax collections since mid-2007 that have been more than $7 billion behind their estimates.

And there is no assurance that conditions won’t worsen further. The state’s latest revenue report for February was down nearly 7 percent from the same month a year earlier.

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