- The Washington Times - Wednesday, January 9, 2002

RICHMOND State agencies could either be eliminated or consolidated as part of Virginia Gov.-elect Mark R. Warner's plan to correct what he calls a "structural imbalance" in the state's budget.
"We need to put in place the framework to structurally fix this problem, and that will require a top-to-bottom review of state government," Mr. Warner said after hosting an economic round-table discussion at Virginia Commonwealth University. "There is the potential that agencies could be consolidated."
Mr. Warner, a Democrat, has already said that layoffs of state employees, deep cuts in state agency budgets, elimination of tax credits, deductions and reductions, and other drastic measures may be needed to plug a $1.3 billion hole in the remaining six months of the current 2001-2002 budget.
"What we're looking at is how we can find savings," Mr. Warner said. "All things are on the table."
Mr. Warner said he hopes the cuts that he proposes and changes to the budget outgoing Gov. James S. Gilmore III presented last month are permanent. In essence, Mr. Warner said, he wants to scale back the size of state government, which grew by as much as 52 percent under Mr. Gilmore.
Mr. Warner mentioned the parole board, which he is planning to dismantle soon after taking office Saturday, and a work force training program that he said has scores of programs that duplicate others.
The Washington Times also reported yesterday that Mr. Warner is considering limiting the number of expansions by many state colleges and universities into the Northern Virginia area, which may result in school closings.
"There can clearly be consolidations that's been going on in business for years. It has not been happening as much in state government," said Mr. Warner, who made a fortune in the cellular phone industry and has never held elected office.
During his presentation before a group of state and national budget and economic experts, Mr. Warner laid out the gloomy news of the state's economy. He also told the group to expect a "wild ride over the next few months" as he wrestles with legislators over the budget.
Mr. Warner stated again his desire to eliminate many of the 50 tax credits and deductions, totaling $600 million a year, that could be used to balance the budget. After the two-hour meeting, Mr. Warner said he would also probably have to rely on "one-time fixes" like taking $467 million from the rainy day fund and using $259 million in Medicaid funds to balance the budget.
Despite the shortfall, Mr. Warner said he was committed to eliminating the car tax by the end of his term in 2005 and raising teachers' salaries to the national average. He also said that "it's important that a safety net remains" for the poor, the elderly and others who need help.
The state's economic recovery is largely dependent on how well the national economy performs. And Mr. Warner brought in allies yesterday at the meeting to make his case that rough waters are ahead for Virginia.
"No one can predict what will happen to the U.S. economy this year," Federal Reserve Bank of Richmond President Alfred Broaddus Jr. said.
But Mr. Broaddus and other economists said there is some optimism that an economic recovery could come at the end of the next year, albeit gradual.
Northern Virginia will play a great role in the recovery for the state, said Christine Chmura, an economist and adviser to the past three governors.
"Over the past couple of years Northern Virginia has been driving growth," Ms. Chmura said. But she added that even the high-tech industries of Northern Virginia may not be able to stave off a worsening recession this time.
Scott D. Pattison, executive director of the National Association of State Budget Officers, put Virginia's financial situation in the darkest terms, saying the state is in the same situation as California, which has a $12 billion shortfall and constitutionally mandated tax increases.
"The states that have the most success [at a recovery] are those that put everything on the table," Mr. Pattison said.

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