Budget outlook darkens for Virgina, Maryland
By: William C. Flook
Examiner Staff Writer
December 18, 2008
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| Gov. Tim Kaine will make his case for a budget that increases the tobacco tax by 30 cents per pack and cuts 1,100 state jobs. (AP photo) |
RICHMOND — Virginia Gov. Tim Kaine proposed on Wednesday to cut thousands of state jobs, sharply curtail state spending, especially in health care and education, and raise cigarette taxes to counter a ballooning two-year budget shortfall his administration places just short of $3 billion.
His announcement came as Maryland Gov. Martin O’Malley said Wednesday that $1 billion may have to be cut from transportation projects over the next six years as revenue from gasoline and vehicle titling taxes shrinks.
O’Malley on Tuesday ordered furloughs of 67,000 employees amid a budget shortfall of $415 million this fiscal year and as much as $2 billion in the next fiscal year.
Residents in both states are facing major cuts in education, health care and transportation, as well as other areas, as lawmakers in the coming general assembly sessions work to balance their budgets.
The District of Columbia and the surrounding counties and cities are hurting too, as the tax revenue their budgets depend on — especially real estate taxes — fall short of expectations.
Kaine, in announcing his proposed budget amendments, said the economic downturn is “shaping up to be longer than any other recession since World War II.” If accepted by legislators, the round of cuts would be the fourth since October 2007.
“Just as citizens and businesses have to tighten their belts and live within their means, state governments must do the same,” Kaine told the General Assembly’s joint finance committees in Richmond. “This is a time for calm resolve to make tough decisions that will position us for a better future.”
Kaine’s proposal calls for laying off nearly 1,100 state employees through 2010, as well as several hundred more from the Virginia Department of Transportation. Including retirements and attrition, VDOT is expected to cut its staff by as much as 1,150.
In Virginia, Kaine’s cuts were especially jarring for areas of state spending that had been spared from reductions. K-12 education, the state’s largest expenditure, would be trimmed by capping spending on school support staff, saving $340 million. School construction grants would be reduced by $27.5 million.
That aspect of Kaine’s budget package could see trouble in the Democratic-led Virginia Senate.
Sen. Edd Houck, D-Spotsylvania, a member of the Senate Finance Committee, said he expected a “difference of opinion in how we go about cutting K-12.”
Medicaid funding would be cut $418 million by capping services, freezing or reducing reimbursements to providers and delaying planned expansions of programs. Higher education dollars, which were already scaled back by much as 7 percent in October, would see that reduction increase to 15 percent for nearly all schools.
Beyond two- to five-day furloughs for most state employees, O’Malley has not proposed further budget cuts for Maryland. However, he says an expansion of health care to the uninsured will likely be delayed, and funding for Chesapeake Bay cleanup will be cut.
Also expected to be reduced is the planned Geographic Cost of Education Index, which helps areas in the state where education costs more — such as Montgomery County.
“I think what we have to brace ourselves for is that there will be virtually no increases to anything and decreases to quite a number of things,” O’Malley said.
Lawmakers in both states will convene Jan. 14 for legislative sessions that promise to be dominated by the worsening economic crisis.
The Virginia General Assembly will be weighing both Kaine’s budget proposal and his 30-cent per pack cigarette tax increase, which would double the existing rate and bring in $148 million to offset Medicaid expenses.
Virginia Republicans, who began to protest the tax increase a day before, attacked the governor again on Wednesday. House Majority Leader Morgan Griffith, R-Salem, told reporters that raising the levy on a pack of cigarettes was a “feint to get people used to taxes.” He went on to challenge Kaine on his shortfall estimate, which many legislators believe to be wider than $2.9 billion. Griffith expected lawmakers would need to trim another $600 million from the budget next year during the session.
“I believe by February we’ll see a whole slew of other tax increases,” Griffith said.
On the chopping block
Gov. Tim Kaine proposed measures Wednesday to close what he says is a $2.9 billion shortfall in the state’s two-year budget. His proposal includes:
- About $400 million in cuts to both Medicaid and K-12 education
- Drawing $490 million from the “rainy day” reserve fund
- Increasing the cigarette tax by 30 cents per pack, raising $148 million
- Eliminating 2 percent employee pay raises, saving $242 million
- Changing sentencing policies to reduce jail overcrowding
- Closing both a training center for mentally disabled Virginians and the last state-operated mental health hospital for children
- Laying off nearly 1,100 state employees through 2010
- Laying off several hundred employees from the Virginia Department of Transportation.
