Va. General Assembly passes budget through 2012

RICHMOND

The General Assembly adopted a budget Sunday that cuts hundreds of millions in spending on public schools and health care. Many legislators and stakeholders breathed a little easier after the spending plan was adopted, despite its sharp reductions, because in many cases it avoided deeper cuts that had been contemplated.

"I think we came out very, very well if you look at where we wound up from where we started out," said Senate Majority Leader Richard Saslaw, D-Fairfax.

The general fund budget, which contains the state's discretionary spending, totals $28.6 billion - $6 billion less than the previous budget passed two years ago. The general fund is only part of the state budget, which also includes federal money funneled to Virginia.

The upcoming two-year spending package slices $360 million more from health and human services and another $253 million from public school funding - two of the biggest state expenses.

Those cuts are in addition to the hundreds of millions in reductions in the introduced budget.

To ease the education cuts, lawmakers agreed to hold harmless those school divisions that would have seen less state money under a complex formula known as the composite index.

They also avoided a funding strategy that could have reduced access to programs such as pre-kindergarten for at-risk students.

But the cuts mean that classroom sizes are allowed to increase by one student, and money for items such as textbooks and school bus replacement is reduced.

"It could have been worse, but it's still very harsh," was the initial assessment of the Virginia Education Association's Robley Jones. The potential remains that thousands of teaching jobs may be lost, he said.

He credited Gov. Bob McDonnell, who previously had recommended about $730 million in education cuts, for helping legislators bridge their differences on education funding.

Many of the budget cuts go beyond those contained in former Gov. Timothy M. Kaine's proposed budget. His strategy combined $2.3 billion in cuts with a proposed repeal of the $1.9 billion car tax subsidy Virginia provides to localities.

The car tax idea was rejected by the legislature and McDonnell, leaving lawmakers to make another $2 billion in spending reductions.

In health and human services, the budget features reductions to Medicaid reimbursements for health care providers who give care to low-income individuals. Some of the reductions could be avoided if $370 million in additional federal Medicaid money flows to Virginia, as expected.

That would "just stop the bleeding from getting worse," said Chris Bailey, a senior vice president with the Virginia Hospital & Healthcare Association. That's because other health and human service programs will still see reductions. The cuts likely will mean poor people will have less access to medical services, he added.

One bright spot in the health care sector is the inclusion of 250 Medicaid waivers to provide in-home care to developmentally disabled individuals, a component House of Delegates conferees insisted on.

Budget negotiators were able to avoid deeper cuts to areas such as law enforcement by raising fees on certain government services. The budget includes about $100 million in fees, including increases to court filing charges and conviction fees.

Legislators also saved hundreds of millions by deferring funding of the state pension plan, which they hope to repay over 10 years beginning in fiscal year 2013. Furloughs of state workers were avoided in the upcoming two-year budget, though one unpaid day remains in the current cycle.

The budget also includes much of the economic development

money McDonnell wants - $46 million of the $50 million he requested.

In his closing message to lawmakers, who finished one day later than scheduled, he praised them for helping carry out his three top priorities: balancing the budget without a tax increase, promoting charter schools and other alternatives to traditional public schools, and promoting job creation.

The advocacy of Sen. Yvonne Miller, D-Norfolk, and others led to the preservation of $7.5 million for the purchase of land around Oceana Naval Air Station, though money is provided only in the first year of the budget.

Also preserved was some funding for the arts, libraries and public broadcasting. Each took cuts, but wasn't eliminated.

Grants to arts groups, threatened by the House's proposal to do away with the Virginia Commission for the Arts, will continue with about a 15 percent cut each year. The commission already had been cut by 30 percent since 2008.

"We really are relieved and grateful," said Alan Albert, legislative counsel for lobbying group Virginians for the Arts.

Pilot writer Teresa Annas contributed to this report.

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