Virginia Gov. Terry McAuliffe on Wednesday announced the layoff of 565 state workers, other targeted cuts and a liquor price-hike as he aims to close a shortfall in the state's two-year budget.
The plan, which includes closing several Department of Corrections facilities, results in $92.4 million in savings in the current fiscal year. Coupled with previously announced cuts, the move gets the state closer to the $346 million needed in the first-year of the biennial spending plan after tapping Virginia's rainy day fund. McAuliffe will present his plan for the second year of the budget in the middle of December.
Earlier this year, state leaders announced that Virginia faces a $2.4 billion shortfall in the fiscal 2015 and 2016 budget that began July 1. The state already had taken steps to narrow the budget gap -- including budgetary reserves of $846 million and an additional $705 million that could be tapped from the Revenue Stabilization Fund or rainy day fund -- meaning Virginia must deal with a gap of $346 million in the current fiscal year and $536 million will be needed in fiscal year 2016.
Leaders previously agreed to cut $45 million each year from higher education and $30 million annually from local governments and fold in $102 million in unused balances at state agencies. McAuliffe agreed to cut a total of more than $192 million from executive branch agencies. No cuts are being made to K-12 education in the first year of the budget.
"Making these budget reductions has been the most difficult part of my job so far," McAuliffe said at a news conference in Richmond. "In a government as lean and as well-run as we have here ... there are really few spending cuts that you can make without impacting the lives of Virginians. While this budget plan represents a sensible approach, I am cautiously optimistic about the fiscal future ahead."
A majority of the layoffs -- which amounts to one-half of a percent of the state workforce -- will result from closing the main portion of the Powhatan Correctional Center, as well as the White Post Diversion Center and the Cold Springs Work Center. Additionally, the department will delay the opening of the Culpeper Correctional Center for Women. McAuliffe said the cuts were suggested by the agency. An additional 146 jobs across various agencies will remain unfilled.
In addition to targeted cuts spread across multiple state agencies, McAuliffe said he plans to sell one of the Virginia State Police's planes and not fill 27 of 68 vacant state trooper positions. The agency also will find an additional $4 million in "operational efficiencies.''
The 350 state-run liquor stores also will increase the price for distilled spirits, resulting in an additional $2.5 million in revenue.
In a written statement Wednesday, Republican House Speaker William J. Howell said the process of closing the budget shortfall has been "arduous and difficult,'' adding that it is "unwelcome news that so many of Virginia's hardworking state employees will be affected.''
The plan announced Wednesday comes a day after the state said its tax collections rose more than 5 percent in September, which ends the first quarter of the state's fiscal year. The main drivers of the revenue increase the first were individual income tax, corporate income tax, and sales tax. Total revenue collections rose 6.7 percent on a fiscal year-to-date basis, well ahead of the revised annual forecast of 2.9 percent growth.