Fee hikes likely amid Virginia's budget woes

RICHMOND

Virginia's next budget will almost certainly include increases in fees that state residents pay for various government services, Gov. Bob McDonnell told a group of lawmakers involved in budget talks during a meeting this week.

The governor, who has vowed to veto any tax increase that comes to his desk, said Thursday that he expects the final budget he signs to include fee increases that meet certain criteria.

The Democrat -controlled Senate's two-year spending plan includes about $326 million in fee hikes; the plan produced by the Republican-controlled House contains none.

Fees have been one of the divides between the Senate and House - some delegates believe that fees are tantamount to taxes - as they build a two-year budget that absorbs a $4.2 billion shortfall.

"It will be hard to reach a final resolution without some reasonable adjustments in the nature of fees," McDonnell said in a phone interview.

The governor made that comment the same day budget conferees began their discussions on what he called "the most difficult budget reconciliation task of their careers." Each chamber's plan calls for hundreds of millions in cuts to areas including public education and health and human services programs.

In addition to the split over fees, the sides disagree on revenue projections.

The Senate budget assumes about $223 million more in revenue than the House version does. McDonnell has told Senate conferees their number is too large.

"What we've got to do first is find out how much money we have to spend, and the rest of it will fall into place," Del. Johnny Joannou, D-Portsmouth, said during the meeting Thursday evening.

Before that session, the governor huddled with budget conferees Monday and Wednesday in the state Capitol.

McDonnell detailed a list of issues he has with the budget bills from each side Monday and delivered his thoughts on fees and revenues during Wednesday's session.

During an interview, the governor said any new fee revenue must pass a three-pronged litmus test: The fee must not have been raised recently, it must have a connection to the government process to which it's being applied, and it can't exceed the cost of the service.

McDonnell didn't specify which fees he considers acceptable.

The Senate budget includes numerous fees. Proposals include increasing court charges to provide public-safety funding and raising the marriage-license fee to subsidize domestic-violence services.

At the Wednesday meeting, McDonnell also reminded lawmakers that he expects them to conclude their budget work by the scheduled close of the 2010 General Assembly session on March 13.

"I'd like to finish on time, but I want to get it right," Senate Majority Leader Richard Saslaw, D-Fairfax County, told fellow conferees. "And if we've got to stay here an extra couple of days, so be it."

Going into overtime would cost Virginia more than $20,000 each day in legislative expenses, McDonnell said.

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