Va. governor: Cut spending, expect no tax hikes

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RICHMOND, Va. (AP) — Gov. Bob McDonnell bluntly ruled out tax increases as a solution for Virginia’s $4 billion budget shortfall, promising to target them for vetoes.

In a 53-minute Monday night speech, 53 hours after being sworn in, the new Republican governor braced state employees for deeper job cuts and residents for reduced services as the state struggles with its worst fiscal crisis.

“Some say taxes must be raised, it’s unavoidable. Here’s what I say. I will work with you — Democrats, Republicans and independents. We will meet and negotiate; there will be disagreements, and there will be compromises,” he said.

But if a bill passes with a tax increase, “I will veto it,” he said. “And if you pass a budget embedded with those same tax increases, I will not approve it.”

Republicans, who filled most of the seats in the standing-room-only House chamber, rose in an ovation while Democrats remained seated.

Democratic former Gov. Timothy M. Kaine had introduced a budget one month ago, proposing a $2 billion boost in the state income tax, despite warnings from McDonnell and a strengthened anti-tax Republican House majority that it would not pass.

McDonnell offered few details, however, of where he would make cuts to the state payroll other than reductions to his own salary and those of his cabinet. McDonnell promised afterward to deliver some details this week in the form of budget amendments.

In his speech, McDonnell also reaffirmed for the first time as governor a promise he made as a candidate: to privatize Virginia’s state-owned liquor stores.

“It is time that we eliminated, consolidated or privatized programs and agencies that do not work or do not fulfill core government functions,” McDonnell said, focusing on selling the state’s Alcoholic Beverage Control stores.

“As I traveled the great commonwealth over the last year, I didn’t run into anybody who thought selling Jack Daniel whiskey or Grey Goose vodka was a core function of government,” McDonnell said.

As a candidate, McDonnell projected $500 million from selling licenses to private vendors to operate the stores, a figure that industry experts question and that Democrats have said is a daydream. He proposes using the revenues largely to jump start highway projects mothballed as transportation revenues ebbed.

But there are areas where McDonnell proposes to spend more.

He said he would reopen the 19 Interstate rest areas ordered closed last summer as part of drastic cost cuts to the Virginia Department of Transportation.

In advancing the central theme of a campaign that led to his landslide victory last fall — creating new jobs — McDonnell proposed lowering the threshold for companies that qualify for a $1,000 tax credit for businesses. New ventures now must create 100 new jobs to qualify for the tax break, but McDonnell would lower eligibility to 50 jobs, or 25 in areas suffering from high unemployment.

McDonnell proposed doubling, from $15 million to $30 million a year, cash available to his administration to recruit businesses to expand or transfer to Virginia.

He proposed $3.6 million, much of it to be used to air television ads in other states promoting the states beaches, mountains and historical tourist attractions, much as Michigan now pays to air ads in Virginia.

He proposed a tenfold increase in the Motion Picture Opportunity Fund, to $2 million, lamenting that an upcoming major film about 1973 Virginia-bred Triple Crown winner Secretariat was filmed in Kentucky and Louisiana.

He said he wants Virginia to be the first East Coast state to drill for oil and natural gas offshore. He said he wants the state to begin selling underwater leasing rights for drilling by 2011, dedicating one-fifth of the revenue go to renewable energy programs and four-fifths to transportation. Environmentalists say the drilling threatens the ecology of the Atlantic shoreline.

But McDonnell also proposed boosting the speed limit from 65 mph to 70 mph on select rural stretches of highway.

McDonnell promised to direct a higher percentage of state support for local public schools to classroom teachers and less to support staff such as janitors, secretaries and curriculum specialists. Within four years, the average earmarked for teachers will increase from 61 percent now to 65 percent.

He promised more charter schools, but cited no target figure. Charter schools are supported by tax dollars, but are freed from many of the regulations of public schools, allowing them to operate more like private institutions. Teachers’ organizations oppose them.

“Nationally, there are 4,600 charter schools. Here in Virginia, 12 years after we passed legislation to allow them, there are only three. That is unacceptable,” McDonnell said.

Restating another campaign pledge, McDonnell called for Virginia colleges and universities to confer 100,000 more degrees by 2025 than they do now.

Democrats said they wanted more details on how McDonnell planned to come up with cuts to plug the $4 billion budget hole.

“If we cut $4 billion out of the budget, there’s going to be thousands of jobs lost: public sector jobs, school teachers, law enforcement officers and health care workers. So it’s sort of questioning, how can you try to grow more jobs at the same time you’re going to be laying off thousands of public employees?” said Sen. R. Edward Houck, D-Spotsylvania.

McDonnell said after his speech he tried signal that he intends to work with members of both parties. The message appeared to have resonated with many.

“He’s trying to set a positive tone for the legislature, and I give him credit for that,” said House Democratic Leader Ward Armstrong of Henry County. “He wants to work with us and we’ll try to work with him.”