Gov. Tim Kaine today will propose eliminating more than 1,500 state jobs and raising Virginia’s cigarette tax by 30 cents a pack, as well as acknowledge that the state’s budget gap is hundreds of millions more than projected, multiple legislative sources said.
Kaine is scheduled to lay out this morning both the newest revenue projections and how his administration plans to close a $3 billion shortfall in the state’s $77 billion biennial budget.
In addition to doubling the levy on a pack of cigarettes, the governor is expected to lay off employees, cut unfilled positions, trim health care and K-12 education funding, and withdraw substantially from “rainy day” reserves, among other measures.
The governor previewed his plan in a conference call Tuesday with Democratic lawmakers and will deliver the reductions officially to the General Assembly’s finance committees today. It is his second major round of reductions in the past three months as slowing tax receipts point to an increasingly grim year ahead for state spending.
In October, Kaine announced 567 layoffs, the closure of aging prison facilities and higher education cuts, as well as a delay in state pay raises. At that point, he said he believed the two-year shortfall to be $2.5 billion, leading critics to say he was being overly optimistic.
A Senate Finance Committee report last month called that figure “understated” and said the shortfall will be closer to $3.2 billion. Kaine is expected today to revise his official projection to $2.9 billion.
“I still think we’re probably going to be closer to $3.5 billion than $2.9 billion,” said Del. Phil Hamilton, R-Newport News, a member of the House Appropriations Committee.
Republican leaders quickly condemned Kaine’s proposed cigarette tax increase on Tuesday. In a conference call, Virginia House Speaker William Howell and U.S. Rep. Eric Cantor said the increase would cost the state thousands of jobs.
Richmond houses Philip Morris, which manufacturers Marlboro cigarettes and is the largest tobacco manufacturer in the United States. The company has about 5,600 employees in the Richmond area and is the region’s fifth-largest private employer.
Del. Dave Marsden, D-Burke, said Kaine has done his best to minimize harming government services with the cuts.
“I think it’s a very responsible way of doing something that is ultimately impossible to do without creating a great deal of pain,” Marsden said.
