* Governor's budget puts new burdens on Va cities, counties

View larger image Virginia Gov. Bob McDonnell presents his budget before a joint session of the House and Senate money committees at the Capitol in Richmond on Monday. Steve Helber/AP Photo View larger image Virginia Gov. Bob McDonnell, left, is surrounded by media after he presented his budget before a joint session of the House and Senate money committees at the Capitol in Richmond, Va., on Monday. Steve Helber/AP Photo

RICHMOND, Va. (AP) -- City and county governments face some hard choices under Gov. Bob McDonnell's new budget.

The new $85 billion two-year spending blueprint for state government strives to shore up the underfunded pension fund with a $2.2 billion boost in employer contributions. But half of that comes from local governments.

It will also present school districts in northern Virginia with some interesting choices. It eliminates $65 million that the state provided districts in fast-growing suburban areas -- mainly those near Washington -- to use in retaining non-classroom staff that competing school systems are trying to hire away.

Budget targets health care cuts

McDonnell's new budget doesn't account for cost increases in hospital and nursing home rates for Medicaid recipients. It also reduces indigent care at state medical school teaching hospitals.

Overall, the new budget the governor presented Monday morning to the General Assembly's money committees trims $416 million from Virginia's Department of Medical Assistance Services.

Income limits for eligibility for optional long-term care are also being reduced, meaning fewer people will qualify.

But rising use of Medicaid forced McDonnell to boost state appropriations for the federal-state entitlement program for the aged, disabled, blind and needy by more than $600 million.

Medicaid's costs have grown by 80 percent over the past 10 years and now consume one-fifth of Virginia's general fund.