Budget Earmarks for Nonstate Entities

by Dick Hall-Sizemore

For many years, the most interesting and fun portion of the state Appropriation Act was a section near the end entitled, “State Grants to Nonstate Entities-Nonstate Agencies.” The 2000 Appropriation Act, appropriating almost $36 million for these nonstate entities, is a good example. It included funding for historic courthouses, local museums and historical societies, and the houses of Founding Fathers, as well as for larger, statewide museums and organizations.

Most of the amounts provided were small, especially in the context of the overall Appropriation Act. However, they were important to the local recipients and served to add to the political capital of the local legislators who sponsored the appropriations.

In 2011, Attorney General Ken Cuccinelli threw what seemed to be a monkey wrench into this process. In an official opinion, he declared that such appropriations, although they may “serve noble purposes,” were in violation of the state constitution. Article IV, Section 16, of the Virginia Constitution plainly prohibits “any appropriation of public funds, personal property, or real estate…to any charitable institution which is not owned or controlled by the Commonwealth.” For years the legislature had operated under the legal fiction that such appropriations were not to “charitable” organizations, but for “historical” or “cultural” ones. Indeed the title of the budget program used for these appropriations is “Financial Assistance for Cultural and Artistic Affairs.” The Attorney General’s opinion ended that charade.

Legislators can be inventive when confronted by obstacles, even constitutional ones. Indeed, Cuccinelli laid out a path in his opinion that could be used to accomplish their goal of supporting local and private nonprofit activities. As he explained, “The Virginia Constitution does not prohibit categorically all payments to charities from the State. The General Assembly can establish a program to provide services to its residents, and make appropriations to state agencies that, in turn, result in payments to charitable entities for goods purchased or services provided.” The state constitution, he pointed out, only prohibits “direct appropriations to a charity.”

That is the path that the General Assembly has taken: appropriate an amount to a state agency with accompanying language directing that the agency pass the funding on to a nonstate entity. (Note:  The term “nonstate entity” will be used in this article to refer to both private nonprofit organizations and to localities.)

These earmarks (some would uncharitably call them “pork”) generally take one or two forms: grants or contracts. A grant is straightforward: appropriate some money to a state agency and tell it to give the money to a designated nonstate entity. The instructions may spell out some specific purposes for which the nonstate entity is to use the funding or they might include some broad, general language in keeping with the overall mission of the nonstate entity. The following examples from the current Appropriation Act illustrate these approaches:

  1. $300,000 for actions undertaken by Preservation Virginia. (Department of Historic Resources)
  2. $1 million to the Wolf Trap Foundation for the Performing Arts to administer STEM Arts and early literacy programs for preschool, kindergarten, and first grade students. (Department of Education)

Under the contract approach, the Appropriation Act language directs the state agency to perform a specified task, accomplish a specified goal, or administer a specific program. It could be argued that this type of earmark is substantively different from the other type (i.e. not “pork”) because the activity or program being contracted for falls within the agency’s normal mission and could be carried out by the agency with its own personnel. On the other hand, the agency is not allowed any discretion over whether activity is to be contracted out or to whom the contract should be awarded. Furthermore, the activity being contracted for could be one that falls within the nonstate entity’s overall mission and one that it likely would be undertaking anyway. Example:  The Department of Health is directed to use $402,712 to contract with Health Wagon to provide summer outreach programs to low-income and uninsured individuals living in Southwest Virginia.

The Appropriation Act passed by the 2022 General Assembly includes at least $192.6 million in earmarks in the first year of the biennium and at least $83.2 million in the second year. I say “at least” because there is no central compilation or listing. The provisions for several agencies, notably the Department of Education and the Department of Historic Resources, do include handy listings, but other earmarks are scattered throughout the budget. One needs to know where to look. In my looking, I likely overlooked some. The total is primarily from the general fund, but there are some federal ARPA funds included and some federal Medicaid funds included in the health-related earmarks.

A spreadsheet listing the earmarks can be found here, sorted by agency. An item is included as an earmark if the language specifies the nonstate entity that is to receive the funding. There are instances in which the language directs the agency to issue grants for a specific program or purpose without specifying which nonstate entities are to receive grants. Those items are not included in the spreadsheet. Similarly, there are programs for which the agency is required to use a formula for distributing funding to localities, such as the Standards of Quality funding for local school divisions. That funding is not included as an earmark, but funding that is meant for a named locality or localities is included.

