- The Washington Times - Tuesday, September 18, 2007

RICHMOND (AP) — Layoffs of state workers are likely because of a looming budget shortfall, Gov. Timothy M. Kaine‘s top fiscal adviser told the House Appropriations Committee yesterday.

Finance Secretary Jody Wagner said the number of layoffs probably would be small but could be greater if the government isn’t allowed to use its cash reserves.

“This isn’t going to be a massive layoff situation,” Mrs. Wagner said. “We will have some strategic layoffs, we will have some vacancies that aren’t filled and we will have some retirements.

“But if the decision by the General Assembly is not to use the rainy day fund, there could be more layoffs.”

If cash reserves can be used, the job losses would likely be less than 50, she said. The state employs more than 100,000 people.

The administration estimates that revenue for the current budget will fall $641 million below the forecast levels on which state spending through June is based.

Largely because of slowdowns in the once-vibrant housing market, Mr. Kaine, a Democrat, will have to revise the revenue forecast in December when he presents his new budget proposal to the Republican-dominated legislature.

Mr. Kaine has ordered state agencies to draw up plans for paring their operating budgets by 5 percent. Mrs. Wagner told the House panel that some job cuts inevitably would be part of those cuts.

“When you look at agencies, most of an agency’s expense is payroll,” she said.

Republicans in the legislature oppose the use of the reserve fund and have said so during the past week in an exchange of letters with Mr. Kaine’s office. They blame miscalculations by the administration for half of the current shortfall and, because of that, contend that use of the state’s $1.2 billion nest egg when revenue has slowed sets a bad precedent, particularly considering new spending initiatives Kaine is planning.

“The governor just can’t do what he wants to do with the flatness in this economy and with the glitches in their formula. He can’t do what he wants to do with the rainy day fund,” said House Republican Leader H. Morgan Griffith of Salem.

Major fiscal demands await the 2008 legislature in updating mandatory public school standards, upgrading the state’s mental health system after failures exposed by the April massacre at Virginia Tech and with Mr. Kaine’s own expansion of pre-kindergarten programs.

Mr. Griffith faulted Mrs. Wagner for raising the prospect of layoffs, accusing her of using it to help bolster the case for using the reserves.

“It’s like they’re saying, ‘throw out layoffs and let’s get everybody concerned,’ ” he said.

Mrs. Wagner also faced grilling from legislators who are demanding that Mr. Kaine turn over recommendations for spending cuts he has received from state agency chiefs.

“We’re telling them we’d like to look at some of those Cabinet documents to see what choices you’ve made,” said Delegate Clark Hogan, Halifax Republican.

Mrs. Wagner said legislators will get to see them after Mr. Kaine decides which cuts to order within executive branch agencies. She said it would be harmful to cause needless alarm by releasing specific cut proposals that the governor ultimately might reject.

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