- The Washington Times - Wednesday, February 13, 2008

RICHMOND — Gov. Tim Kaine yesterday recommended scaling back spending, trimming agency budgets and dipping further into the state’s savings to cover a $1.4 billion slowdown in projected state revenue growth through 2010.

“None of these were things I wanted to do,” Mr. Kaine, a Democrat, said at an afternoon press conference.

Mr. Kaine, who promised last year not to raise taxes, presented a plan to close the shortfall without tax increases.

“It is a tough time for individuals to pay, and it is not a good time to explore increases in taxes,” he said.

Republican leaders said Mr. Kaine’s plan could lead to some conflicts, especially his call to reduce aid to localities and a proposed 2 percent cut in higher-education funding.

“Clearly, there are several strategies proposed by Governor Kaine that we will not adopt, such as additional cuts to higher education, which would merely result in greater tuition increases, hitting middle-income Virginians particularly hard,” said House Appropriations Chairman Lacey E. Putney, Bedford independent.

Mr. Kaine said his plan would cover a $339 million shortfall in the budget that runs through June 30 and a $1 billion revenue adjustment in the $78 billion biennial budget he proposed in December.

The budget, which funds the state government through June 2010, is the only budget he will author during his four years in the governor’s mansion.

Overall, the grim financial picture came as no surprise to lawmakers, who started digesting the numbers last night and will release separate House and Senate budgets Sunday.

Mr. Kaine in August warned lawmakers of a $641 million shortfall in the current budget and in October cut $300 million. The reductions included 74 layoffs, the elimination of 386 jobs through attrition and a $19.3 million reduction in local aid.

Mr. Kaine now recommends taking a combined $420 million out of the state’s revenue-stabilization fund, commonly known as the rainy-day fund, to cover most of the current budget shortfall.

Republican lawmakers, who have opposed the governor’s push to use as much of the rainy-day fund as possible under the Virginia Constitution, predicted a smaller slice of the savings will be used.

“What we had always said is that it should not be the first resort; it should be the last resort. And it sounds like clearly the declining revenues are going to require us to go into the rainy-day fund,” said Delegate Phillip A. Hamilton, Newport News Republican and member of the House Appropriations Committee.

Mr. Kaine’s plan also frees up $300 million in cash by bonding capital projects, requests that localities come up with suggestions to offset 5.4 percent cuts in state aid for 2009, and makes additional cuts to state agencies, which could lead to additional layoffs.

“The prospect for new layoffs is real,” he said.

While his proposed mental health reform package — a direct response to the Virginia Tech massacre — remains untouched, Mr. Kaine significantly reduced plans to expand preschool for at-risk 4-year-olds and create the “Virginia Share” health insurance program to help subsidize health insurance premiums for low-income workers.

“The recognition that declining revenues will not permit some of the new initiatives and expanded initiatives, I think, is acceptance of the reality of the situation,” Mr. Hamilton said.

The plan also includes a 2 percent salary increase for state employees in a rollback from the budgeted 3 percent, and a reduction in the budgeted 3.5 percent salary increase for teachers down to 2.5 percent.

“When times are good or times are tough you have to have the same attitude — which is try to remain focused on decisions to invest people’s dollars in way that will produce the best return for citizens,” he said.


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