Thursday, August 20, 2009
Kaine says Virginia should brace for more cuts
The governor is projecting a cumulative deficit of $1.5 billion for the budget that expires in June 2010.
Photos by Associated Press
Del. Lacey Putney (center), a Bedford independent who is chairman of the House Appropriations Committee, conducts a vote on a compensation bill Wednesday. Putney said the task of another round of cuts to the state budget could be "awful."
Associated Press
Republican lawmakers, such as House majority leader Morgan Griffith, have largely agreed with the cautious budget assessment the governor delivered.
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roanoke.com/politics
RICHMOND -- Gov. Tim Kaine warned Virginia lawmakers Wednesday that his administration will make "painful" spending cuts to help close a $1.5 billion shortfall in the state's two-year budget, a deficit caused by the lingering effects of a severe economic recession.
"We will make these decisions carefully and with precision, but let there be no mistake -- they will be painful to those who rely on public services at this very challenging time," Kaine said as he delivered a revised revenue forecast to the General Assembly's money committees.
Kaine said he will produce a plan to balance the budget in early September and will rely on a combination of spending cuts, reserve funds, federal stimulus dollars and "other reasonable strategies." And he told reporters after his speech that the cuts could include layoffs of state workers.
"I would certainly think there would be some," Kaine said. "Where there will be and how many there will be, it's too soon to say."
Kaine said lingering economic weakness led him to reduce projected general fund revenue for the current fiscal year by about $1.2 billion. The state finished the last fiscal year with a shortfall of nearly $300 million, leaving a cumulative deficit of $1.5 billion for the two-year budget that expires June 30, 2010.
Kaine pointed to some hopeful economic signs that indicate the recession may be nearing an end. But the governor said "instructive and sobering" meetings with economists and his advisory council on revenue estimates led him to be cautious in revising the revenue projection for the current fiscal year.
Kaine has asked state agencies to plan for spending cuts of 5 percent, 10 percent and 15 percent, and said no program will be off-limits as his administration works to balance the budget. Kaine said he would have "a lighter hand" with public schools funding, which he called a top priority. But, he added, "I can't say that anything is off the table."
Republican lawmakers have accused Kaine of relying on overly optimistic revenue forecasts in the past, but they largely agreed with the cautious assessment the governor delivered Wednesday.
"It's hard to criticize when he's got the red pen and has to make all the hard decisions -- at least until we get back in January," said House Majority Leader Morgan Griffith, R-Salem.
House Speaker Bill Howell, R-Stafford County, said Kaine "has finally taken a realistic view on the projected budgetary shortfall."
"Fiscal prudence dictates adopting estimates that are restrained and reflective of the apprehension permeating the economy," Howell said.
The General Assembly earlier this year revised the state's two-year, $77 billion budget to account for a cumulative revenue shortfall of about $3.7 billion. The shortfall affects the general fund portion of the state spending plan, which stands at $31.8 billion for the biennium.
Federal funds from the economic recovery package that Congress passed in February allowed lawmakers to avoid about $700 million in cuts the governor had proposed in December. Kaine has said he could revisit some of those cuts as he works to balance the next budget.
"Probably everything's up for grabs," said Senate Majority Leader Richard Saslaw, D-Fairfax County. "I don't see how you can avoid it."
Education advocates rallied on Capitol Square on Wednesday afternoon to demonstrate against cuts to public schools, but lawmakers said it will be difficult to leave any program unscathed.
"I don't see how we can go this round and not touch some sacred cows, which means education," said Del. Onzlee Ware, D-Roanoke, a member of the House Appropriations Committee.
Kaine will leave office when his term expires in January, but not before drafting a budget for the two-year period that begins July 1, 2010. That spending plan likely will require more tough choices because federal stimulus funds will expire during the budget cycle. Del. Lacey Putney, I-Bedford, said the task could be "awful."
"I think the toughest job is going to be putting together the 2010-2012 two-year budget, for many, many reasons" said Putney, chairman of the House Appropriations Committee.
Kaine said Virginia is weathering the recession better than most states and has avoided taking drastic or reckless steps to balance its books. And he vowed to leave his successor and the General Assembly with a budget that makes "hard decisions" and positions the state to take advantage of an economic recovery.
"It's going to be very challenging to write the next budget, and there will be more painful decisions involved in that, but we'll make them," Kaine said. "My hope is I will leave my successor and next legislature with a clear road map, and they will begin to enjoy the fruits of some of this early economic recovery."
