The McDonnell administration is asking Virginia agencies to brace for potential cuts of 2 percent to 6 percent as he begins to prepare his one-and-only full biennial budget.
"As we have begun to review the budget requests submitted by agencies, it has become increasingly apparent that the many critical needs of our state will have to be met with what may be increasingly limited resources," Martin L. Kent, Gov. Bob McDonnell's chief of staff, recently told leaders of executive branch agencies.
Mr. Kent cited gloomy national economic forecasts and the tenuous federal budget talks on Capitol Hill as reasons to plan such cuts, telling agency officials in a memo they cannot assume future revenue growth will be enough to cover increased costs from federal mandates and other programs.
Mr. McDonnell, a Republican, made the same request of agency heads last year.
The Board of Education's recalculated budget for funding the state's Standards of Quality and other programs will likely cost more than $300 million, and Virginia also has $18 billion in unfunded liabilities in its retirement system for state employees and teachers, Mr. Kent noted.
The governor is assembling work groups to develop savings proposals in such programs as higher education, public education and Medicaid. For other executive branch programs, he's asking each agency to prepare savings strategies of 2 percent, 4 percent and 6 percent of their 2012-14 general fund appropriation.
Delegate David L. Englin, Alexandria Democrat, said the process is "standard government management," pointing out that former Gov. Tim Kaine, a Democrat, did the same thing.
But while the state has posted surpluses for the past two years as a result of better-than-expected revenues and savings from state agencies, Virginia still has unmet obligations.
For example, the state must repay with interest $620 million in payments deferred from the Virginia Retirement System. It has thus far paid back about $142 million, mostly for teacher pensions, and legislators agreed to accelerate payments into the system during the 2011 budget amendment process.
"I think the important question to ask is how the governor, in good conscience, could have claimed a surplus at the end of June and now be suggesting that cuts to education might be on the table," Mr. Englin said.
But McDonnell spokesman J. Tucker Martin said the request to state agencies is just part of an effort to make sure that the budget preparations take place with all the available information on hand.
"This is a means by which the governor and his advisers can identify potential savings in agency-base budgets and provide flexibility in budget development," he said.
Mr. Kent also urged agency heads to suggest eliminating programs or services even if they're required by state law, because changes to the law will be proposed if the plan is adopted.
The plans are due by Oct. 17.
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