Category Archives: Budgets

Proposed Standards of Quality Changes and Their Fiscal Impact

by James C. Sherlock

Dan Gecker, President, VBOE – picture credit: VBOE

This essay will present the changes proposed to Virginia public school Standards of Quality proposed by the Board of Education and put forward in identical School Equity and Staffing Act bills in the General Assembly.  

They represent very significant change.

I have annotated each change in law in that bill with its estimated FY 2021 fiscal impact on the state budget. 

You will note that localities will have to provide matching funds based upon the current based on each division’s local composite index. The actual fiscal impact to local school divisions is indeterminate at this time.

The two identical bills being vetted in this session are:

  • HB1929 (Aird).  Current status: Reported from Education 21-Y 1-N. In Appropriations.
  • SB1257 (McLellan) Current Status: Referred to Committee on Education and Health; assigned Public Education subcommittee

The bills are based on the Dec 1, 2020 recommendations by the Board of Education. That document can be consulted for background on the recommendations. Dan Gecker (pictured), the Board President, ran for the state senate in 2015 as a Democrat and lost a close race to Glen Sturtevant. Continue reading

Reward Teacher Heroes, Not Those Who Stayed Home

This teacher deserves society’s thanks.

by James A. Bacon

In his state of the Commonwealth speech last night, Governor Ralph Northam made some proposals worth cheering and some that bear closer scrutiny. I’ll get to them in future posts. But one remark in particular stands out as totally wrong-headed — the idea, in the year of COVID-19, of giving every teacher a pay raise. Said the Governor:

School staff and teachers have made great sacrifices this year, and I thank them. … Investing in education includes giving teachers a pay bonus.

A few weeks ago Northam proposed giving teachers a bonus bump in pay. With an improving revenue picture, he said in the speech, “We’re going to have more money than we thought. We need to make this teacher bonus a raise, and make it more than two percent.”

This teacher deserves nothing.

Time for a reality check. Some teachers and staff have made extraordinary efforts during the COVID-19 epidemic. They deserve society’s thanks, and they fully warrant a reward for their selflessness. But not all teachers and staff did. Continue reading

Virginia’s COVID Federal Grants Now At $5.8 Billion

Click for larger view.

By Steve Haner

Having received and mostly spent $3.1 billion in federal COVID-19 “relief” funding already, Virginia’s state and local governments now will have another $2.7 billion in the fourth and latest (but likely not last) federal spending bill tied to the ongoing pandemic and unemployment crisis.

The word relief is in apostrophes because Virginia’s state budget, as previously reported, is surprisingly strong in this time of economic stress, strong enough to pour dollars back into the state’s reserve funds Other states are in much worse shape. But just as with the individual COVID payments, need is not a factor. The idea is to stimulate personal – and government – spending across the board.  Continue reading

Welcome to the New Year, Same as the Old Year

2021 New Year baby?

by James A. Bacon

Three hundred and sixty-five days ago, my wife and friends and I tossed confetti, tooted our noisemakers and welcomed in a new year. Twenty twenty, we all agreed, couldn’t possibly be worse than 2019.

It didn’t take long to disabuse us of that notion. First came the coronavirus. Then the George Floyd protests and riots. And then the presidential election. We won’t be celebrating New Year’s Eve with anyone this year — we’ll be hunkering down in social isolation — but we’re thinking that, short of an outbreak of nuclear war, 2021 has got to be better than our current annus horribilis.

But it could be a close call.

On the positive side, we should be on the downward slope of the COVID-19 epidemic as vaccines are administered and herd immunity sets in. Life for most will return to normal. We’ll be able to socialize and travel once more. But 2021 will be no epidemiological nirvana. The virus will do plenty of harm on its way out. Millions more Americans will be infected and tens of thousands likely will die. Many people will suffer lingering medical after-effects from the virus. And the nation will be dealing with the economic, mental-health and fiscal fallout for years to come. Continue reading

Another Major Judicial System Reform

by Dick Hall-Sizemore

Perhaps the most surprising item in the Governor’s recently-presented budget bill was the proposal to increase the size of the Virginia Court of Appeals by four judges, from 11 to 15. It is certainly one of the most controversial. The Republicans immediately decried the proposal as “court packing”.

As usual, the issue is more complicated than its opponents would have one to believe. The Governor’s proposal reflects the unanimous recommendation of a two-year study conducted by a working group appointed by the Virginia Chief Justice and the Judicial Council. (The membership of the Council consists of eight judges, two attorneys in private practice, and the chairmen of the House and Senate Courts of Justice Committees.) That recommendation is supported by both the Virginia Chamber of Commerce and the Virginia Manufacturers’ Association. Continue reading

Healthcare Spending Drives Growth in Virginia Budget over Last 10 Years

by James C. Sherlock

On December 16, the Director of the Virginia Department of Planning and Budget provided a briefing for the Joint Meeting of the Senate Finance and Appropriations Committee, the House Appropriations Committee, and the House Finance Committee.  

