Gov. Ralph Northam is instituting a hiring freeze of state employees and is telling agency heads to look for ways to cut budgets in response to the coronavirus.
Northam chief of staff Clark Mercer told agency heads in a memo last Thursday obtained by The Associated Press that a recession is coming and the state revenues will be far below “even our most pessimistic forecast” from last year.
On top of that, Mercer said, the state is having to spend heavily on fighting the virus, including buying medical supplies and on efforts to help vulnerable populations.
“All of this will cost the commonwealth extraordinary sums,” Mercer wrote.
Northam’s actions are not surprising.
The coronavirus is pounding state governments around the country with a financial one-two punch, costing them millions to try to contain the disease just as businesses are shutting down and tax revenue is collapsing.
Northam’s administration has not directed agency heads to come up with a specific figure, saying the total financial impact of the virus is not clear. Mercer also warned that the recently passed federal stimulus, which directs billions to state governments, will not be a cure-all.
“We cannot rely upon temporary federal funding to address our ongoing budget concerns,” Mercer wrote.
Lawmakers passed a two-year, $135 billion state budget early last month, just as the impact of the coronavirus was beginning to be felt. Northam will now offer suggested changes to the budget, which lawmakers are set to take up during a one-day legislative session later this month.
A booming stock market had boosted state tax revenues and helped give lawmakers plenty of new money to spend during the most recent budget writing process. New spending that Northam and lawmakers will now have to reconsider includes raises for teachers and state employees, in-state tuition freezes at public universities, and expanded social services benefits.