Virginia Gov. Bob McDonnell is asking state agencies to steel themselves for potential cuts of between 2 and 6 percent as he begins to prepare his one and only biennial budget for the next two fiscal years.
“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,” McDonnell Chief of Staff Martin L. Kent wrote in a memo, dated Sept. 30, to executive branch agency heads.
Mr. Kent cited gloomy national economic forecasts and the tenuous federal budget talks on Capitol Hill as reason to plan accordingly, writing that 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 rebased budget for funding the state Standards of Quality (SOQ) has a price tag of over $300 million, and there are also $18 billion in unfunded liabilities in the state’s retirement system for state employees and teachers. Increases in Medicaid costs, aid to localities, economic development, higher education, transportation and public safety will all require attention in the introduced budget, Mr. Kent wrote.
The governor is assembling work groups to develop savings proposals in programs like higher education, public education, and Medicaid, and for other executive branch programs, he’s asking each agency to prepare savings strategies of 2, 4, and 6 percent of its base general fund appropriation for the next biennium.
“The request for agency savings proposals is merely part of the effort to ensure that the Governor’s budget preparation takes place with all available information and options at hand,” said McDonnell spokesman J. Tucker Martin. “This is a means by which the Governor and his advisors can identify potential savings in agency base budgets and provide flexibility in budget development to address funding needs of core services.”
“These savings plans should focus on identifying the lowest priority activities in your respective agency,” Mr. Kent wrote. “You should also focus on savings you anticipate obtaining through your ongoing efforts to restructure internally to drive down administrative costs and to deliver programs more efficiently. You should examine statutory mandates that are outdated and should be eliminated.”
Mr. Kent also directed agency heads not to hesitate to suggest program or service eliminations even if they’re required by state law, as any changes to the law will be proposed if the plan is adopted.
“Governor McDonnell is committed to keeping Virginia on a fiscally sound path in a very difficult and uncertain economy,” Mr. Martin said. “The Governor will continue to balance Virginia’s books by responsibly reducing government spending, ensuring that we invest wisely in the core functions of government that citizens depend upon, and not raising taxes.”
The plans are due no later than October 17.