Kaine: Va. laying off 570 workers immediately

Gov. Timothy M. Kaine today announced he will lay off 570 workers, leave 800 unfilled jobs vacant, delay state pay raises and borrow $400 million from the state's rainy-day fund to help close a $2.5 billion revenue shortfall in the state's two-year budget.

The governor says his plan, which could include additional layoffs, reduces government spending while protecting K-12 education and other critical government functions, like public safety.

Kaine yesterday announced he's cutting spending in his Cabinet offices by $1.4 million.

The state employs 116,000 people, many in the Richmond area. Their compensation costs Virginia taxpayers more than $5 billion a year.

In addition to the layoffs, frozen positions and delay in pay raise, Kaine's biggest cost-reductions measures include reductions of 5 or 7 percent to colleges and universities, and restructuring Department of Corrections facilities, which would involve closing some older facilities.

“I know that the layoffs associated with these cuts come at a challenging time for state employees, and I regret that they are necessary,” Kaine said today. “I have instructed the Virginia Employment Commission and our Human Resources Department to help those state employees who are laid off through this difficult transition.”

The official revenue reforecast projects a shortfall of $973.6 million for fiscal year 2009 and $1.54 billion for fiscal year 2010, or just over $2.5 billion for the biennium. Kaine said he will balance the FY 2009 budget through state agency savings and spending reductions of over $348 million and additional steps, including a withdrawal of about $400 million from the Revenue Stabilization Fund, commonly called the "rainy-day fund."

The new forecast predicts a decline in the general fund budget for fiscal year 2009 of 4.0%, and very slow growth – of 3.6% – as the recovery begins in fiscal year 2010.

“The shortfall for 2010 is projected to be even greater, and while I will work to protect items like employee raises, we must keep open the possibility that they may have to be eliminated altogether as we make additional reductions,” Kaine said. “We will continue to examine every government expenditure for performance and efficiency, but we will have to look at new ways of doing things and ask ourselves hard questions about all of our programs.”

“No one would wish for a crisis like this, and as we move forward, there will be more difficult choices to make,” Kaine continued. “But we should embrace the opportunity to critically evaluate how we’re spending taxpayer money, and whether every program is delivering the results people deserve.”