By Tim Craig
Washington Post Staff Writer
Thursday, March 13, 2008; B01

RICHMOND, March 12 -- Virginia House and Senate negotiators completed work on a new state budget Wednesday, which could end an overtime session of the General Assembly on Thursday night.

After two weeks of often harsh negotiations, which forced lawmakers to extend their regular 60-day session past its Saturday deadline, the negotiators agreed to give teachers and state employees a pay raise, increase spending on the mentally retarded and expand courts that direct drug addicts into treatment instead of prison.

The two-year $77 billion spending plan, which goes into effect July 1, includes more money for environmental protection, human services and health care. But it scales back or eliminates many of Gov. Timothy M. Kaine's proposals.

The full Senate and House of Delegates are scheduled to consider the budget proposal Thursday night and adjourn. But last night, negotiators were still trying to finalize an agreement on borrowing more than $1 billion for construction at colleges, universities and other state entities.

The dispute was complicated by a slowdown in the economy, which forced lawmakers and Kaine (D) to cut about $2 billion from the proposal the governor submitted in December.

"It took some time, but we were able to fashion a budget that will help all Virginians," said Senate Majority Leader Richard L. Saslaw (D-Fairfax).

House Speaker William J. Howell (R-Stafford) said he looked forward to the legislature approving the agreement Thursday.

The budget talks stalled last week over teacher pay, pre-kindergarten spending and higher education. Lawmakers settled those issues Monday, but negotiators then dug in over public safety matters such as funding for two regional programs to catch people who use the Internet to arrange sex with children.

As they completed the budget deal Wednesday, Republicans and Democrats battled over several issues that underscore each party's priorities.

Senate Democrats persuaded House Republicans to strip language that prohibited funds for Planned Parenthood of Virginia, which performs abortions, and groups that conduct stem cell research.

In exchange, Senate Democrats agreed to abandon a program that Republicans feared could have led to collective bargaining and undermined the state's right-to-work laws.

To make up for the shortfall in the current year's budget, House and Senate leaders agreed to take about $296 million from the state's reserve fund.

The lean economic conditions will also trigger another round of budget cuts, raising concerns that some state services could be curtailed on top of previous trims.

M. Wayne Huggins, executive director of the Virginia State Police Association, said previous cuts to the public safety budget led officials to delay training of trooper recruits that was scheduled to start last month. Huggins said the decision basically amounts to a hiring freeze.

"If we can't hire new troopers to fill vacancies, that is of a great concern," Huggins said. "We have a whole school of new troopers that have been put on hold."

The House and Senate also agreed to fund $22 million more to expand subsidized pre-kindergarten; Kaine had pushed for double that amount. There will be $30 million more for land conservation programs; Kaine and Senate Democrats had proposed $50 million.

Republicans and Democrats also agreed not to fund a Kaine initiative that sought to expand access to health care by having the state partner with businesses to provide insurance to their low-income employees.

And many charity and cultural groups that have relied on state funding, such as the Wolf Trap performing arts center in Fairfax County and the Science Museum of Virginia in Richmond, won't be getting any state aid in 2009 or 2010.

Even so, the self-imposed ban on funding some nonstate agencies wasn't universally applied, offering a glimpse into decision making about spending in Richmond.

Hospitals and nursing homes are getting less of a percentage increase in new funding than they have in previous years.

But the Patient Advocate Foundation, a Newport News group that offers patient assistance services to the uninsured, will get $500,000, twice as much as it received in the last budget.

Del. Phillip A. Hamilton (R-Newport News), vice chairman of the Appropriations Committee and a budget negotiator, sits on the foundation's board of directors.

"They provide services at no charge to individuals with debilitating illnesses," he said. Asked whether it was a conflict for him to push for the money, Hamilton said, "I am a board member for a lot of things."

House and Senate leaders agreed on $1.5 million more to fund an existing program aimed at predators who target children online.

The program is named after Alicia Kozakiewicz, a 19-year-old Pennsylvania woman who was kidnapped and tortured when she was 13. Four days after her disappearance, a team of law enforcement officers who specialize in cyber crime tracked her down in a basement in Herndon. The Senate initially planned to withhold those funds but agreed to restore the money Tuesday after Kozakiewicz's mother called legislative leaders.

In response to the Virginia Tech shootings, lawmakers plan to spend $42 million more over two years to enhance mental health programs.

Budget negotiators also agreed to spend $4.5 million more over two years to bolster care for Iraq war veterans with brain or psychological injuries. And they support funding for 600 more slots for the mentally retarded to receive treatment at home instead of being hospitalized. Both are priorities of House Republicans.

But the Senate, under pressure from House Republicans, abandoned plans to spend several million dollars to create programs that try to divert nonviolent offenders into settings other than prison.

To House Republicans, that money was better spent on building more prisons, said Del. Beverly J. Sherwood (R-Frederick).