Virginia's budget shortfall will eliminate pay raise for state employees

Published: Oct. 13, 2016 at 9:29 AM EDT
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Virginia's budget shortfall will eliminate a pay raise for state employees, and require up to 26 layoffs.

But on Thursday, Governor Terry McAuliffe said his plan will protect public education and other core services from damaging cuts.

McAuliffe outlined the first steps to close a $1.5 billion gap in the state budget caused by slowing revenues.

Speaking to reporters in Richmond, he said the shortfall will claim pay increases, require money from the state's rainy day fund, and a variety of other savings.

“The budget actions laid out here are not based on impulse or wishful thinking, they are based on a coherent and sound fiscal framework of how we need to move forward to protect our core priorities and build the new Virginia economy,” McAuliffe said.

McAuliffe will outline additional cuts for the next budget year when he speaks to lawmakers in mid-December.

But he said he is encouraged that state revenues for the first quarter of the current year are running ahead of projections.


Governor Terry McAuliffe is holding a 9:30 a.m. news conference to lay out plans to cut spending.

The goal is to close a budget shortfall of $1.5 billion. The shortfall is for fiscal year 2017.

Virginia Gov. Terry McAuliffe says a budget shortfall is forcing him to cancel pay raises, trimming the payroll, and tap the state's rainy day fund.

"These are obviously difficult decisions to make and there may be more to come," McAuliffe said in a statement Thursday.

The state is facing a potential $1.5 billion budget shortfall due to lower-than-expected income and sales tax collections.

Though Virginia's unemployment numbers have dropped, the state is facing a budget crunch because of a loss of high-paying jobs. State budget officials said national defense cuts have led to a loss of good paying jobs and retiring baby boomers are being replaced by a younger, lower-paid workforce.

The state had expected a 3.2 percent growth in general fund revenues in fiscal 2016, but saw only a 1.7 percent increase.

McAuliffe's actions are part of an effort to address a $861 million budget hole for fiscal 2016 and 2017. They include cancelling a modest pay raise for state employees and teachers that was approved by the General Assembly earlier this year.

The governor is also slashing discretionary spending in many agencies, including at the Executive Mansion, delaying grant payments and eliminating 26 current positions. McAuliffe's administration says it hopes that employees in jobs slated to be eliminated will leave voluntarily through retirement or transfers, rather than being forced out. The Library of Virginia is slated to lose 15 jobs.

The governor said he'll address the projected $654 million shortfall for fiscal 2018 when he submits a budget proposal in December. McAuliffe, a Democrat, has indicated he'll try again to expand Medicaid in Virginia, something the GOP-led General Assembly has repeatedly blocked and is expected to continue to oppose.

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