- The Washington Times - Monday, December 19, 2011

RICHMOND — Virginia taxpayers would see more money for such big-ticket items as education and the state’s depleted public pension system under the two-year budget blueprint Gov. Bob McDonnell released Monday that also holds the line on taxes as the state slowly emerges from a recession.

Mr. McDonnell, a Republican, said his proposal for the two-year, $85 billion budget — the largest in state history — reflected his priorities of creating jobs, streamlining government, funding such core services as transportation and education and steeling for economic uncertainty in the coming years.

“I know some would prefer that government take the easy way out and raise taxes on our hardworking citizens even as we continue to recover from this economic downturn,” he told lawmakers Monday morning. “But that would avoid us having to set priorities and [speak] honestly with the citizens about what we can and cannot afford.”

Among the budget’s major components is $2.21 billion to shore up the state retirement system and a $230 million infusion into higher education — proposals that garnered praise from Delegate David L. Englin, Alexandria Democrat.

“On the spending side, there’s a lot of good things in there,” he said.

But Mr. Englin criticized other provisions of the budget, particularly an $81 million funding decrease for pre-kindergarten programs, which was championed by Mr. McDonnell’s predecessor, Democrat Tim Kaine.

The governor’s office said the amount reflected savings through more accurate data regarding participation and was not a “cut” to the program.

Between additional funding and savings is a total of $438 million more going to K-12 education in the budget.

Mr. McDonnell also proposed diverting a greater percentage of the state sales tax to transportation, a concept lauded by Republicans but historically opposed by Democrats, who are against taking funds from the same pool of money that goes toward such services as health care and public education.

The governor, however, reminded critics about the $3.3 billion transportation package that he helped shepherd through the General Assembly in 2011 and strongly defended the proposal, adding that more elements of his transportation agenda were forthcoming.

“The people who say we can’t afford this are just flat wrong,” he said. “The people that are saying that are the people who want to raise taxes and, worse, don’t want the government to be more effective and more efficient. They don’t have the courage to tell people what we can afford and can’t afford. They don’t have the courage to cut spending in areas that need to be cut. That’s one of the choices that I’ve made.”

He also decided to prepare Virginia for calamity amid lingering uncertainties about the state, national and global economies.

Money for the state’s rainy-day fund would increase by $300 million over the next two fiscal years. With revenue growth, the amount is projected to exceed $600 million by June 30, 2014.

The governor also proposes $50 million for a special reserve fund to steel against potential reductions in federal spending, which would impact the defense contractor-rich Northern Virginia economy and the military-rich Hampton Roads region.

The budget also includes an additional $40 million for economic development and $30 million for the intellectually and developmentally disabled. It would chop $7.2 million in funding for public broadcasting, a perennial target of the GOP.

In the health and human services area, provider reimbursements for Medicaid did not decrease, as some had feared. But the budget does not provide for anticipated inflation in the federal-state health insurance program for the poor for hospitals, nursing facilities, outpatient rehabilitation clinics or home health care providers. The withholding for hospital and nursing facility rates alone would result in savings of about $324 million.

Despite the inflation withholding, the budget includes $650.5 million in general funds for the expanding Medicaid program in the biennium, though much of the money will come from the federal government. The federal government initially will pay 100 percent of the cost of the expanded Medicaid population resulting from the health care overhaul, should the Supreme Court uphold its constitutionality next year.

State workers were also largely spared from any broad-scale layoffs in the plan. Fewer than 300 layoffs are recommended out of a state workforce of 103,000, including reductions resulting from the already-announced shuttering of the state correctional facility in Mecklenberg County.

The budget has no tax increases, but includes $10 million in proposed fee increases to help fund the Department of Motor Vehicles.

“On the House side, we’ll look at every single fee that’s being proposed,” said House Majority Leader M. Kirkland Cox, Colonial Heights Republican. “That’s certainly been something we’re very reluctant to do.”

Key statistics:

• $84.9 billion budget

• 40.7 percent, or $34.5 billion, from general funds

• 59.3 percent, or $50.3 billion, from non-general funds

• General fund revenue (primarily individual and corporate income taxes, sales and use taxes)

— $16.2465 billion in fiscal 2013, 3.3 percent growth

— $16.9695 billion in fiscal 2014, 4.5 percent growth

• Non-general fund revenue (funds earmarked by law for a specific purpose; for example, federal grants for entitlement programs such as Medicaid)

— $24.0052 billion in fiscal 2013, 0.1 percent growth

— $25.502 billion in fiscal 2014, 6.2 percent growth

• Unappropriated balance of $31.4 million left on June 30, 2014

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