Virginia Gov. Tim Kaine on Thursday ordered the layoffs of 567 employees and asked for permission to dip into the state’s savings account to help close a $2.5 billion budget shortfall, but limited cuts to education and the state police.
The moves come amid other budget-paring measures made necessary by falling tax revenues and a global financial crisis that further imperils the economy.
Mr. Kaine said Virginia - which operates on a two-year budget cycle - is facing a $973.6 million shortfall for fiscal 2009 and a more than $1.5 billion deficit in 2010, but his cuts aimed to preserve core services in the state’s $77 billion budget.
“We can’t expect that families would make cuts and businesses would make cuts and we would not,” said Mr. Kaine, a Democrat. “In looking for ways to save and reduce spending, I’m leaving no stone unturned and no program unexamined.”
The state’s revenue is expected to decline 4 percent this fiscal year and grow only 3.6 percent in fiscal 2010.
Mr. Kaine’s plan to cover the shortfall includes statewide reductions and revenue enhancements of $279 million to help balance the budget for the current year. He also will ask the General Assembly to approve taking $400 million from the state’s reserves and borrowing $250 million for capital projects rather than paying for them in cash.
The plan calls for 381 layoffs in public-safety agencies, but most will come in the Department of Corrections, where the governor also mandated that the agency’s 11-day reporting sites for offenders under probation or parole and some correctional facilities be closed.
“It’s a hard time to be in the job market right now,” Mr. Kaine said. “We were very mindful of that as we worked through these difficult decisions, but it’s the same kinds of decisions that are being made at businesses, state governments and other levels of government all over the country.”
There are no layoffs proposed for Virginia State Police, but Mr. Kaine did call for leaving 27 civilian positions vacant in the department and eliminating overtime cash payments for the first three hours more than 40 hours worked by sworn employees.
In education, Mr. Kaine made reductions of 5 percent to 7 percent to institutions of higher education and said 11 employees working in the Department of Education’s Central Office Operations will be laid off, effective next month.
He also reduced administrative funding by 50 percent for specialized programs like foreign-language academies, while eliminating 12 vacant education specialist positions.
But Mr. Kaine said that his cuts aimed to protect K-12 education and that withdrawing $400 million from the state’s more than $1 billion reserves will at least postpone cuts to key educational services.
“Things that we left untouched though in ‘09, I need to point out, will definitely be examined and are not going to be untouched in 2010,” Mr. Kaine said.
Making the withdrawal from the state’s savings requires approval by the General Assembly.
Speaker of the House William J. Howell - a Stafford Republican who has previously blamed Mr. Kaine for optimistic revenue projections that he said helped lead to the shortfall - said House Republicans “stand ready to work cooperatively with the Kaine administration” to balance the budget.
He said party legislators were just beginning to examine the proposed cuts and may offer other ideas as well, but he was encouraged that Mr. Kaine did not consider raising taxes as an option to help cover the gap.
“While difficult budget decisions confront us in Richmond, these challenges cannot overwhelm and must not overcome our ability to work constructively on the people´s business,” Mr. Howell said.
However, Delegate Phillip A. Hamilton, Newport News Republican, said dipping into the state’s reserves should be a “last resort.” Delegate H. Morgan Griffith, House Majority Leader and Salem Republican, said the move is “probably appropriate.”
“There’s some disagreement on that, and we’ll have to review and study it,” Mr. Griffith said.
Mr. Kaine’s reductions for fiscal 2009 affected about 100 agencies and resulted in the elimination of 1,406 positions, including the layoffs. This year’s measures also should save about $500 million in fiscal 2010 to help close that year’s shortfall, he said.
Other cost-cutting measures outlined by Mr. Kaine include delaying salary increases scheduled this year for state and local employees until July and making ground-floor reductions such as eliminating laptop computers and decreasing spending on office supplies and postage.
The governor on Wednesday also announced budget cuts affecting himself, his executive staff and the Executive Mansion, including a 5 percent cut in his $175,000 salary.
Most of the measures will begin immediately. Mr. Kaine said he will release his budget amendments and all recommended strategies for reducing the fiscal 2010 shortfall by December.
Meanwhile, Maryland Gov. Martin O’Malley met Thursday with members of his budget office to finalize more than $200 million in cuts to help the state close its own shortfall, which could reach $1 billion next year.
The Associated Press said discussions have involved cutting about $250 million and using about $200 million of surplus in the budget left by lawmakers at the end of the last legislative session.
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