RICHMOND
--Gov. Tim Kaine yesterday unveiled his proposals to cut nearly $3 billion out of the state budget, but Republicans say they won't support many of them, though they believe the state needs to prepare for a greater financial shortfall.Kaine, who already made a round of budget cuts in October as the economy worsened, is proposing to cover the rest of the shortfall by raising the cigarette tax, cutting $400 million each out of education and health care, eliminating more than 2,000 state jobs, letting non-violent prisoners out of overcrowded jails earlier, and eliminating pay raises for state employees.
Republicans think the budget hole will worsen and that Kaine should have proposed deeper cuts now rather than waiting for the next revenue forecast in February.
"I wish the governor had gone ahead and taken that leadership," Majority Leader Morgan Griffith said.
The job cuts include layoffs but also retirements, attrition and not filling vacancies. About half of the job cuts are in the Virginia Department of Transportation. Additionally, state employees won't get a promised pay raise.
Kaine's cuts to education involve across-the-board reductions of 15 percent to state colleges and 10 percent for community colleges. He also suggests adding $26 million for need-based financial aid.
SCHOOLS LOSING AIDES
Kaine proposes capping state funding for support positions in schools--i.e. administrators and other non-teaching personnel. He said the number of support positions have increased faster than the number of teachers and capping the state funding for those positions (at one support job for every 4.03 instructional positions) would save $340 million in fiscal 2010.
Sen. Edd Houck, D-Spotsylvania, who chairs the Senate Education and Health committee, said he would like to look at other ways of cutting the education budget, such as freezing teacher salaries, postponing the purchase of new textbooks, and re-calibrating the amount the state puts into educators' health insurance to reflect how many of them actually use that health insurance.
"I would prefer to find those chunks of savings," Houck said. "We need a lot of ideas. The more proposals on K-12, the better."
Kaine also plans to eliminate state money for school construction, and take $55 million from lottery funding--currently used for school construction--to put toward instructional expenses.
Kaine's cuts to health care primarily involve limits on new enrollment and freezing reimbursement rates, rather than cuts that would kick some people off the current Medicaid rolls.
He said his proposal to double the tax on cigarettes--raising it to 60 cents per pack--would save Medicaid from deeper cuts.
SMOKING ILLS COSTLY
Kaine said smokers cost Medicaid--and thus taxpayers--far more than they pay in cigarette taxes. He said the Centers for Disease Control and Prevention estimate that smoking costs more than $400 million a year in Medicaid costs, whereas the current cigarette tax raises $167 million per year.
Raising the tax would generate $148 million more.
"This will bring tobacco products closer to paying for the costs that they create for Virginia taxpayers," Kaine said.
The tax increase has few friends among Republican leaders.
A recession is "never a good time to raise a tax," said state Sen. William Wampler, R-Bristol, a member of the Senate Finance committee.
"I think it's going to be very difficult for both chambers to agree on a tax increase," he added.
Griffith said if lawmakers agree to raise the cigarette tax, he expects Kaine to propose more tax increases.
'Very Tax Resistant'
"I am very tax resistant. Our caucus is very tax resistant," Griffith said. "The governor has put two tax increases in this proposal after indicating that he wouldn't."
The second tax to which Griffith referred is Kaine's plan to eliminate a provision that allows retailers to keep a portion of the state sales tax they collect. Retailers collect the tax and send it on to the state. Kaine said the state doesn't pay other groups that collect taxes, like payroll taxes, and that modern cash registers and computers have made it an "unnecessary diversion" of $64 million in taxes.
Del. Albert Pollard, D-Lancaster, said that concerns him since it would affect every retailer in the state.
While Kaine is making cuts, he also proposed to increase funding for state food banks, increase the money in a governor's fund to attract new businesses to the state, and create a new income tax credit and sales tax exemption to attract new "green" jobs.
Republicans were skeptical of cutting education while increasing spending on other things.
They also doubted Kaine's estimate of a $2.9 billion budget shortfall.
"At some point he's going to have to take his head from under the basket and realize this is not a six-month problem. I think he needed to make about $600 million more of tough decisions," Griffith said.
Griffith did not specify what cuts he think would be preferable.
Kaine said he thinks the state's revenues should reflect the best data available now, not a prediction that the economy could worsen in the next two months.
"We have to remember that departing from the data and cutting deeper because of our anxieties would mean real harm to real people," Kaine told lawmakers.
"This tough budget already contains hundreds of layoffs--there's no compelling reason to lay off more state and local employees just in case. My proposed budget already cuts spending in virtually every area of state government--there's no reason to carve deeper into core services to vulnerable people to be on the safe side. If the data in February suggest the need to go deeper, we have the will and the tools to do it."
Chelyen Davis: 804/782-9362
Email: cdavis@freelancestar.com