- Associated Press - Saturday, May 24, 2014

RICHMOND, Va. (AP) - Some local government officials in Virginia are starting to consider contingency plans for worst case scenarios as a budget impasse drags on toward a possible unprecedented state shutdown on July 1.

Democratic Gov. McAuliffe has pledged to keep state government fully open and running even if no state budget is passed before July, but Republicans believe the governor’s ability to spend absent a budget is extremely limited and several facets of state spending will be affected.

Mary Ann Bergeron, executive director of the Virginia Association of Community Services Boards, said the boards - which provide mental health care and respond to psychiatric emergencies - are beginning to dust off contingency plans drawn up in 2006 when a state budget wasn’t passed until late June.

“People’s lives often depend on those services,” she said.

There are concerns that state government offices could be shut down if a budget isn’t passed. The effect will also be felt locally because Virginia provides more than $8 billion a year to cities and counties to help pay for public schools, law enforcement salaries and mental health services.

Much is unknown because Virginia has never before started a fiscal year without a budget in place. Complicating matters even further is a recent state revenue forecast that currently predicts a $300 million deficit for this fiscal year.

Goochland County Sheriff James L. Agnew said he’s confident lawmakers will pass a budget before July, or at least pass one that allows public safety spending to continue.

“Someone is going to have to give in,” said Agnew. “If not, we’re not too far from chaos.”

State lawmakers currently can’t pass a budget because they can’t agree over a key part of the Affordable Care Act. Democrats, including McAuliffe, and three GOP senators want to expand Medicaid eligibility to about 400,000 low income residents; The GOP-controlled House of Delegates does not.

Republicans say the state can’t trust the federal government’s pledge to cover the bulk of the costs associated with Medicaid expansion. They also argued that Democrats are unnecessarily hurting localities by tying Medicaid expansion to the state budget. Democrats have said those concerns are overblown, and they point to the benefits of 400,000 low-income residents obtaining federally funded health insurance.

The pain of a possible shutdown will be felt far more sharply in poorer counties that depend more heavily on state aid.

Lee County in the southwest receives one of the highest shares of state aid. It lost it’s only hospital last year.

Board of Supervisors Chairman Charles Slemp Jr. said he’s a longtime Republican who sides with McAuliffe on Medicaid expansion, saying his constituents need the help.

But Slemp that while he’d like to see Medicaid eligibility expanded, he’d rather have a state budget passed first.

“Go ahead and pass the budget, let’s get going with it,” said Slemp, who added that Lee County has delayed passage of its own budget while it waits for the state.

Richer counties are less dependent on state funding and are in better positions to use local funds to pay for services until a state budget is passed.

“The good news is that we get so little from the state is that it’s probably not having as much of an impact on us as it is in other parts of Virginia,” said Sharon Bulova, chairman of the Fairfax County Board of Supervisors. “We can manage with our county dollars for a period of time, but obviously not forever.”

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