By Sen. Toddy Puller (D-36)

Gov. Tim Kaine announced the official revenue reforecast for fiscal years 2009 and 2010 and his budget reduction plan to meet the projected shortfall for fiscal year (FY) 2009. The new forecast predicts a decline in the general fund budget for FY 2009 of 4.0% and very slow growth of around 3.6% with anticipation of a recovery beginning in FY 2010. The 2009 shortfall is projected to be $973.6 million and for FY 2010, $1.54 billion.  That’s just over $2.5 billion for the biennium.

 The Governor is proposing that the FY 2009 budget be balanced by state agency savings and spending reductions of over $348 million, a withdrawal of about $400 million from the Revenue Stabilization Fund, and through bonding nearly $250 million in capital outlay that had been planned for cash payments. Presently the Revenue Stabilization Fund has over $1 billion. These actions must be approved by the General Assembly.     

Revenue forecasts have been revised downward twice since the spring of 2007. Over $1.7 billion has already been cut from Virginia’s budget as the national economy continues to worsen.

States, unlike the Federal Government, are required to balance their budgets. Therefore, the Commonwealth of Virginia must find additional ways to save money by ensuring our government agencies work efficiently and by reducing government spending.

As the Governor says, we must work together to find ways to reduce government spending while protecting core services provided by our state government in this difficult time. Some decrease to services will be necessary to balance the budget. But it is important that this be done with consideration of protecting the most vulnerable Virginians.

With regard to education, the Governor’s proposals focus on administrative functions and leave basic funding for K-12 intact since the school year has already begun. He has instructed colleges and universities not to increase tuition during the 2009-10 academic year but to find ways to reduce spending to offset reductions of 5 to 7 percent of state funding.

This is a challenging time for everyone. These budget cuts require significant layoffs of personnel, delay of a previously planned salary increase of 2% for state employees, a hiring freeze, and some reductions in state services. Administrative efficiencies in Medicaid, the Department of Aging, Community Service Boards, and mental health are being made to prevent deeper cuts in programs to provide direct service delivery. Restructuring Department of Corrections facilities will result in closing several older facilities.

It will be important to examine how efficiently our government agencies are delivering necessary services and make choices on what programs work and which ones do not. Also, we need to look at ways to stimulate economic growth in Virginia, attract more industries, for example in the alternative energy sector, as well as more jobs.

The serious economic situation in our nation and our Commonwealth require us to come together and work with the Governor to meet these challenges to keep Virginia fiscally strong. In doing so, we should keep in mind what impact these actions may have on the people of Virginia and the core services on which we all depend.