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‘Drastic Reduction’ in Revenues Causes Northam to Rethink Budget

Teachers wearing red hold signs at Red4Ed rally
Teachers and education advocates gathered at the Red4Ed rally in January. Gov. Northam has proposed delaying new spending, including 4% pay raises for public school teachers over the next two years. (Crixell Matthews/VPM News)

Democratic lawmakers barely had time to celebrate passing their first new budget in over two decades before COVID-19 scrambled their math.

Now Gov. Ralph Northam is asking them to stick with a skeletal version of the current budget -- at least until the state has a clearer sense of the pandemic’s economic toll.

Instead, the governor wants to focus on maintaining the core services of government, including healthcare, social services and public education.

“We are expecting a recession with a drastic reduction in our revenues paired with large increases in spending to fight this epidemic,” Northam said in a press conference on Wednesday.

Funding increases for teacher raises, early childhood education, community colleges, and affordable housing would be delayed under Northam’s plan.

Businesses and the state have no sense of how long the pandemic and its economic spillover could last, according to Secretary of Finance Aubrey Layne. Once they have a better grip on the situation, Northam would ask for a re-forecast to assess how much revenue the state expects to come in.

“My guess is a lot of this [new] spending is never going to go into place,” Layne said. “But we don’t know that right now.”

The re-forecast could also result in deeper cuts to existing services. Northam already ordered a hiring freeze and asked state agencies to pause all non-essential spending. 

At some point after state revenues are reassessed, Northam would call the legislature back for a special session to vote on a revised budget. Layne said the state would have to return to semi-normalcy before that could happen.

The governor has until midnight on Saturday to sign legislation, into law and make any changes to bills, including the budget. Lawmakers are returning to Richmond on April 22 to vote on any changes or vetoes he makes.  

The governor’s budget plan has the support of leadership in both parties.

“This is just the first step in addressing the likely shortfall we will face in the coming months,” Del. Luke Torian, chair of the House appropriations committee, said in a statement.

House Minority Leader Todd Gilbert (R-Shenendoah) agreed.

“We can’t steer the ship of state financially if we can’t see where we’re going,” he said in a statement.

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