Buoyed by better-than-expected state revenues, Gov. Ralph Northam proposed a revised two-year state budget on Wednesday that includes significant investments spanning education, COVID-19 relief, and criminal justice reform.
The latest December revenue forecast anticipates an extra $1.2 billion beyond the prior forecast, released in August. The extra cash gives lawmakers the luxury of adding new spending rather than the cutbacks seen in other states.
Virginia’s largest employers -- the federal government, defense contractors, and the tech sector -- have largely weathered the pandemic without layoffs, a reality that has been reflected in the withholding tax collections that make up over 60% of Virginia’s state revenues. Better-than-expected sales and corporate tax revenue have buttressed Virginia's bottom line.
Speaking in a mostly empty conference to lawmakers scattered across the commonwealth, Northam connected his budget proposal to a pandemic that upended business as usual.
"The plan I will present to you today is intended to help Virginians navigate the next phase of the crisis, and perhaps, its final months," Northam told lawmakers on the House Appropriations and Senate Finance committees. "It will position us to recover as quickly as possible as we rebuild our economy in a post-pandemic world."
In a nod to the potential for future uncertainty, roughly $650 million in Northam’s proposal would go toward the state’s revenue reserves. lt calls for setting aside over $500 million to school districts to avoid a calamitous drop in state funding. Enrollment at public schools has dipped during the pandemic, creating the potential for a dropoff in state funding for districts across the commonwealth.
Teachers would also get a 2% bonus under Northam’s proposal. If the January revenues remain strong, Northam would like to turn that into a permanent raise.
Northam’s budget proposal also calls for $90 million toward COVID-19 vaccinations that have begun across the commonwealth. The state set aside $22 million in CARES Act funding for that purpose, but that money has to be spent by the end of December.
“That money should come from the federal government,” Northam said. “But we’ve all learned not to wait.”
Other elements of Northam’s proposed budget include:
- An additional $25 million investment in Virginia’s Housing Trust Fund and almost $16 million toward the Rent and Mortgage Relief Program, which is designed to help renters facing eviction.
- $50 million toward extending passenger rail service from Roanoke to the Blacksburg-Christiansburg area, and extending service along the I-81/Route 29 Corridor from Washington, DC.
- $11 million to support efforts to transform Monument Avenue in Richmond and $9 million toward a slavery heritage site in downtown Richmond.
- $700,000 toward increasing staffing at the Virginia Parole Board to improve victim services assistance. Republicans and the Office of the Inspector General have been critical of the board’s handling of recent cases.
- Roughly $5 million to expand the Virginia Court of Appeals from 11 to 15 justices.
The budget plan still requires sign-off from the General Assembly, which is set to begin a compact, 30-day session in January. Republicans announced they would force that change from the customary 45-day session in an attempt to limit the scope of the session.
Senate Republican Caucus Chairman Ryan T. McDougle (R-Hanover) said in a statement that Northam’s plan reinforced that decision, arguing that the largely one-time investments proposed by the governor constitute “a recipe for future instability.” McDougle also said Northam’s plan to expand the Court of Appeals mirrored a “hyper-partisan” plan from some national Democrats to expand the U.S. Supreme Court.
Both McDougle and House Minority Leader Todd Gilbert (R-Shenandoah) suggested Northam needed to do more to help students and parents during virtual learning.
“Rather than face the very real crisis facing our students, Governor Northam has instead defaulted back to the same old Democratic playbook — throwing money at the same old line items and hoping they solve problems he won’t even acknowledge,” Gilbert said in a statement.
Top Democrats hailed Northam's plan.
“Governor Northam’s proposals are a good first step toward protecting health, continuing economic recovery, and addressing social justice,” said Democratic Senate Caucus Chair Mamie Locke (D-Hampton) in a statement.
