New hole in budget; McDonnell hints about cuts

A House of Delegates committee blew a new $66 million hole in the proposed budget for 2010-2012.

The news came as Gov. Bob McDonnell, in his first "Ask the Governor" radio show, said he will propose cuts in education, health care and the Virginia Retirement System to try to bring the budget into balance.

The House Commerce and Labor Committee tabled a proposal by then-Gov. Timothy M. Kaine to increase the fee on property and casualty insurance premiums by 0.5 percent. It was tabled, rather than killed outright, which means it could be revived, the sponsor, Del. Clarence E. "Bud" Phillips, D-Dickenson, said.

Nevertheless, the chances of resurrecting the measure in the Republican dominated committee appear slim.

As proposed by Kaine in the budget, the fee would raise $22 million in fiscal 2011 and $44 million in fiscal 2012, with the money going to the Virginia Public Safety Fund. But the insurance industry opposed the measure, saying it would drive up insurance premiums, and the Virginia Professional Firefighters Association also objected.

The rejection of the fee increase adds to a budget deficit that already is $4.2 billion.

On radio station WRVA, McDonnell, hoarse from four speeches the day before, said he doesn't object to fee increases as long as they have a nexus to the state service they are designed to support. He did not comment on the insurance premium fee.

Without going into any detail, McDonnell said he has been talking with legislative leaders about prospective reductions and planned to meet with Democratic leaders today at a breakfast at the Executive Mansion.

On the Senate floor yesterday, Sen. R. Edward Houck, D-Spotsylvania, the No. 2 Democrat on the Senate Finance Committee, scolded the Republican for failing to tell legislators where — and how — he would erase the budget shortfall.

Houck said McDonnell, as other governors have since at least 1970, should submit amendments revising the farewell budget of his predecessor, Democrat Timothy M. Kaine.

Stacey Johnson, press secretary to McDonnell, said "we agreed to give the House and Senate suggestions and alternatives that would fit with the governor's initiatives and goals. There was no commitment by us to directly submit budget reduction amendments."

Johnson continued:

"Like we said before, we will provide input to budget conferees and staff as part of their ongoing process to reduce the remaining deficit. Ideas based on bipartisan efforts will ultimately make their way into the budget in the final analysis."

In an occasionally emotional floor speech, Houck said the General Assembly faces difficult choices: that cutting services means the state also would be shedding jobs — adding to the unemployment that McDonnell, as a candidate for governor, pledged to ease.

At one point, Houck, pounding his desk, said legislators can't balance the budget only with cuts — that perhaps the General Assembly will have to raise taxes. McDonnell and Republicans have vowed to oppose higher taxes.

"Have we got the political stamina to do what needs to be done?" Houck asked.

A retired public school administrator now working for a Fredericksburg area hospital, Houck singled out the car-tax rollback as a major drain, diverting $950 million a year from essential services.

Protecting public jobs, and the accompanying services, such as law enforcement, education and health care, are more important than car tax relief, Houck said.

"I'll take the political lashing; I'm sure it's on the way," he added.

Tyler Whitley and Jeff E. Schapiro write for The Richmond Times-Dispatch.