Tim Kaine says he cut $5 billion in spending as governor

Democrat Tim Kaine says he knows how to cut budgets, and that will be helpful if he’s elected to the U.S. Senate this fall.

"As governor, I cut $5 billion in spending," Kaine says in opening words of a TV commercial that began airing Oct. 8.

That same day, Kaine boasted of his budget prowess in his opening comments of a debate with Republican George Allen. "I was the governor that drew a tough, tough straw," he said. "I was governor during the worst recession since the 1930s and I had to cut $5 billion from the state budget."

Did Kaine really cut state spending by $5 billion? We took a look.

Kaine says the reductions were made in the general fund, the portion of the state budget that pays for schools, health programs and public safety. It is largely funded by income taxes and sales taxes.

When Kaine took office in January 2006, he inherited a general fund budget of $15.1 billion for the fiscal year that started July 1, 2005. The economy was healthy at the start of his term and the general fund for the budget year that started in July 2007 was pegged at $17 billion.

But trouble began that October when the nation began sliding into recession. Kaine announced there was a $300 million shortfall in tax revenues needed to pay for general fund programs and took steps to balance the budget, as required by law.

By the time he left office in January 2010, Kaine and the General Assembly had filled in cumulative budget holes totaling about $7.28 billion, according state documents from the final three years of his administration. About 85 percent of the shortfall was caused by dwindling tax receipts; the rest was caused by increased expenses, mainly in providing Medicaid.

Kaine and the General Assembly closed the gap by drawing on emergency funds, transferring state funds, using bookkeeping techniques and cutting programs.

There’s no single document that lists each action Kaine and legislators took to balance the general fund. But a solid summary can be constructed by piecing together figures contained in a variety of reports issued by the General Assembly’s money committees, the Joint Legislative Audit and Review Commission and the Kaine administration.

Actions approved during Kaine’s term

How did Kaine and the General Assembly balance the $7.34 billion in general fund shortfalls? For starters, they made about $4.03 billion in budget adjustments that did not require cuts in spending.

*They used $1.5 billion in federal stimulus money to pay for programs.

*They withdrew $895 million in emergency reserves from the state’s Rainy Day Fund.

*They found $525 million in short-term savings by switching the financing on some construction projects from cash to bonds.

*They wiped $240 million off the books by rescinding a 2 percent raise for state employees and teachers before it went into effect in 2008.

*They transferred $244 million into the general fund from other state accounts.

*They collected $234 million in unspent money in state accounts at the end of budget years.  

*They gained $171 million by changing tax and fee policies.

*They saved $133 million by delaying the reimbursement of Medicaid providers.

*They saved $93 million by changing business practices, such as delaying purchases.

As we noted, these steps erased about $4.03 billion of the shortfall without imposing spending cuts. That leaves about a $3.31 billion portion of the shortfall that was eliminated with cuts to general fund programs.

So how does Kaine get to $5 billion in cuts?

Kaine’s farewell budget

During the final weeks of his term in late 2009, Kaine confronted an additional $4.2 billion shortfall facing the state for the fiscal year starting the following July 1.

On Dec. 18, 2009, Kaine proposed an outgoing budget with steps to balance the future shortfall. He called for a $1.9 billion tax hike and $2.3 billion in other budget-balancing steps. Kaine left office four weeks later, before the General Assembly took up his proposals.

Lawmakers eventually rejected the tax hike. Brandi Hoffine, a spokeswoman for Kaine, said the General Assembly embraced the rest of Kaine’s plan and the campaign adds its entire $2.3 billion impact to Kaine’s tally of cuts -- pushing him well above a $5 billion total.

But a different picture emerges from documents issued by the General Assembly’s money committees in January and June of 2010. They show that the $2.3 billion portion of Kaine’s plan included $660 million in adjustments that did not require general fund cuts; half it coming from an additional draw on federal stimulus funds and half coming from increased fees and transfers from other state accounts.

That leaves us with about $1.64 billion in spending cuts proposed by Kaine and, of them, the General Assembly adopted about $1.33 billion worth.

Our rating

Kaine said, "As governor, I cut $5 billion in spending."

As governor, Kaine approved about $3.31 billion in general fund spending cuts. After he left office, the General Assembly adopted additional budget cuts recommended by Kaine totaling about $1.33 billion. If we count everything, we come to about $4.64 billion.    

Should Kaine receive some credit for cuts that he recommended but were enacted after he left office? We think so. But the actual spending cuts still fall short of $5 billion.

We rate Kaine’s statement Mostly True.

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