Governor to state employees... you'll have to pay for state's mismanagement

According to a recent study commissioned by the General Assembly, the Virginia Retirement System (VRS) is underfunded by $18 billion. In his budget proposals, Governor Bob McDonnell will likely tell state employees to pick up some of the tab for restoring the system. With pay raises unlikely, that will be a pay cut for the Commonwealth's workforce.

One might ask why the VRS is ailing. Well, the simple and honest answer is because for several budget cycles the General Assembly and governor have cut the state's, local governments', and school boards' contributions below what was prudent to maintain a viable system able to meet its obligations. They've also borrowed from VRS to patch holes in the budget. They assured everyone that these actions would not endanger VRS' balance sheet. Due to policymakers' own actions the VRS is in some difficulty and those same policymakers want someone else to pick up the tab.

If that sounds unfair... it most definitely is. A quarter century ago the state (also most local governments and school boards) picked in the employees' 5% share of the contribution in lieu of a pay raise. In response to some skepticism, policymakers promised it would be permanent. Then last year legislation passed requiring new employees to pay that 5% themselves. At least newbies understood the deal when they took the job. Now the governor wants all employees to pick up (as yet undisclosed) some of the so-called "employees' share." If the state does so, it is probable that local governments and school boards will follow suit - like state employees, most teachers, police, and other local employees would effectively face a pay cut after several years without pay raises.

The governor's proposal is bad policy that breaks faith with the men and women who perform valuable services for the citizens. The General Assembly should reject this idea, restore rational contribution rates for VRS, begin paying back money borrowed from VRS, and delay funding new pet projects of the administration until current obligations to VRS are met.

This ain't chicken scratch

Governor Bob McDonnell finally went public with his budget recommendations and, as many expected, much of the bloodshed will come at the expense of state employees, schools, and lower income Virginians.

For example, the governor wants state employees to take five unpaid furlough days in each of the next two years - effectively a pay cut. To soften the blow, he suggested a one-time 3% bonus in December 2011 (the check is in the mail... ha, ha... don't go spending what may be an empty promise) and to roll back former Governor Kaine's suggestion that state employees contribute to the Virginia Retirement System. Instead the governor will simply reduce state contributions to VRS by $786 while school divisions and local governments can save $522 by the same "adjustment." Now that is one fancy budget word... adjustment. What it basically means is the state will underfund future VRS commitments to save dollars and "balance" today's budget. It is kind of like you and I failing to put money in our Roth IRA now but still thinking it will grow anyhow and we'll have the same amount in 20 years. Does the governor think state employees, teachers, and local government employees are all dumb clucks?

The governor bloodied K-12 education with an additional $730 million in cuts (Governor Kaine had already cut $1.2 billion) that will mean thousands of teacher layoffs, larger classes, the end of a breakfast program for kids from low-income families, and lopping off a program to mentor new teachers (many of whom need it for their own as well as the kids' sake). Combined with the governor's support of a change of the Local Composite Index, school divisions in most of the state outside of NOVA will get a double whammy of reduced funding.

His axe fell heavily on an array of programs that help those who have the most difficulty helping themselves. Among the cuts are a reduction of $1.8 million of assistance for free clinics, ending the health department's dental health services, and eliminating programs to help deal with homelessness, domestic violence, and family health. One facility that has garnered lots of support in the Staunton area is the Commonwealth Center for Children and Adolescents - the governor agreed with former Governor Kaine and proposes selling the 48 bed for $9 million (wonder who is in the market for something like this... more phantom money if they don't close a deal on it).

The ghost of Jim Gilmore continues to haunt this state budget like every other budget for the past decade. Senator John Edwards (D-Roanoke) called the governor's cuts a "political tsunami" and suggested cushioning the impact by rolling back $1.9 billion of "car tax" relief subsidies. There is little support for that in the House of Delegates or from the governor - so watch out for the big wave that will hit some Virginians far more than others. But, I thought we were a "commonwealth."