Budget for schools, health would be hit by legislators, too

With Michael Sluss, The Roanoke Times

RICHMOND

The General Assembly's budget-writing committees set the stage Sunday for battles over funding of public schools and health care safety- net programs, producing competing plans for addressing a two-year, $4.2 billion state revenue shortfall.

Committees in the Senate and House of Delegates opted for deeper program cuts and other savings measures after rejecting former Gov. Timothy M. Kaine's plan to eliminate $1.9 billion in car tax relief payments.

Both plans cut deeper into public schools than Kaine proposed in December but contain money to help localities affected by an adjustment to the local composite index formula. And both plans also call for hundreds of millions of dollars in additional cuts to health care programs that serve the elderly, poor and disabled.

"In my 49 years as a member of the House, I have not seen a budget situation this bad," said Del. Lacey Putney, I-Bedford County, the chairman of the House Appropriations Committee.

The House and Senate plans reduce payments to cover unfunded liabilities in the state employee pension system and require future state employees to contribute to their retirement plan in order to avert further program cuts. And both plans managed to restore significant portions of the cuts Kaine proposed for local sheriffs and prosecutors.

The Senate budget anticipates savings of $508 million by under funding the pension system over the next two years; the House proposal envisions $803 million in savings from reduced retirement contributions for state workers and teachers.

Additional savings would be realized through legislation that requires future state employees to pay more toward their retirement costs.

Sen. Walter Stosch, R-Henrico County, cautioned his colleagues about the pension plan maneuver, telling them "it is extremely important that we make a commitment to repay this."

Each house will vote on its own budget plan Thursday, and negotiators from the two chambers will try to reconcile differences in the plans before the legislature's scheduled March 13 adjournment.

The House plan contains an additional $1.5 billion in net cuts over those that Kaine proposed in December. House budget writers rejected $145 million in new fees Kaine proposed and also spurned Gov. Bob McDonnell's proposal to furlough state workers for 10 days over the next two years.

The Senate's net cuts are considerably lower - $704 million over the two-year period - in part because that chamber's budget includes several new revenue items and savings of $108 million from six employee furlough days.

For instance, money generated from higher fees on certain civil court filings and for criminal convictions would be used for public safety purposes, including sheriffs' offices and an Internet sex crimes task force.

The Senate budget also restores some funding for local police.

And closing an as yet unnamed state prison would save $20 million over two years.

Some of those items could be a sticking point in the coming budget negotiations.

While differences between the two plans abound, McDonnell said in a statement he was "pleased by the common ground" in the proposals.

The House plan includes $620 million in additional cuts to public schools and $211 million in reductions to health and human services programs, according to documents produced by the House Appropriations Committee.

The Senate's education cuts total $133 million, but its health and human resources reductions of $344 million are deeper than those proposed by the House or McDonnell.

The House budget would establish a block grant scheme to allow localities flexibility in absorbing cuts to at-risk, early reading, and pre-kindergarten programs. House budget writers said the cuts would be mitigated by reducing the amount local school systems must contrib ute to teacher retirement plans by $270 million per year.

Both plans lift Kaine's proposed one-year freeze on adjusting the local composite index, which measures a locality's ability to pay for its public schools. Lifting the freeze will steer a greater share of state dollars to Northern Virginia at the expense of other localities. But both budget plans contain "hold harmless" funding to make up most or all of the dollars those localities will lose next year.

The House plan contains nearly $200 million in cuts to Medicaid and a program that provides health care to low-income mothers and children.

About $125 million comes from reduced payments to hospitals, nursing homes and other providers, while $74 million comes from eligibility changes.

The Senate plan would not freeze enrollment to that low-income health care program, and it provides money for free health clinics and community health centers.

It does contain reductions to Medicaid reimbursement rates and eligibility; the Senate hopes to avoid those cuts if proposed federal dollars flow to the state.

Both houses largely avoided cuts to state colleges, which have been hit hard in earlier rounds of budget reductions. The House and Senate plans both scrap Kaine's plan to seize 5 percent of the student fees collected by the institutions.

Neither plan includes the closing of five state parks, including False Cape State Park in Virginia Beach, which McDonnell proposed.

Julian Walker, (804) 697-1564, julian.walker@pilotonline.com