Kaine lays out plans to boost economy

Hear the governor's full speech

In an effort to jump-start a stalled state economy amid the national recession, Gov. Timothy M. Kaine last night set a goal to bid 30 capital construction projects worth $250 million by July 1.

"These projects will put people to work, build a higher platform for longterm economic success and take advantage of a climate where construction costs are favorable," Kaine told a joint session of the Virginia General Assembly in his State of the Commonwealth address in Richmond.

The proposal would accelerate work on projects that lawmakers previously approved.

In a sober, 37-minute speech punctuated by tepid applause, Kaine outlined a slashed state spending plan of "difficult choices, painful choices" confronting state lawmakers.

Legislators convened yesterday in Richmond for a 46-day session. Their first order of business is to close a deficit in the 2009-10 budget that some lawmakers say could grow to $4 billion or more.

The governor lauded the hope, resiliency and willingness of Virginians to help one another through tough times. He said he wants to stimulate new economic growth through green jobs and renewable-energy investments.

To bridge the budget gap, currently estimated at $3.2 billion, Kaine already has proposed eliminating nearly 2,000 jobs; slashing millions from health care, education and public safety; and withdrawing $500 million from the state's rainy-day fund.

"We have a responsibility to make decisions -- however difficult they may be -- to keep the commonwealth on a firm financial footing and to prepare us for future economic success," Kaine told senators and delegates gathered in the House chamber at the Capitol.

Kaine also appealed to the "entrepreneurial spirit" of Virginians to help turn the economy around.

"Those who dare to take risks will create the new companies and the new jobs," he said, calling energy "the next great challenge of our generation."

"We have an opportunity to be leaders in the nation, and in the world, on the development of renewable energy," he added.

The governor pushed his "Renew Virginia" initiative -- an amalgam of executive orders, legislative proposals and new spending to create "green jobs," provide tax incentives for investment in new energy technology, and promote conservation.

He also asked Virginia's families to reduce their own energy consumption with a state goal of a 19 percent reduction by 2025. He asked them to find ways to conserve, right down to replacing old light bulbs with more energy efficient ones.

Kaine said his proposed doubling of the cigarette tax to 60 cents per pack -- which would make Virginia's tax roughly half the national state average -- is a better alternative than making even deeper cuts to Medicaid, from which his revised budget already slashes $418 million.

"Virginia's current cigarette excise tax covers less than half of the $400 million in Medicaid costs that smoking creates," Kaine said.

Kaine also outlined reductions in public-safety and higher-education budgets, as well as more than $300 million in cuts to K-12 education spending, which had been spared significant reductions in the past three rounds of spending cuts.

The governor said his cuts target spending in administrative and support services with a view toward protecting instruction and classrooms.

It didn't take long for Republican lawmakers to find fault with the governor's plans.

They blasted Kaine for the proposed tobacco tax increase and for new spending initiatives. And they said the state's economic problems were exacerbated by an administration budget based on overly optimistic revenue projections.

"Do we want to impose new taxes on some Virginians and not others as the administration has proposed tonight?" asked state Sen. Stephen D. Newman, R-Lynchburg. "Or do we want government to learn to live within its means, just like working families?"

Del. David B. Albo, R-Fairfax, said that in making his cuts, "Governor Kaine did make some tough choices, and I applaud him for his effort. However, in some cases, his priorities for cuts are not ours."

Albo said that during the session Republicans would seek sustainable solutions to the state's transportation needs and push for energy exploration off Virginia's coast.

The state could get some relief from the economic stimulus plan proposed by President-elect Barack Obama. The plan could aid Virginia by helping fund Medicaid, unemployment insurance and transportation infrastructure.

The transportation money could help subsidize a number of the $2 billion in projects that state officials say could be ready to go within six months.

"We will not just weather this challenge, but we'll seize the opportunity to prepare for the future," Kaine said. "And we will emerge even stronger than ever."

Before Kaine's speech, Senate Majority Leader Richard L. Saslaw, D-Fairfax, said the state would be lucky if it can close the state's 2009-10 spending gap for less than $4 billion.

"There's nothing good on the street," said Saslaw, who is worried that the sales figures and January unemployment numbers arriving in February will spell more budget trouble.

"We could be back here every other month, revising the thing. You don't know -- where does it hit bottom? We never had this before."

In previous downturns, "you had a recession -- three or four quarters -- then you were out of it, you were back up," he added.

"That ain't happening this time."

Contact Jim Nolan at (804) 649-6061 or .