By Tyler Whitley and Jeff E. Schapiro
Media General News Service

The 2010 General Assembly adjourned yesterday, one day later than scheduled, after speedy approval by weary lawmakers of a $70 billion-plus budget-balancing plan. The budget doesn’t raise taxes, prunes spending for education and health care, and erases a $4.2 billion shortfall with new fees and a giant cash grab from the public-employee pension.

At 5:52 p.m., lawmakers headed home after a 61-day session during which the Democrat-dominated Virginia Senate, the Republican-controlled House of Delegates and new Gov. Bob McDonnell occasionally clashed over remedies to a fiscal crisis that is forcing the state and localities to sharply reduce some services and slash payrolls.

The final business of the legislature—approving a budget for 2010-12—came on quick floor votes with little debate. Senate approval came on a 34-6 vote, with only Republicans opposing the budget. The House endorsed the plan, 73-23, with bipartisan opposition.

A final budget figure was not immediately available because of such factors as a final burst of federal dollars into the state treasury.

The budget now heads to McDonnell, a Republican, who can use his sweeping veto and amendment powers to further tweak the document to his liking. For the most part, however, it largely reflects his priorities, in that it doesn’t rely on higher taxes, preserves car-tax relief and includes millions more for him to lure businesses and nurture job creation—his oft-stated priorities in last year’s campaign.

“We’ve had four snowstorms and $4 billion in budget cuts,” McDonnell told a small group of legislators who had been dispatched to his ceremonial quarters on the third floor of the state Capitol to inform him that the assembly was ready to adjourn. Senate Majority Leader Richard L. Saslaw, D-Fairfax, replied, “You didn’t have pestilence and fire.”

Acknowledging the sting of spending cuts on many Virginians, McDonnell went on to say that balancing the budget—more than $11 billion has been cut since the early days of the economic downturn in April 2007—“is probably the most difficult thing that you will encounter in your professional lives.” Looking to better days, McDonnell added, “I hope that next year you’ll have a surplus to divvy up.”

There was virtually no discussion of the budget on the House floor, while in the Senate, Republican John Watkins of Powhatan complained about two features: the phaseout of a tax credit for manufacturers and the expansion of the state-owned, 75-year-old network of liquor stores. Eliminating the credit by 2014, in effect, is a tax increase, he said, while adding more package stores will only be make it harder to get Virginia out of the whiskey business.

For state employees, thousands of whom live in the Richmond area, there are more lean days ahead. Having gone without a raise in nearly four years, they may see a one-time 3 percent bonus next year, assuming cash is available.

Workers will have to take one unpaid day off before June 30, the end of the current fiscal year, as required by then-Gov. Timothy M. Kaine. However, the assembly resisted further furloughs in the coming biennium. McDonnell had recommended 10 over the next two years; the Senate, six. The House rejected furloughs altogether, saying they were disruptive and punitive.

In addition to reduced appropriations, the budget relies on new fees on a range of state services and more than $620 million diverted from the Virginia Retirement System. All told, the diversion from the $48 billion pension fund for state and local employees accounts for approximately one-quarter of the revenues freed up by delegates and senators.

In resisting higher taxes, however, the assembly will force layoffs at the state and local level—the state’s teachers union, the Virginia Education Association, is projecting job losses exceeding 20,000—and require health-care providers to make do with even less in state payments for providing medical services to the poor.

The compromise budget adds $253 million more in cuts to public education atop $1 billion in reductions crafted by Kaine.

“There’s less damage than there could have been,” said VEA lobbyist Robley Jones, adding—in a reference to late Senate Finance Committee Chairman Hunter B. Andrews, D-Hampton—“But as Hunter would have said, it’s ‘shift and shaft.’”

In higher education, which the Senate, in particular, was determined to shield from further cuts, the undergraduate financial-aid program for public colleges and universities was largely protected, but grants to Virginians attending the state’s private institutions would be cut $10 million.

Even with the prospect of additional dollars to the state from the federal government for Medicaid, said Christopher S. Bailey of the Virginia Hospital & Healthcare Association, doctors, nursing homes and others will be compensated only 64 cents on the dollar in the year ahead and 68 cents in the succeeding year. Currently, health-care providers receive 72 cents.

“We’ll take cuts, and the challenges will get greater,” Bailey said.

The budget would slash state funding for the arts by 15 percent—a comparatively light hit given that the House, at one point, was intent on eliminating funding for the Virginia Commission for the Arts. Another House target, public broadcasting, would see its appropriation cut 15 percent.