City and county governments across Virginia are facing the grim prospect that 2010 may be worse than 2009.

Leaders in the public and private sector, along with hundreds of other concerned citizens, met at James Madison University Thursday for a regional hearing on Gov. Tim Kaine's proposed budget for the 2010-2012 biennium.

A survey conducted by the Virginia Association of Counties and the Virginia Municipal League found that nearly 60 percent of local governments initiated hiring freezes or cut funding in 2009. About 45 percent dipped into reserves to close budget gaps, and 70 percent reduced or eliminated projects.

City and county leaders hope their budgets will balance come June 30, the end of the fiscal year, but where state funding will be further slashed is still unknown.

Kaine has proposed cuts in a wide variety of areas, but one that drew significant concern from people attending Thursday's hearing was health care.

For Brett Wills, caring for his autistic son can be a challenge.

"This tightrope here represents what us families with special-needs kids and special-needs adults walk pretty much our entire lives and their entire lives," says Wills, who lives in Augusta County.

During the public hearing, he visually demonstrated with a tightrope, a safety net and a puppet what cuts in state funding mean to families like his.

"The Medicaid waivers are the stabilizing influence that keep them out of that inadequate safety net. We do not need a shorter stick," says Wills.

Kaine proposes cuts to waiver programs that pay for care. People currently on the waiting list would stay there.

However, Jim Krauss, President and CEO of Rockingham Memorial Hospital, says the cuts go well beyond that.

"This budget will have an astounding affect on how health care is provided to the citizens of the Commonwealth who are covered by Medicaid," says Krauss.

Kaine proposes reducing Medicaid spending by $419 million. As far as health care cuts go, Kaine says he's "worked to make these cuts manageable, but they cannot be completely spared."

What worries Krauss is the loss of federal matching money. Krauss says the Medicaid program is already not paying health care providers enough to cover their costs.

"This type of pressure on health care providers can only lead to further cost shifting, reduction in health care services and loss of jobs in the health care sector," says Krauss.

Wills says the kind of cuts considered could hurt Virginia for many years.

"Anything we do to upset the already-precarious balance of these families is going to cost us money elsewhere," says Wills.

Where else to look for that money will be the key issue for legislators like Del. Steve Landes (R-25th). He's a member of the House Appropriations Committee. Its members, along with members of the Senate Finance Committee, are the legislators going around the state to attend the regional hearings.

More than 100 people signed up to address the legislators about a wide variety of cuts.

Residents also voiced concerns about education, help for the homeless, treasurers' offices and several other issues.

Landes says he thinks the top priorities in the General Assembly will be education, public safety, and health and human resources.

"It's going to be tough. If we do restore the cuts that Gov. Kaine has come up with, we've got to find the money or shift the dollars from other programs. So, it's going to be difficult. But, I know [public safety is] going to be a priority," says Landes.

Kaine's budget calls for some tax increases, but Republican Gov.-elect Bob McDonnell says the final budget will not include those.

"There aren't going to be any tax increases. You don't raise taxes on the taxpayers who are unemployed, who are looking for jobs, who are concerned about whether they are going to have a job, or be able to put food on the table for their families," says Landes.

Among the people who could be looking for a job are employees of Virginia's sheriff's offices.

Local sheriffs say dozens of people could lose their jobs if cuts proposed by Kaine go through.

Shenandoah County Sheriff Timothy Carter says the proposed cuts would cost his office more than $600,000.

"It equates to either a drastic reduction in essential services or an added increase in the tax burden on for the locality. And, as far as my locality is concerned, it's about a two-cent increase on our tax rate," says Carter.

Rockingham County Sheriff Don Farley says the cuts amount to him losing 20 to 28 people at his office.

In addressing the panel at the hearing, Farley says, "We have to have cuts. I understand where we are. But, make those manageable cuts because the cuts that you make, I think, to each sheriff is personnel."

The General Assembly session begins Wednesday.