Gov. Tim Kaine proposes decreasing state support for public schools by $357 million by 2012.
Besides the cuts to local school districts, state-supported colleges will see their state funding slashed by 26 percent starting July 2011.
The proposals are in a two-year state budget Kaine presented Friday. The plan struggles to reconcile a revenue shortfall of $3.6 billion from 2010 through 2012.
As part of the cuts to local schools, the state would reduce health insurance funding for faculty and staff by $134 million in each of the next two years.
Those on the school health plan will remain covered. Kaine's proposal would cut money schools use to insure all employees, including those on a spouse's plan, not the school's.
Kaine also plans to lay off more state employees, increase the retirement age, and ask them to pay a share of their retirement contribution.
Friday's proposal cuts the state work force by another 664 positions as Kaine struggles to fill a $3.6 billion shortfall in the budget for 2010 through 2012.
Kaine's proposed reductions would bring the number of state layoffs since July 2008 to 1,651.
Since 1983, the state has paid the full five percent employee share toward their pensions. Starting in July, workers would pay one percent of that. The figure goes to two percent in July 2011.
On top of that, Kaine proposed freezing pay increases for two years and increasing the retirement age for new state hires from age 50 to 55.
Closing several mental health facilities and cutting programs that provide crisis treatment for the mentally ill are among other things Kaine proposes.
These cuts would undo millions of dollars in funding provided in the wake of the shootings at Virginia Tech, where a mentally disturbed student killed 32 others and himself.
Friday's proposal calls for a $12.2 million cut for community service boards that provide treatment and crisis services.
Kaine's budget also calls for closing several mental health treatment centers for children, adolescents and older patients.
In order to try to bring money into the Commonwealth, Kaine has put housing out-of-state inmates back on his agenda for generating revenue.
In a briefing to lawmakers Friday, Kaine said the state could raise nearly $20 million by housing up to 1,000 inmates in state prisons.
Last year, a similar proposal was stopped after a sheriff sued the state. The complaint was the state would be making money on out-of-state inmates, while not paying the full cost to house state inmates in local jails.
The revenue plan, however, doesn't prevent deep cuts in Virginia's public safety system.
Kaine's budget calls for cutting $270 million from local sheriffs, Commonwealth's Attorneys and other constitutional officers.
Another $73 million would be cut from local police departments.
Kaine is also asking Virginia lawmakers to forever end the state's car tax and replace it with a phased-in one percent income tax increase.
The exiting Democrat's proposal must win approval by an anti-tax Republican House and a Republican governor who succeeds him next month.
Virginia taxpayers would first pay the increased income tax in the spring of 2011. By 2012, it would yield $2 billion a year.
The proposal was accompanied by about $1.2 bill in spending cuts that hit public safety and mental health services deeply.
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