Kaine to lay off 567, cut college funding to battle $2.5B shortfall
By: William C. Flook
Examiner Staff Writer
October 10, 2008
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| Gov. Tim Kaine gestures as he announces his spending reduction plan at a press conference at the Capitol in Richmond. (AP) |
RICHMOND — Virginia Gov. Tim Kaine said Thursday he would lay off 567 state employees, cut millions of dollars from university funding, delay pay raises and deplete much of the state’s reserves to begin closing a $2.5 billion budget shortfall through 2010.
The spending reductions in the state’s $77 billion two-year budget are the most severe in years, the result of a national economic crisis that continues to empty state coffers.
Kaine also will do away with 800 vacant positions, shut down aging correctional facilities and take out loans for $250 million worth of capital projects instead of paying cash. He said services such as K-12 education and mental health have been largely spared, for now.
The governor, at a news conference in Richmond, argued the state government has the same fiscal responsibilities as businesses and citizens struggling in the downturn.
“When they make less money, they pay less taxes, and they have to make very difficult decisions either around a kitchen table or around an office about what to cut,” the governor said. “Government has to do the same thing.”
Kaine did anticipate a sunnier scenario than the $3 billion worst-case shortfall that state economists predicted last month. Even so, this fiscal year will be the third to see a decrease in revenue in at least four decades, according to Virginia Finance Secretary Richard Brown, a 4 percent drop causing an immediate $973 million budget gap.
Fiscal 2010 is projected to see only 3.6 percent growth — a far cry from the 6.7 percent forecast earlier this year, which will open up another $1.5 billion shortfall.
More cuts are expected when the General Assembly goes back into session in January.
Many of the state layoffs are in the Department of Corrections, which will see facilities and programs closed or consolidated. Universities will see their state funding cut by about 6 percent, and state employees won’t see their 2 percent pay raises until July, if at all.
House Republican leaders pledged cooperation with the governor, but quickly began to pick apart elements of his presentation. Kaine averted a showdown by pledging not to raise taxes, at least for this fiscal year.
Kaine wants to withdraw $400 million from the commonwealth’s $1 billion “rainy day” reserve fund, a move Del. Phil Hamilton, R-Newport News, said should be considered a “last resort.”
Del. Clay Athey, R-Front Royal, said the governor was slow to recognize the downturn.
“We are glad he has finally acknowledged that there is going to be a deficit going forward,” he said.
