standoff forces hiring, spending, building freezes
effects of the ongoing budget impasse in Richmond are buffeting
Grounds, and political observers say the situation may not get
any better soon.
state Senate and House of Delegates, locking horns over Gov. Jim
Gilmore's proposed phase-out of the car tax, were unable to agree
on a compromise set of amendments to the current and coming fiscal
year budgets before their Feb. 24 adjournment. As a result, the
two-year, $50 billion budget passed in the 2000 General Assembly
remains in force.
Revenue growth anticipated in that budget has not met projections,
and state law requires that the budget be balanced. Minutes after
the legislature adjourned, Gilmore issued an executive order mandating
$421 million in spending cuts over the remainder of the two-year
budget cycle, including $189 million during the last four months
of the current fiscal year.
To achieve those cuts, Gilmore ordered an immediate statewide
freeze on hiring and discretionary spending, and directed state
agencies not to enter into new contracts for capital projects.
Hiring offers made before the freeze will continue to be honored,
University officials said, and positions not supported by state
funds are not affected by the freeze.
agencies had until noon March 2 to submit their spending reduction
plans to the state Department of Planning and Budget. Less than
72 hours earlier, the University was informed that it would have
to reduce its current operating budget by up to $2.4 million and
next year's budget by $6.7 million. The Medical Center is exempt
from the cuts, University officials said.
cuts do not reflect potential savings from the capital outlay
freeze and "likely represent a worst-case scenario," executive
vice president and chief operating officer Leonard W. Sandridge
explained in a Feb. 28 memo.
Immediately affected at the University were two high-profile construction
projects ‹ the Special Collections Library and the new studio
art building, both of which are being financed with a combination
of state and private funds. Also put on hold were a major electrical
upgrade project, a new sprinkler system for the Chemistry Building,
and replacement of structural cables at the Law School.
Looming down the road is the prospect of a salary freeze. Classified
and faculty pay increases in the 2001-02 fiscal year were part
of the disputed budget amendment package.
want to avoid any furloughs or layoffs to the greatest extent
possible," Gilmore wrote in a Feb. 27 e-mail message to state
employees, "Š Layoffs will only be considered as a last resort."
political background to all of this is complex, but political
analysts say it comes down to one thing: the car tax.
Gilmore made the phaseout of the unpopular tax the centerpiece
of his 1997 election campaign. The 1998 General Assembly passed
a plan to phase it out over the next four years; the rollback
hit 49.5 percent in the current fiscal year and was scheduled
to increase to 70 percent in 2001-02 and finally 100 percent in
revenues failed to meet projections, Gilmore appears committed
to seeing the tax phased out as he leaves office in January 2002.
His proposed budget amendments included the 70 percent figure,
but in order to achieve that, he proposed a $249 million bond
package to raise revenue for several major projects that had been
slated to receive general funds.
The Senate Finance Committee, although dominated by Gilmore's
fellow Republicans, rejected Gilmore's plan on a 17-1 vote in
the early days of the General Assembly. Their chief objection
was that the state should not go into debt to finance a tax cut.
Instead, the Senate passed a spending plan that increased the
car tax rollback to only 55 percent.
of the House of Delegates all of whom are up for re-election
this fall, and thus hesitant to come out against a tax cut, it
has been widely reported
sided with Gilmore and passed his proposed budget amendments.
House and Senate conferees were unable to resolve the unprecedented
impasse before the General Assembly's scheduled adjournment. Gilmore
who has placed the blame for the situation squarely on the shoulders
of the Senate
said he will call a special session later this month in another
attempt to resolve the crisis, but pledged that he will not compromise
on the 70 percent car-tax rollback.
J. Sabato, director of U.Va.'s Center for Governmental Studies,
said earlier this week that he has been in touch with several
legislators and Gilmore administration officials. "I expected
everybody to say, 'yes. This is going to be resolved,'" he
said. "But what I'm hearing is the opposite. People are firming
up their opposition and digging in."
no agreement be reached, the original budget would stay in effect.
Gilmore could also veto any agreement that does not achieve the
70 percent reduction, and it is unlikely the legislature could
muster enough votes for an override, Sabato said.
H. Wood, director of U.Va.'s Sorensen Institute for Political
Leadership, noted that the conflict between Gilmore and the Senate
has reached a high level, and said "the odds are against"
reaching a deal.
"Because the arguments lasted throughout the General Assembly
session and some got personal toward the end, the two sides are
dug in," Wood said.
agreed. He said one state senator told him that "hell would freeze
over before he would vote to do anything Gilmore wanted."
public, Sabato said, was behind Gilmore, noting that polls show
that two-thirds of Virginians support complete abolition of the