McDonnell navigates changing landscape

RICHMOND — Big win notwithstanding, Republican Gov.-elect Bob McDonnell will start his reign hampered by a slashed state budget, a politically divided legislature and a sour economy.

Less than 24 hours after he was elected Virginia’s 71st governor, McDonnell acknowledged that he will face tough economic times when he takes office Jan. 16.

Gov. Timothy M. Kaine has already slashed $6 billion from the state’s $75 billion, two-year budget because of declining tax revenue. He is expected to cut an additional $1 billion.

And while Republicans gained at least five members of the House of Delegates in Tuesday’s voting, strengthening their majority, Democrats retain a thin majority in the Virginia Senate - which will now be the last redoubt of Democratic power in Richmond.

Tuesday’s election “certainly creates a large majority there that gives me the ability to ... get full cooperation to get a lot of things done in the House,” McDonnell said during his first news conference as governor-elect.

“And then obviously the challenge is for me to get these solutions put together in a bipartisan fashion that we’re able to get [them] through the Senate,” he said.

Speaker of the House William J. Howell, R-Stafford, acknowledged that a cash-strapped budget will play a big role in what McDonnell can get done.

“I think he’s going to find when he gets in there and, particularly when we all see the budget figures, the revenue forecast and where the economy is still lagging, I think that’s going to dictate an awful lot of the issues,” Howell said.

“I don’t think there’s going to be a lot of new initiatives.”

Howell said the financial difficulties are a challenge and an opportunity.

“Bob and I both over the years have stressed and worked on the idea that Virginia needs to step back and focus on what its core responsibilities are, and I think this gives an opportunity,” he said. “It forces us to do this.”

McDonnell maintains that he expects to carry out the agenda he outlined during his campaign. And he insisted Wednesday that he will do so without raising taxes.

That agenda includes doubling the size of the Governor’s Opportunity Fund, which is used to lure industry to Virginia; tax credits for job creation; merit pay for teachers; and transportation improvements.

In an interview before the election, McDonnell said he expected that the economy will begin to improve within the next year, in part because of his emphasis on job creation.

Political analysts expect McDonnell to concentrate on nonbudgetary issues over the short term, seeking to increase the number of charter schools, pushing more education money into the classroom rather than into administration, speeding up the permitting process for new businesses, and increasing penalties for gang activity and drug dealers.

He also wants to open foreign trade offices in India and China, nations with emerging economies.

McDonnell wants to initiate performance audits of state agencies to seek increased efficiencies. He has estimated that doing so could save the state $300 million a year.

Achieving all these goals during a depressed economy would be “a hat trick,” said Toni Travis, a political scientist at George Mason University.

She thinks McDonnell “is going to have to find a way to have user fees - perhaps tolls - if he is to carry out his transportation agenda.”

A case in point is building a second U.S. 460, paralleling the current 460 from Suffolk to Petersburg. The Virginia Department of Transportation has explored working with a private developer to build a 55-mile toll road with seven exits. But the agency abandoned the idea after a study found that the state still would have to pay $2 billion for construction. The state could not afford it.

McDonnell said Wednesday that the 460 route would be his top transportation priority. He held out the hope that he could find a private partner for the construction.

McDonnell has not ruled out using tolls to raise transportation funds, and he’s not backing down from his plan to privatize the state’s ABC stores. He said 32 other states have privately operated liquor stores. He has said the sale of Virginia’s stores would bring the state $500 million, which he also would use for transportation.

McDonnell acknowledged that passing a transportation plan “will be one of the biggest challenges that I will face with a Democratic Senate, Republican House and different ideas between the rural, suburban and urban areas of the state.”

When he pushes to double the Opportunity Fund, McDonnell will have an ally in the House Democratic Caucus, now reduced to 39 or 40 members, depending on the outcome of an unresolved contest in Virginia Beach.

“We want to be cooperative,” said Del. Ward L. Armstrong, D-Henry, the House Democratic chairman. But he added: “Our role hasn’t changed. We still represent 40 percent of Virginians. It is important to put alternatives on the table.”

Tyler Whitley and Olympia Meola are staff writers for the Richmond Times-Dispatch.