Kaine administration cuts back spending, hiring as economy slows

WASHINGTON (Map, News) - The Kaine administration, in an effort to head off Virginia’s worsening economic slide, this week ordered cuts on state government spending that include travel restrictions and hiring freezes for all but the most critical positions.

The belt-tightening, outlined in a Wednesday memorandum from Gov. Tim Kaine’s chief of staff, is the result of a “troubling trend” of major revenue streams growing slower than anticipated. The state emerged from the last fiscal year with a tiny surplus of $5.4 million.

The travel restrictions come while Kaine is on a trade mission to Europe at state expense. Chief of Staff Wayne Turnage told agency heads to cancel any nonessential travel plans and not commit to any trips not related to “mission critical services.”

Turnage also told directors not to enter into consulting contracts, and said hirings must be approved by members of Kaine’s Cabinet. He also predicted possible layoffs.

The changes exclude jobs and contracts related to public health and safety.

“This will undoubtedly result in some short-term difficulties for your agency, but given the nature of our fiscal situation, it is critically important that we implement strategies that hold the promise of long-term savings,” he wrote.

The shrinking revenue is tied to “declining employment levels, slower income growth, lower consumer confidence, and the continued downward trends in the housing market,” Virginia Finance Secretary Jody Wagner wrote Thursday in a separate but related memorandum.

As a result, she warned “significant downward adjustments” should be expected for revenue forecasts, which could prompt lawmakers to cut the already somewhat austere $77 billion, two-year budget they approved earlier this year.

Del. Bob Brink, D-Arlington, said he was certain there would be major cuts to the budget next year “if conditions continue to deteriorate.”

“One of the problems that you run into is that when you go into an economic downturn, there are a number of expenditures that go up and are very necessary,” said Brink, a member of the House Appropriations Committee.

Del. Phil Hamilton, R-Newport News, agreed with the tighter restrictions on discretionary spending.

“They want to err on the side of caution, which is always a good way to operate,” he said.

wflook@dcexaminer.com

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