Va. shortfall tops $3.2 billion
The hole is even deeper than expected.
The Senate Finance Committee of the Virginia General Assembly is projecting a budget shortfall of at least $3.2 billion for the 2008-10 biennial budget -- an even bleaker projection than the $2.5 billion Gov. Timothy M. Kaine had forecast previously.
And the shortfall in the $77 billion budget could reach as high as $3.5 billion if lawmakers retain an additional $350 million in high-priority, mandated programs approved last session, according to the committee's report, "Fiscal Issues Facing the Commonwealth."
"The economic picture has become clearer and uglier," the report states.
Kaine's administration already has taken action to address roughly $1 billion of the shortfall. But the Finance Committee report -- released yesterday at a bipartisan retreat for the state's 40 senators in Fredericksburg -- suggests lawmakers will need to carve out another $2.5 billion from state spending in the upcoming 2009 legislative session.
"A lot of painful decision-making is going to occur," said Sen. R. Edward Houck, D-Spotsylvania, a ranking member of the Democrat-controlled committee.
"This economy is still falling and declining, so we have to take measures to deal with it."
This week, the Republican-dominated House Appropriations Committee presented in Roanoke a similarly gloomy scenario for state revenues.
Anxious lobbyists representing all industries potentially affected by the cuts were on hand yesterday at the Fredericksburg Hospitality House and Conference Center to hear the dire news and make their case to lawmakers to spare their constituencies.
Lawmakers from both parties yesterday signaled that virtually nothing would be left off the chopping block when they reconvene Jan. 14 in Richmond. That includes spending in health-care entitlements such as Medicaid as well as public education.
"It's all up for grabs," said Sen. William C. Wampler Jr., R-Bristol, the ranking Republican on the Democrat-controlled Finance Committee. "I think the first thing you do is examine new spending.
"There is not one indicator today that says the economy has hit bottom," Wampler said. "And if we haven't hit bottom, we have no idea how long we're going to be there or when we're going to get back out."
The continued economic downturn and collapse of the financial markets this fall helped push Virginia, like other states, deeper into the budget hole.
Economic data on declining home values, tight credit markets, increased unemployment and drops in the manufacturing and service industries presented yesterday suggest that the recession will last longer than expected, well into mid-2009.
In turn, the Senate Finance Committee staff said a $2.5 billion budget shortfall originally projected was "underrated" and revised the shortfall estimate upward to $3.2 billion.
The report says that closing the gap will require a number of strategies, including across-the-board spending cuts, targeted cuts, and increases in fees, which could include hikes in tuition at state universities.
The report also suggests the state should consider reducing certain services, reorganizing agencies, and tightening criteria for who qualifies for services.
Reductions in state aid to localities, such as public education, and in state aid to individuals, such as Medicaid, also were cited as possible areas where state spending could be cut.
Wampler said Kaine should not have pushed for new spending in the budget, such as expanded funding of pre-kindergarten programs in at-risk communities that was advocated by the governor.
"I would argue that pre-K is something you're going to have to take a very strong look at," he said. "We have to take care of the core services."
Houck yesterday cautioned against reading too much into the specific options and strategies the report suggests as a way to make up the shortfall. He said lawmakers would place a priority on minimizing the impact of cuts on the state's neediest individuals.
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Reader Reactions
Shut down VDOT and Sub out the work. and end these give aways.
There is much more that can be cut in the Dept of Corr- start with eliminating ACA audits which are totally worthless but cost millions of dollars each year. Re-organize and abolish deadwood positions at central and regional offices which only make unnecessary work for employees actually doing the work in the field. Cut some of the many middle managers and reorganize units in the central office so that they are more productive. Combine more units and departments under one director thus eliminating need for high paid directors and middle managers.
There is plenty to cut in the state budget. Start with the goodies that were added in the last biennial budget, e.g., early childhood education. Subsidies to private industry or industries that should be private are next, e.g. corporate welfare to railroads and “public transportation.“ Public Education and Higher Ed are next (and prohibit the colleges and universities from raising tuition/fees and salaries.) VEAP and other non-productive endeavors need to be eliminated, too. Consolidation of agencies, e.g., Department of Health Professions back into VDH or Aviation and Rail and Public Transportation back into VDOT could also save some cash. Cut the salaries of the Secretaries and other “at will” executives by 10-15%
that is hours per year, not week. I should clarify, there is nothing left to cut in my agency except for the executives. The work areas are decimated.
There is nothing left to cut. My agency has essentially ceased to function in some areas with the layoffs and retirements. It is time for the GA to start scrapping agencies which are not part of the core functions of govt - health, safety, welfare, education. Agencies to eliminate - Avaition, museums, all of these boards for chickens and horses and such. It is time for managers to make some hard choices on programs. It is time for agencies like mine to get rid of all of the assistant commissioners, deputy commissioners, directors and deputy directors who know nothing of programs. It is time to stop letting people telecommute using state cars when they have to go into the office (why is that car at the grocery store?), it is time to beef up collection efforts on deliquent tax payers who cause the rest of us to pay more. It is time for a buyout. I can take over 500 hours a week. Hire young people, but that is right, salaries are so low. Even in his commencement speech at VCU, the Governor did not encourage students to have a govt. carreer. There is no need to cut VITA, they have no staff to do anything anyway and my agency does what it wants.
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