Governor Tim Kaine says he will lay off about 74 state employees and order reductions in travel, training and supply purchases in a $300 million spending reduction.
The state also will eliminate 312 other positions out of the government's 100,000 staff members through attrition. Kaine says the cuts are an effort to reduce a shortfall of $641 million in the current state budget.
He says officials have been watching the budget since the shortfall was first noticed when the housing market began to flounder.
"Since last May, when we detected a significant slow down in revenues because of the weakening housing market, our administration has closely monitored and reduced discretionary spending across state government," says Kaine. "In August, it became clear that more belt-tightening would be required to balance the budget.
In looking for places to cut, Kaine sought to protect certain programs, such as those that fund public schools, Medicaid and prison security.
"Throughout this difficult process, we made a determined effort to keep these budget cuts from impacting our most vulnerable citizens," says Kaine. "In fact, we rejected proposals to cut programs such as Meals on Wheels, children's mental health, free health clinics and campus security."
He says he would like agencies to offer the same services in a more efficient manner.
The Department of Medical Assistance Services saved nearly $60 million by negotiating lower administrative fees for insurers participating in Virginia's Medicaid managed care program.
State Police will save more than $1.3 million per year by using police vehicles longer before replacing them.
The Department of Forestry will implement steps to reduce energy consumption, saving $133,000 per year.
The Department of Health found savings of nearly $100,000 by converting paper publications to an electronic format.
In order to act as an example, Attorney General Bob McDonnell's office voluntarily cut its general fund budget by five percent, a move not required by Kaine's announcement because the Attorney's General office is independently elected.
McDonnell says, "The taxpayers expect their leaders to practice good government, which from time to time includes reviewing our spending and making necessary reductions."
Kaine also proposes using $303 million from the state rainy day fund known as the Revenue Stabilization Fund, which currently contains about $1.2 billion.
However, the Republican-controlled General Assembly is against using these funds.