Virginia General Assembly Passes Biennial Budget

On Thursday evening, my colleagues returned to Richmond after a three-month stalemate and passed a responsible biennial budget.

The budget that the Virginia General Assembly sent to Governor McAuliffe closes a two-year $1.5 Billion+ budget deficit with no tax increases and no accounting gimmicks.  This was no small task given the fact that we unexpectedly found ourselves in a huge deficit.  Virginia’s economy has plummeted in just the past few months.  Many economists believe this is due to expiration of the tax cuts implemented by President Bush and the new tax increases for the Affordable Care Act. These two factors have caused hiring to drop and the economy to slow.   In addition, Virginia is being hit even harder than other states because of the slowdown in federal government spending.  With sequestration cuts and defense cuts due to the cessation of the Iraq and Afghanistan wars, many citizens are losing their government contracting jobs.  Consequently, they are sending less income tax and less sales tax to the State Capitol.  Because of this, Virginia tax revenues are predicted to be down this year by $870.9 Million out of a $17.165 Billion yearly Discretionary Budget.

The good news is that the Virginia legislature has saved a lot of money in the Rainy Day fund, and we can use $470 Million of this to help close the deficit.  The bad news is that we still had to find the remaining $400.9 Million in cuts ($870.9 Million – $470 Million = $400.9 Million).

The House Appropriations and Senate Finance Committees went back to the drawing boards.  The Committees “level-funded” our budget at every level of government. This means we did not increase any funding and, on top of that, cut hundreds of millions out of the Governors’ proposed spending.  These cuts were in every area of government.   Some examples include a 16% cut in Administration, Finance, Legislative, and Judicial areas; significant cuts to funds that are given to businesses to move to Virginia; and killing new education and health and human services programs.  (E-mail me if you want a full list).

While we had to make these tough cuts, we were able to free up enough money to fund priority projects.  Here are the areas for which we actually added money in the budget. (Note: These are rounded numbers and not a full list, just ones I thought you would be interested in.)

  1. As required by Federal Law, we have to pay $280 Million in new dollars to fund our existing Medicaid.
  2. We fully funded K-12 Education “re-benchmarking” (the infamous school funding formula that sends direct dollars to school systems to help them run their schools).  This resulted in an additional $18,633,000 for our Fairfax Schools.  That equals $104.24 per student!  This is a huge achievement for our schools, especially in a year where there is a deficit.
  3. $184 Million to our Virginia Colleges and Universities. This includes $6.2 Million to add more than 1,700 new in-state slots at W&M, UVA, JMU and VT.  (Note: This has been a top priority for me.  When I found out that students with over 4.0 GPA’s could not get into UVA, W&M and VT, I set out to do something about it.  Delegate Hugo (Clifton), myself, and others have been pursuing this with the Colleges, the Universities, and our colleagues for over five years.  It is great to see this come to fruition.)
  4. $37 Million to fund improvements in Virginia’s Mental Health system.
  5. $56 Million in Medicaid “Waivers” to help those with both intellectual and physical disabilities move to group homes. This is required by a recent court case that states these citizen must be moved from institutions into group homes.
  6. $97.6 Million to continue to fully fund Virginia’s State Employee Retirement System. (Note: This is significant because other states’ pension systems around the country are on their way to bankruptcy.  Two years ago, we canceled pension for new state employees and replaced it with a 401K type of investment.  We are now adding money to the fund, so that our system will be fully solvent in a few years.)

A key highlight of the budget, is that we struck out Medicaid Expansion.  While there is much to discuss on the issue, simply said, everyone – Republicans & Democrats & Independents – all think it would be nice to take care of everyone.  But from the Republican side, we realize that there is a limit to the amount of money the government has.  Virginia had trouble funding our existing Medicaid which just this year cost an additional $280 Million.  The House Republicans (including me, of course) did not want to expand Medicaid and thus obligate Virginia to pay even more money in the future.  (Note:  Medicaid gives government paid healthcare to poor children, elderly and disabled.  The Democrats want to give free health insurance to poor adults who are working age (ages 19-64).  While the Federal Government would pay 100% for three years, eventually the State share would be 10%.  And just the 10% is predicted to cost $240 Million/year.  With medical inflation, it would be $480 Million/year in just ten years.)   The Republicans successfully struck this free health insurance to adults 19-64 out of the budget.

While it took 96 days after the normal March 8th due date, my colleagues and I were able to deliver a balanced budget without a tax increase!  It took some time and compromise, but that is how you get things done.  Our responsibility is to run our government.  That means build roads, get your kids into college, fund our public schools, catch criminals and keep the violent ones in prison for a long time, and take care of people who are unable to care for themselves.  To be honest, there is a lot in this budget I don’t like.  Due to the Recession that never seems to end, tough cuts had to be made.  However, making tough decisions and compromising when it is needed, is how you get things done.  We fulfilled our responsibility to you.

To view the entire bill that was passed by the Senate and House on June 12, 2014, click here.

http://leg2.state.va.us/MoneyWeb.NSF/sb2014a

Dave Albo

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