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Kaine asks for 5 percent from state agencies
Gov. Tim Kaine (D) is asking state agencies to tighten their belts in hopes of remedying an anticipated $641 million budget shortfall for the combined 2007 and 2008 fiscal years, from July 2006 to June 2008.
In a presentation to a joint meeting of the Senate Finance, House Finance and House Appropriation Committees Aug. 20, Kaine said 5 percent was needed from state agencies to counter the shortfall caused by a slowing economy.
"In fiscal year 2007, revenues grew 4.9 percent, compared to an anticipated 6.5 percent growth rate," Kaine said. "The housing sector, which started slowing last fiscal year, continues to struggle."
The 5 percent cuts are not likely to effect Northern Virginia's counties, said Loudoun's Deputy Chief Financial Officer Ben Mays.
"It's not a huge amount of money for us," Mays said. "Most of the Northern Virginia counties are supported by local revenue."
Mays said it was too early to predict the true effects of the 5-percent budget cuts to state agencies, but most of the Northern Virginia agencies are county run and county funded.
He said the exception could be the county's Health Department, juvenile court services and some libraries.
Del. Vincent R. Callahan (R-Fairfax) opposes Kaine's additional plans to use the state's Rainy Day Fund -- about $1.3 billion -- to combat the shortfall. He blames the Kaine administration's forecasting inaccuracies for the shortfall, and not an economic slowdown.
"It is both premature and perhaps totally unnecessary to draw down the state's Rainy Day Fund," Callahan said. "Sound management practices would dictate that we thoroughly scrutinize the budget and make the necessary hard decisions on what should be funded and what should not. Likewise, we should not commit scarce taxpayer dollars to new programs."
Mays said the state's metro areas -- such as Richmond and Hampton Roads – and the state's southern localities, as well as those that rely more heavily on state funds, will likely be more affected by the 5-percent cut.
The last time state agencies were asked to go under the fiscal knife, Virginians saw significant reductions in the Department of Motor Vehicles customer-service programs.
The 2002 budget cuts, enacted by then Gov. Mark Warner (D), caused the DMV to close 12 customer-service locations in late 2002, lay off 121 full-time employees and terminate another 25 wage positions.
The offices were reopened in January 2003, said DMV spokeswoman Melanie Stokes, without really helping the budget shortfall at that time. She said that the employees who were laid off were likewise rehired, if they hadn't moved on to new jobs.
Stokes said the DMV is currently analyzing its budget to see what the effects could be.
State Secretary of Finance Jody Wagner said it is not likely the DMV will experience cutbacks under Kaine's plan.
"The colleges will be asked to look at budgets," she said. "DMV would not likely be effected because [the 5-percent cut] affects general fund agencies."
In his closing remarks, Kaine said the challenges caused by the cuts are "significant, but they are also manageable."
Currently, no deadline exists for the state's agencies to submit their spending cuts for state approval, but Wagner said the administration hopes to implement Kaine's budget plans in late December.
Contact the reporter at hhobbs@timespapers.com
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