The legislature frequently designates amounts for subunits within state agencies and institutions of higher education, such as the Research Institute for Social Equity at Virginia Commonwealth University or the Virginia Center for School Safety in the Department of Criminal Justice Services. These, too, are earmarks in the sense that the General Assembly has explicitly directed how a specified portion of funding provided to the agency or institution is to be spent. However, because these earmarks are within state agencies and institutions and not for nonstate entities, they are not included in the spreadsheet.

The last column, labeled “source,” lists the legislators who submitted budget amendment requests for the items that were ultimately included in the conference report. For some conference committee amendments, there is no official paper trail identifying the source of the amendment. Those are designated with a question mark. The conference committee amendments also reduced or deleted some earmarks proposed by the Governor. The source of those reductions is designated as “N/A.”

There are four ways for a nonstate entity to get an earmark included in the budget:

Base budget—This is the best situation for a nonstate entity to have. In the budget development process, the appropriations for the second year of the biennium immediately preceding the upcoming biennium is used as the starting point, or base. For example, the appropriations for FY 2022, enacted by the 2021 General Assembly, served as the base for developing the budget for the 2022-2024 biennium, comprised of FY 2023 and FY 2024.

Unless the governor proposes an amendment to remove or change something in the base, it stays in. Seldom does the governor propose to remove any earmark from the base. Members of the General Assembly money committees and staff pay scant attention to the base, focusing rather on the changes proposed by the governor. If a nonstate entity achieves a spot in the base, it can be relatively sure it will retain it.

Governor’s amendments—The Governor proposes amendments to the base to add new earmarks, increase existing ones, and, rarely, eliminate one. During the fall when the budget is being developed, there is furious lobbying by nonstate entities to make it into the Governor’s amendments. They write letters to the Governor pleading their case. Members of the General Assembly write letters to the Governor endorsing specific nonstate entities’ requests. Representatives of these entities contact Cabinet members and senior members of the Governor’s staff, trying to get support for their requests. The Department of Planning and Budget maintains a database into which all of these requests are loaded. This “walking around list,” containing hundreds of requests, is used during the budget development process to select new earmarks for the budget.

General Assembly—After the Governor submits his proposed budget bill, the lobbying for earmarks shifts to the General Assembly. Nonstate entities that were unsuccessful in their quest to get included in the Governor’s amendments focus on the members of House Appropriations and Senate Finance. The smaller, more local nonstate entities, which may not have appealed to the Governor, request their local legislators to submit a budget amendment request on their behalf to the money committees. The enthusiasm with which those amendments are later pursued probably varies from legislator to legislator and from situation to situation.

Reconvened session—It is not common for a Governor to propose new earmarks in his proposed amendments in the reconvened session. However, Governor Youngkin proposed several in June to benefit Historically Black Colleges and Universities.

The breakdown of the earmarks in the current biennial budget by source is as follows (dollars shown in millions):

First Year               Second Year

  • Base Budget                                $44.7                      $44.7
  • Governor’s Amendments         $36.7                      $27.5
  • General Assembly                    $101.6                        $7.6
  • Reconvened Session                   $9.5                         $3.5
  • Total*                                         $192.6                       $83.2

*Totals do not equal sum of details due to rounding

The earmarks in the current biennial differ substantially from those 22 years ago at the turn of the century. Over the previous ten years, the number of earmarks decreased considerably due to revenue shortfalls. With the return of substantial revenue, the priorities of the legislature have noticeably changed. Gone are the relatively small awards toward restoration of historic courthouses and sites and support for local historical societies and museums. Overall, there is less emphasis on historic sites and more on education services and health services for low-income and uninsured individuals. Another noticeable change is the absence of funding for the United Daughters of the Confederacy and the provision of $250,000 for the preservation and care of historic African American graves and cemeteries.

My Soapbox

With one exception, all the earmarks seem to be for worthy causes, with some being more worthy than others, depending on one’s perspective. The exception is the $9 million for the City of Chesapeake. The language that appears in the Appropriation Act states that the funding is intended for the “expansion” of a community center. The explanatory “bullet” that accompanied the amendment in the conference report reveals what that expansion entails: the addition of an “indoor aquatic facility.” Why should the taxpayers of Virginia be expected to pay for an indoor swimming pool for Chesapeake residents?