The subject was the Governor’s proposed amendments to the 2020-2022 Biennial Budget. The Governor submitted the revised budget discussed in that briefing and it was introduced as matching bills by the chairpersons of the Senate and House appropriations committees on December 16.

There is plenty of information of interest in there.  Continue reading

Northam Would Save Most of Virginia’s New Cash

Source: Virginia DPB. Well, $1.9B is 8% of one year’s general fund revenue, but a fairly small cushion in a $141B two-year total budget. The blue lines represent the official Revenue Stabilization “Rainy Day” Fund and the orange lines are a cash reserve that represents legislative spending discipline.  (Who picked UVA colors?)

By Steve Haner

Other states are in trouble these days, but Virginia suddenly has about $1.5 billion in free cash flow to use over the next 18 months, Governor Ralph Northam announced Wednesday. About half of it ($750 million) will be placed into reserves or used to improve the financial health of the Virginia Retirement System.

The COVID-19 recession has certainly had an impact, reducing state spending, and adding unanticipated expenses. But the economic restrictions imposed here have not equaled those in other states, and the federal government has continued its spending on services and contracts in Virginia.

A series of pre-pandemic tax increases have also cushioned the blow, along with $3.3 billion sent to the state for COVID-related expenses.  Continue reading

Utilities Face Paperwork Blizzard to Provide Relief

by Steve Haner

Virginia utility customers who are behind on their bills in the COVID-19 recession are closer to receiving government payments toward their debts, but there is one more paperwork hurdle that may trip some of them.

A few days ago, the Virginia State Corporation Commission completed a preliminary allocation of the $100 million in federal CARES Act funding to various regulated electric, gas and water utilities around Virginia. The payments were authorized in the amended budget adopted by the recent General Assembly special session.  Continue reading

Medicaid Enrollment Reaches 1.5 Million Virginians

Annual year-over-year growth of Virginia Medicaid spending and enrollment. Eligibility expanded and provider reimbursements increased at the end of 2018. Source: Senate Finance Committee presentation. Click to view. 

By Steve Haner

Just under two years into Virginia’s Medicaid expansion, and less than one year into a pandemic-sparked economic crisis, enrollment in the program is now about 1.5 million Virginians. Enrollment has grown more than 25% in less than two years and spending more than 30%.

The financial impact on state taxpayers has been blunted by a COVID-19 related boost in the federal share of the program costs, which is expected to continue well into 2021. But the federal legislation providing the money also prohibited the state from removing recipients from the program unless they actually moved away.  Continue reading

More Falsehoods and Malarkey from Clean Virginia

Capitalist Michael Bills of Clean Virginia: “Dividends are Bad”

By Steve Haner

The big money behind the Clean Virginia activist group was all earned by a Charlottesville hedge fund manager through the great American system of capitalism. That didn’t stop his organization from a recent attack that could have come from Communist Party USA. This one would have made Bernie Sanders blush.

Dominion Energy is paying out dividends in the middle of a pandemic! Shocking.

“Dominion Energy is transferring nearly $3 billion dollars from Virginia families and small businesses to Wall Street shareholders at a time when people are still struggling to stay in their homes and keep the lights on. This is economic injustice at its starkest,” said Clean Virginia Executive Director Brennan Gilmore.”  See this news release.

I know I pick on Clean Virginia all the time. Somebody has to call it out. This cannot simply be stupidity. They have to know these statements are nuts and they hurt their own cause.

“The record payouts will arrive on the heels of a new Virginia budget that allows Dominion Energy to pocket over half a billion dollars of customer overcharges while forcing Virginia customers to pay for all outstanding debt that is owed to the monopoly…”

“A new Virginia budget, expected to go into effect next week, compels no refunds of the $502.7 million Dominion overcharged customers since 2017 and puts the financial burden of the COVID-19 crisis and economic fallout on the shoulders of Dominion’s captive Virginian customers, allowing shareholders to pocket excess profits…”

Whatever excess profits Dominion Energy Virginia has earned in the 2017-2020 period are still hanging out there, accounted for somehow on the utility’s books. It is a lie to say they have now been pocketed by shareholders in the 2020 dividend payout. It is also a lie to say the new budget bill allowed that to happen. Continue reading

The University of Virginia Eastern Virginia Medical School

by James C. Sherlock

With additional information and thoughts generated by responses to my original posts on this matter, I offer this post as a final proposal before the November 15 release of the Sentara-funded “study” of what I call the Sentara Plan for Eastern Virginia Medical school.

