Northam imposes hiring freeze, calls for budget cuts as Virginia faces recession

Virginia News

RICHMOND, Va. (WRIC) — Gov. Ralph Northam has directed state agencies to focus on ways to cut budgets and ordered a hiring freeze of state employees as Virginia begins to prepare for a looming recession caused by the coronavirus pandemic.

In a memo sent Thursday, which was obtained by 8News, Northam’s chief of staff Clark Mercer paints a stark picture of the state’s economic outlook while also laying out steps for agency heads to follow amid the crisis.

“The virus has brought us challenges that our society has not faced in generations,” Mercer wrote in the 4-page memo. “Events are unfolding quickly and require us to prepare for a new reality that is drastically different from what was certain just a few weeks ago.”

The memo outlines five actions imposed by the governor in order to “reduce spending and to generate savings to help pay for the unbudgeted costs of COVID-19.”

The following steps will go into effect immediately: Agencies will eliminate discretionary spending for the remainder of the current fiscal year, prepare for budget reductions in the next biennium, re-examine funding for new initiatives, avoid new commitments and a comply with a hiring freeze.

While specific budget reduction targets were not shared, the memo suggests ways for agencies to cut budgets ahead of possible reductions that could be needed in the next two-year budget cycle. The suggestions listed in the memo include:

  • Identify low priority or underperforming activities
  • Avoid one-time savings
  • OK to include costs to achieve savings
  • Savings must be against your agency’s general fund appropriation
  • Do not transfer costs to another agency
  • Do not close the “Washington Monument”
  • Focus on overal savings to the state
  • Evauluate current budget spending and cash flow
  • Remember that layoffs generate costs

This story is developing. Stay with 8News for updates.

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