McDonnell unveils two-year budget

Call it a “re-prioritizing” or “not a status-quo budget.”

But Virginia Gov. Bob McDonnell’s message was clear ahead of the release Monday of his biennial budget: The state is crawling back from years of dwindling revenues and budget cuts, but is nowhere near out the woods heading into 2012.

Mr. McDonnell, a Republican, on Monday announced the only full biennial budget of his four-year term, the consequence of state law that keeps governors from succeeding themselves in office.

The governor said key budget priorities are funding K-12 and higher education, public safety and transportation while streamlining government and re-prioritizing money from other areas.

Despite the uncertainty of the U.S. and global economies, Mr. McDonnell said he is “comfortable” with proposing $230 million more for higher education, $2.2 billion for employer contributions to Virginia’s depleted state retirement fund and money for state employees who have gone four years without a raise.

He said Virginia will, as it has in past years, take a “reasonable but conservative” approach on revenue assumptions.

“We are certainly looking better now than we were two years ago, [but] there still needs to be a number of decisions about where to apply [those] resources,” the governor said.

At current spending levels, the state would be roughly $1 billion short of meeting its anticipated needs over the next two years, according to General Assembly projections.

As part of a government-reform package, Mr. McDonnell has proposed eliminating two state agencies and 19 boards and commissions, which would save about $2 million a year. He also has asked state agencies to identify cuts of 2 percent, 4 percent and 6 percent in their budgets.

Though Mr. McDonnell has vowed to increase K-12 funding, his caveat is that the bump “may not up as much as some people want,” which has created much anticipation and some uncertainty.

“We understand that due to the economy, everything is tight for everyone,” said Karen Conchar, president of the Fairfax County Government Employees Union.

Steve Greenburg, president of the Fairfax County Federation of Teachers, expressed concern over the governor’s proposal for the Virginia Retirement System.

“We don’t know the trade-off,” he said. “My concern would be that at some point the payout for that would come back on the localities.”

Mr. McDonnell said he is concerned about Virginia not transferring responsibility for maintaining roads to counties until at least next year.

“We have a real disconnect between responsibility and authority,” he said. “Local governments have [the] authority to approve roads, but no responsibility to pay for” them.

How the General Assembly will fund Mr. McDonnell’s budget priorities remains unclear, considering he and the Republican-controlled House have consistently rejected the idea of tax increases.

Shortly after taking office, Mr. McDonnell and the legislature closed a $4.2 billion budget gap without an increase in taxes, in part by slashing funds for health care, education and public safety.

“Even in tough budget years, you always have to think about the future,” Mr. McDonnell told state employees at a town-hall meeting last week. “Not everything in the budget is going to be cause for celebration.”