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Gov. Northam Suggests Raises for Teachers, Taxes on Tobacco & Gas in Proposed Budget

Ralph Northam addressing lawmakers
Gov. Ralph Northam addressing the Joint Money Committees on Monday about his budget proposals. (Ben Paviour / VPM)

Gov. Ralph Northam unveiled what he called one of the most progressive budgets in the state’s history on Monday, with $2.7 billion in new spending in education, health care, and the environment.

The budget also included new taxes on gas and tobacco that would help fund transportation and healthcare priorities.

Riding high on strong revenue forecasts and Democrats’ sweeping wins in November’s elections, Northam said he had a mandate to pursue proposals that helped the state’s most vulnerable residents.

“This budget takes care of vulnerable Virginians invest in long, neglected needs and puts money away for the rainy day,” Northam told a meeting of the General Assembly’s Joint Money Committees on Monday.

Republican lawmakers pushed back on the amount of spending and the revenue forecasts underlying them.

“Santa Claus Northam is going to have to get a second sleigh to carry all of these presents and goodies that he wants to extend to the citizens of the Commonwealth of Virginia,” said GOP Senate Majority Leader Tommy Norment (R-James City), who will lead the Republican minority beginning in January.

Education and Healthcare

Almost two-thirds of the budget would go to funding education and healthcare. While Northam laid out many of his priorities over the last two weeks, some of his proposals were new.

That includes a state-run healthcare exchange and a reinsurance fund designed to reduce premiums by 20% on the exchange.

The initiatives would be funded by a doubling of the cigarette tax to $0.60, as well as a 20% tax on other tobacco products like chewing tobacco.

Previously-announced projects in the budget include free community college tuition for lower and middle-income students who enter high-demand fields as well as funding for historically black colleges and universities.

Teachers would also get a 3% raise under Northam’s plan.

Transportation

In what is likely to be one of the most controversial pieces of his budget, Northam is calling for a $0.12 increase in the gas tax over three years, with future increases pegged to inflation. The average Virginian driver would pay about $60 more a year in taxes under the proposal, Northam said.

His budget also scraps mandatory vehicle inspection and cuts the costs of vehicle registration by 50%.

Northam said the changes would allow the state to make up for a looming transportation funding shortfall that affects key infrastructure. He argued drivers would accept the tradeoff to avoid backups.

“Those who drive more should pay more,” Northam said. 

Norment and other Republicans questioned whether the proposal was truly fair. 

“I didn't hear anything about how hybrids and electric cars are going to pay their fair share of the miles as they drive,” Norment said. 

Republicans were also uneasy about Northam’s move to redirect money that would go to the so-called Taxpayer Relief Fund -- created by Republican lawmakers last year -- to the state’s general fund. The taxpayer fund was created from a bump in state tax collections caused by changes to the federal tax code.

“The addition of hundreds of millions of dollars in higher taxes by a Democratic governor is predictable,” said incoming House Minority Leader Todd Gilbert (R-Shenandoah) in a statement. “But going further to repeal a fund specifically designed to bring tax relief to Virginians passed just last year is disappointing."

Democrats now control both chambers of the legislature, which also places them in leadership of key budget and finance committees. Northam's budget includes $200 million set aside for lawmakers to spend on their own priorities -- a provision that raised some eyebrows with the conservative Family Foundation, which warned in an email the money would be used "presumably to issue handouts for Leftist causes and supporters." This is the first time, administration officials say, money has been allocated like this in the budget for additional priorities. 

The move was also surprising given the legislature's role in crafting and reshaping the budget, which generally includes projects proposed by lawmakers as well as those put forward by the governor. 

Next Steps

Democrats now control the General Assembly, which also places them in leadership of key budget and finance committees. 

They'll begin hashing out budgets of their own when they meet on January 8, 2020.

Northam's budget includes $200 million set aside for lawmakers to spend on their own priorities. This is the first time, administration officials say, money has been allocated like this in the budget for additional priorities. 

The provision raised some eyebrows with the conservative Family Foundation, which warned in an email the money would be used "presumably to issue handouts for Leftist causes and supporters."

Given that lawmakers usually rewrite the budget handed down from the governor to include their own priorities, the move appeared to be largely ceremonial.

Lawmakers will take up Northam’s budget when the 2020 session convenes on January 8.Incoming Democratic Speaker of the House Eileen Filler-Corn (D-Fairfax) said she was broadly pleased with the budget, which included “a lot of proposals that we have been prioritizing that have not been funded.”

Norment said Northam’s budget would undergo extensive scrutiny in the legislature. 

“Every Republican and every Democratic governor unrolls their altruistic wish list that they think is going to leave their imprint on the Commonwealth of Virginia when they run off into the sunset,” Norment said. “So this is really no different.”

Ben Paviour covers courts and criminal justice for VPM News with a focus on accountability.
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