By Travis Fain
Daily Press
NEWPORT, Va. — The state will lay off as many as 565 employees, mostly in the Department of Corrections, to balance its budget in the wake of lower-than-anticipated revenues, Gov. Terry McAuliffe said Wednesday.
Roughly 90 percent of the layoffs will come from the Department of Corrections, which will close three facilities. None are in Hampton Roads. The department also will delay most new equipment purchases this year and push back the opening of a new women’s correctional facility in Culpeper.
Prices at the state’s ABC liquor stores also will increase, though an ABC spokeswoman said those details likely won’t be decided for a few weeks. The increase should be fairly small because it’s expected to raise about $2.5 million a year and the department’s budget totals nearly $588 million.
The layoff figure is a ceiling and amounts to about one-half of 1 percent of the state workforce, according to McAuliffe’s staff. The governor said all state employees who will be laid off have been informed, and human resources officials are working with them to find new jobs.
Department of Corrections employees may be shifted to other prisons, many of which have a high turnover rate, Secretary of Finance Ric Brown said Wednesday.
The state also will eliminate some vacant positions and temporarily freeze others. Added to the layoffs, that affects a total of 711 positions out of the roughly 104,000 in state government. The state will fill 27 vacant state trooper positions this year instead of the planned 68.
The cuts help close a budget gap that grew in recent months as it became clear that the state had significantly overestimated how much tax revenue it would take in during the last fiscal year, 2014, and the current one, fiscal 2015. State leaders also raided the state’s rainy day fund to avoid deeper cuts, and more changes are expected early next year, when legislators rework the fiscal 2016 budget.
There is some good news on state revenues, though. September collections were up, and revenues year-to-date are up about 6.7 percent compared to the estimate this year’s budget was built on. McAuliffe and his finance staff, though, stressed that they need to see more numbers before painting an optimistic picture.
Coming decisions in Washington, about the federal debt ceiling and sequestration, may also have a major effect on the state’s finances, since so much of Virginia’s economy is tied to defense and other federal spending.
The cuts will hit most state departments, with single-digit layoffs and project delays sprinkled throughout the budget. The state will scoop up money from various accounts across state government, spreading it out instead of allowing agencies to spend it internally.
The governor and legislative leaders said they spared K-12 schools, but the Commonwealth Institute, a left-leaning think tank, takes issue with that. Its analyst argues that the way state leaders moved funding around amounted to a de facto cut of about $43 million, even if it doesn’t look that way at the bottom line.
A handful of Peninsula groups will take direct, if not necessarily deep, hits in this round of cuts. The Fort Monroe Authority will lose roughly $287,000 of the $6.7 million it gets from the state. It plans to reduce administrative costs, cut some outside contracts and keep one position part-time instead of converting it to a full-time job as planned, according to McAuliffe’s budget plan.
The Jamestown-Yorktown Foundation will lose about $367,000 of the $7.4 million it gets from the state general fund through a couple of layoffs, holding vacant positions open, cutting outreach services to K-12 schools and ending the Summer Teachers Institute in fiscal 2016.
Among the other cuts:
An end to state funding for 4-H and Future Farmers of America youth education programs at the Virginia State Fair.
Selling the state-owned Northern Neck Farmers Market.
Cutting $750,000 from water and wastewater grants available in the southwestern part of the state.
Cutting more than $900,000 from domestic and international marketing efforts for job creation, but keeping money the governor can use to attract new companies to Virginia.
Reducing support for the Virginia Sports Hall of Fame in Portsmouth by $250,000 this year.
Selling a “very old,” in Department of Planning and Budget Director Dan Timberlake’s words, state police airplane for about $50,000.
Eliminating the Department of Taxation’s online live chat program, saving about $140,000.
Eliminating state matching funds for a federal abstinence education grant.
Shifting some work that had been contracted out to existing state employees and asking other contractors to cut their rates.
In addition to the liquor price increases, several fees will rise, primarily in the Department of Behavioral Health and Developmental Services. Service providers, including Community Service Boards, will pay more for background checks and to use the state’s online training system. The plan also institutes new annual licensing fees for service providers.
McAuliffe, who has been in office less than a year, said deciding on these cuts was “the most difficult part of my job so far.” He said his administration went through every line item in the budget and that Department of Corrections leadership volunteered to take the brunt of the cuts in part because of a downward trend in incarceration rates.
The governor reiterated Wednesday that he hopes to have a broader discussion about taxes and revenues as he and legislators overhaul the fiscal year 2016 budget early next year. He particularly targeted tax preferences — breaks the state gives on various taxes, often to encourage economic growth or various behaviors — saying many of them have “outlived their usefulness.”
A 2012 internal report on these preferences found that they save taxpayers, and cost the state, about $12.5 billion a year.
Some, such as the partial sales tax rollback on food, affect most Virginians. Others target specific types of businesses, setting up a potential fight with the special interest groups that benefit if the governor comes after them.
McAuliffe was not specific about preferences he’d like to end, but referenced a Joint Legislative Audit and Review Commission report that determined many of these tax breaks don’t accomplish their apparent goal. Among them: A tax preference for the coal industry, another for ships and large sales tax breaks for churches and other nonprofits.
When it comes to next year’s budget talks, “nothing is sacred,” the governor said Wednesday.