- The Washington Times - Thursday, March 8, 2001

Virginia Gov. James S. Gilmore III said yesterday he won't cut transportation spending to close the state's $421 million budget deficit.

The Department of Transportation last week submitted recommendations that included cutting more than $40 million in transportation funds that the governor and legislature earmarked just last year to jump-start key transportation projects, but the governor said he won't allow that to happen.

"We will not have to make any transportation cuts of any kind. No project will be delayed even so much as a single minute," Mr. Gilmore said to several reporters at Republican National Committee headquarters in the District of Columbia.

The announcement also signals that the budget showdown might be nearing an end, since Mr. Gilmore is comfortable enough with potential cuts to start exempting agencies.

"I think that we are almost there. We have made great progress, and we are close to making the final decisions about how to balance this budget," he said.

The Republican governor is wrangling with the Republican-controlled General Assembly over the two-year, $50 billion budget passed last year.

The House and Senate adjourned Feb. 24 after failing to agree to amendments to the budget, stalling over the size of the governor's signature rebate on the car tax. The House agreed with the governor's schedule to move the state's share of the rebate from 47.5 percent to 70 percent this year. The Senate has proposed only a 55 percent rebate.

That has left Mr. Gilmore with the responsibility of balancing the budget with revenue coming in less than originally expected. Thus the two-year budget has a $421 million hole.

Mr. Gilmore already has identified more than $100 million in unspent cash and as much as $405 million of capital projects that can be frozen to help close the gap. He also has in front of him plans from every agency except public education and human services for how to cut 15 percent of their budgets. That's how the proposed cut to transportation funding came to be considered.

Mr. Gilmore's legislative opponents said it doesn't matter what the governor exempts moving the car-tax rebate forward means less money for necessary government spending.

"They've decided that the car tax comes above school construction and everything else," said Sen. Richard L. Saslaw, Fairfax Democrat.

The Senate had proposed using the money the governor had proposed for the car-tax cut to fund additional public safety and health services, in particular.

Mr. Gilmore will meet tomorrow morning with the House budget negotiators and Speaker S. Vance Wilkins Jr. to update them on his progress and plans.

One issue will be whether or not to have a special legislative budget session. If the cuts don't hurt too much, there is less incentive for the legislature to work out a budget.

But if there is no special session it will be impossible to offer the pay raises for state employees and teachers the legislature had hoped to give.

Both the House and Senate found money for raises by lowering the state's contribution to the Virginia Retirement System in both budget years. But the VRS board had only recommended a decrease in the second year, not the first year, though it agreed the system was overfunded.

The governor was able to use the money from the VRS recommendation but cannot get at the first year money without legislative action leaving him with $122 million less cash to use than the assembly had in drawing up its budgets.

Fulfilling those needs is one reason why many lawmakers still want a special session.

"I think we should have one even if we don't address the entire budget," said Delegate Vincent F. Callahan Jr., Fairfax Republican and the chief House budget negotiator.

But a majority of senators have repeatedly said they see no reason to meet if the governor isn't going to compromise on the car tax, especially since the governor had pledged in the 1997 campaign that the tax cut wouldn't eat into spending.

"It's his mess; let him clean it up. The Senate just tried to help him keep his campaign promise," Mr. Saslaw said.

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