Pay raises sought for Virginia workers

The Virginia General Assembly will propose a 2 percent raise in the second year of the proposed 2012-2014 budget for state employees, faculty and classified staff in higher education as well as local constitutional officers and their staffs, according to legislative leaders.

The raise would depend on the state meeting its revenue targets in mid-2013 under the budget proposal that the House Appropriations Committee will release today, but the Senate Finance Committee is not linking its proposed pay increase to revenue forecasts.

The Senate budget also will propose savings for local governments to help them pay their share of big increases in contributions to the teacher retirement plan administered by the Virginia Retirement System.

Localities would pay an additional $600 million over two years for retirement and other post-employment benefits under the budget proposals to be released today.

The contribution increases could be offset somewhat by savings from proposals to increase state money for K-12 education and eliminate about $60 million in cuts to state aid for localities under the two-year budget proposed by Gov. Bob McDonnell in December.

"We want more money to go back to local governments to help shield them from the increases" in VRS contributions, Senate Finance Chairman Walter A. Stosch, R-Henrico, said Saturday.

Virginia's more than 104,000 employees haven't had an increase in take-home pay since 2007. Last year, the state provided a 5 percent wage increase to mostly offset a new requirement that state employees pay 5 percent of salary to their retirement accounts.

"It is important to members of the (House Appropriations) Committee to provide, if possible, for these raises for our hard-working and dedicated employees," said Del. S. Chris Jones, R-Suffolk, chairman of the subcommittee on compensation and retirement.

Appropriations Chairman Lacey E. Putney, I-Bedford, said in a speech Thursday that the House budget would provide a reserve fund that would be used for state employee raises if tax revenues meet projections in the first year of the budget.

"If our economy does perform, then these appropriated dollars will be earmarked in the second year of the budget … for state employees, college faculty, and our state-supported constitutional officers and their employees, such as deputy sheriffs, commonwealth's attorneys, and such," Putney said.

Jones said Friday that the $42 million reserve will include $33 million for 2 percent wage increases in 2013-2014. The House proposal also will include about $13 million in the higher education budget to pay 25 percent of the wage increase for faculty and classified employees at state colleges and universities.

Virginia's public colleges and universities have been pushing for authority to provide wage increases for their employees because of concerns about competitiveness in job markets.

"That has been the No. 1 priority expressed to us in the budget process by college officials," Stosch said. "It has to do with recruitment and retention" of employees.

Virginia's salary compensation for its employees lags well behind private and other public employers, according to a series of state studies.

In December, the Joint Legislative Audit and Review Commission released a study on retirement benefits that showed the state last in a comparison of salary compensation with 15 private and public employers.

The state's lagging position on salaries was partly offset by other benefits, such as the defined retirement benefits that are under close scrutiny this year by the governor and both chambers of the General Assembly.

The House of Delegates has approved proposed reductions in retirement benefits for state employees, but the Appropriations Committee balked this month at a proposal by McDonnell to require state employees to pay an additional 1 percent of salary toward their pensions.

Also in December, a study by the state Department of Human Resource Management found that Virginia pays its public employees less than more than 60 percent of the states, and ranks 48th among the states in a comparison of public employee salaries and pay for private sector employees in the state.

The budget proposal to be released today by the Senate Finance Committee also will make some changes to McDonnell's proposal to provide about $77 million in bonuses to state employees next year if state agencies save twice that amount by June 30, 2013.

In 2010, the state paid $80 million in one-time bonuses to employees as a reward for $174.7 million in savings.

The Senate committee wants to make the bonuses next year less contingent on individual agency savings, Stosch said. "We would like to bring a greater certainty to their ability to earn a bonus. It will be earned, but it will make it fair."

The Finance Committee also will propose to restore proposed cuts in state aid to local school districts for K-12 education and to free health clinics and other essential health and human services that eventually may be covered by an expansion of Medicaid under federal health-care reform. The Patient Protection and Affordable Care Act faces a constitutional challenge in the U.S. Supreme Court and a political challenge in a presidential election year.

"We can't allow the uncertainty of the national health care (reforms) to interfere with the delivery of these services," Stosch said.

The Appropriations Committee also is proposing to restore cuts made by the governor in funding for free clinics, community health centers and dental services at local health departments, Jones said in a speech on the House floor Friday.

The money committees are getting some one-time help from a national settlement of claims against mortgage bankers. Stosch estimated that the settlement would give the assembly an additional $68 million that the Senate would propose to use for one-time expenditures.