The nation is short of doctors and shorter yet of good doctors. The nation has to produce more of both or the situation projects to worsen.

There is an opportunity here in Virginia to deal with both objectives.

But the Sentara Plan is not it.

Continue reading

Northam’s Tax Hikes Keeping Virginia Budget Afloat

This column was published originally in the Thomas Jefferson Institute for Public Policy newsletter. Steve normally re-publishes it on Bacon’s Rebellion himself, but he is volunteering at the polls today, so I am posting for him. — JAB

by Steve Haner

One quarter into the new fiscal year, despite the ongoing COVID-19 recession, Virginia state government is blowing the roof off its revenue estimates. Thank tax increases Governor Ralph Northam has signed.

Secretary of Finance Aubrey Layne recently reviewed the July through September 2020 results with state legislators, offering his standard slide presentation. Compared to the year before – before COVID — the state’s total General Fund revenue was up 9.9%, sales tax revenue was up 7.5%, corporate income tax receipts up 36% and estimated individual tax payments (those not withheld from paychecks) up 59%.

Now more tax increases are being proposed for the 2021 General Assembly. The Transportation and Climate Initiative in particular is a new carbon tax on gasoline and diesel. The proposal to restore a state inheritance tax on large estates is back. Virginia’s leading progressive group is actually hiring a “revenue campaign manager” to lead the 2021 and 2022 fight “to secure expanded progressive revenue options.” The tax changes already in place will see our revenue “progress” quickly. Continue reading

Assembly Protected Utilities, Not Other Businesses

First published this morning (with some slight differences) by the Thomas Jefferson Institute for Public Policy.

By Steve Haner

Now that the Virginia General Assembly’s “Cops and COVID” special session is all but finished, will it be easier or harder for the state’s struggling economy to recover in 2021? It will be harder, probably, except for the utilities.

The initial reason Governor Ralph Northam recalled legislators starting August 18 was to review the state budget for COVID recession-related changes. Then a series of confrontations between police and Black Americans added law enforcement and criminal punishment to the agenda.

But the legislators reached far beyond those issues in the 270 pieces of legislation introduced, of which 56 have now passed (many of them duplicates).  The Assembly recessed October 16, but did not adjourn, and that will delay the effective date of the various new laws until perhaps March 1.

What did the legislature do for or to the business climate in Virginia? Continue reading

Finally — a New Budget Bill

Photo Credit: Richmond Times-Dispatch

By Dick Hall-Sizemore

The money committees have reported a “conference” budget bill, which the General Assembly will probably adopt either tomorrow or Saturday.

The legislature has backed off the earlier contingency appropriations that drew objections from the Governor.

As with any budget, there are numerous moving parts. The legislature would capture savings in several areas and provide additional spending in others. Here are some of the major spending items:

  • $95.3 million for K-12. The source of the money is revenue from licensing of “gray” machines or “games of skill.”
  • $60 million for higher education “to maintain affordable access.”
  • $11 million for a one-time $500 bonus to state law-enforcement and corrections officers.
  • $379.6 million over the biennium to reappropriate some of the $2 billion in new spending earlier unalloted due to revenue shortfalls.

Continue reading

Budgeting in the Time of COVID

Photo credit: Pilot Online

by James A. Bacon

When last we read news reports about the ongoing budget negotiations between the General Assembly and Governor Ralph Northam, lawmakers said they were making “progress” but had not yet come to a resolution. One outstanding issue is how much money to put into General Fund reserve funds to buffer against revenue shortfalls stemming from the COVID-19 epidemic. Another is how much of the federal CARES Act revenue to spend now on coronavirus relief and how much to hold back for future needs.

I caught up with Secretary of Finance Aubrey Layne over the weekend, and he shared the perspectives that are shaping his advice to Northam, whom he describes as “middle of the road” fiscally and not inclined to accommodate all the spending demands emanating from the House of Delegates. Says Layne: “His instinct is to be cautious.”

Caution is called for, he adds, when there are so many economic and fiscal unknowns arising from the epidemic and the presidential elections.

The good news, says Layne, is that Virginia escaped the fiscal battering experienced by other states. He attributes our good fortune to two factors. One, which is widely acknowledged, is the large contribution of the federal government to Virginia’s economy. Federal employment was barely affected by the virus. Less widely appreciated is the fact that the commonwealth’s major private-sector employers also provide a stable employment base. Continue reading