Category Archives: Budgets

Inflation and the Budget

by Dick Hall-Sizemore

In addition to conventional budget requests, the Youngkin administration is likely to receive requests from agencies in the fall budget development exercise for additional funding to enable them to cover additional costs resulting from higher inflation. (Yes, I realize that the 2022-2024 biennial budget has not even been agreed upon yet, but, once one round is out of the way, budget folks are always getting ready for the next round.)

With some exceptions, inflation is not normally built into budget bills. Budget development for a biennial budget starts with a base budget, which is the appropriation for the second year of the most recent biennium. Adjustments are made to the base, but rarely are those adjustments for inflation. As for the mid-biennium budget, agencies normally are not provided additional appropriations to cover inflationary costs. Continue reading

What’s the Governor Waiting For?

by Dick Hall-Sizemore

At the reconvened session on April 27, Governor Youngkin returned 116 bills to the General Assembly with recommended amendments. Legislators accepted the Governor’s recommendations on 91 of those bills. The remaining 25 bills were returned to him as originally passed.

The Governor has three options for each of these remaining bills: sign it, veto it, or let it become law without his signature. The deadline for him to take action is midnight, May 27.

What is the Governor waiting for? Yes, he still has 11 days before the deadline, but it was only 25 bills and he has had 19 days to consider them. He already had a folder with notes on each bill. Actually, the batch sent back included several sets of duplicate bills; therefore he has fewer than 25 legislative proposals to act on. Furthermore, he probably knew before he returned the bills which ones he was not going to approve if his recommendations were not accepted. Continue reading

Stoney Versus the Environ-istas

Image credit: Virginia Public Media

by James A. Bacon

Environmental activists in the City of Richmond aren’t happy with Mayor Levar Stoney’s proposed budget. The City’s Draft Climate Equity Action Plan sets a goal of reducing greenhouse gas emissions 45% by 2030 — and reaching net zero by 2050 — but Stoney’s budget plan doesn’t provide funding for conversion to electric vehicles, increasing the city’s urban forestry staff, or phasing out natural gas, as environmentalists would like.

“If we are truly serious about this master plan that puts environmental justice at the forefront, we need to put our money where our mouth is,” said Elle De La Cancela, an organizer with the Chesapeake Climate Action Network, as reported by Virginia Public Media.

“Our funding is not limitless, and we have many priorities in the city,” retorted Stoney spokesperson Jim Nolan in an email. “We have to provide funding for public education, affordable housing and homelessness, basic city services like sanitation and street cleaning, parks, clean water, all of the above.”

This is one of those rare occasions where I side with Stoney. As mayor, he has to consider the interests of a wide range of constituents — not the least of which include the city’s low-income minorities. Murders are up. Schools are melting down. Surging rents are intensifying the homeless problem. And, oh, by the way, the taxpayers paying for all this would like to maintain a modicum of city services like sanitation, pothole-free streets, litter-free parks and the like. The last thing Stoney wants is to preside over an exodus of middle- and upper-income taxpayers from the city. Continue reading

Virginia Budget Deal Stalled as Democrats Demand $3B in Increased Spending

by Shaun Kenney

Just to illustrate how fanatically out of touch Senate Democrats are as they frantically try to spend $3 billion on more government, check out State Senator Scott Surovell (D-Fairfax) on Twitter as he blasts Governor Glenn Youngkin’s proposal for gasoline tax relief:

Remember — we are sitting on a $3bn surplus fueled by COVID relief dollars and not by any metric of economic success. Yet Senate Democrats continue to lean into the hammock of so-called budget cuts as they continue to shove money into the maw of state government for the sake of producing mediocre results. Continue reading

Virginia’s Incredible Money-Spending Machine

by James A. Bacon

Spending by Virginia’s state government isn’t just increasing — spending is increasing at an accelerating rate. The current budget biennium (fiscal 2021-22) and the next (fiscal 2023-24) will have seen the two biggest spending increases of the past nine budget cycles. 

Assuming no modifications to the next biennial budget’s spending totals submitted by former Governor Ralph Northam, the combined General Fund and Non General Fund budgets will have increased 123% in the 17 years between fiscal 2007 and 2024.

(For purposes of comparison, the increase in the Consumer Price Index was 40% between 2007 and 2022. The state population increased 8.2% between 2010 and 2022. Spending has been increasing at roughly double the rate of inflation and population growth.) Continue reading

A SW Virginia View of the Budget Impasse

by Scott Dreyer

Virginia’s headline-grabbing elections last fall put Republicans back in the top three statewide offices for the first time in about a decade and a Republican majority back in the House of Delegates. However, since state senators enjoy four-year terms and none were up for election last November, senate Democrats still hold a slender 21-19 majority. Led by Senator Louise Lucas, D-Portsmouth, who, according to the Virginia Mercury, owns a shop that sells illegal and misidentified marijuana products with labeling targeting children, Senate Democrats have promised to be a “stone wall” against GOP-led proposals from Governor Glenn Youngkin and the House of Delegates. Continue reading

Richmond’s Reaganesque Time for Choosing

Chris Braunlich

by Chris Braunlich

Richmond, like Washington, has always been a place where an “insider’s game” is played – not in a pejorative sense, but simply as the way things are done.

Relationships are paramount, people speak in the arcane language of lawmaking, agendas are confusing for outsiders, and the activities of a subcommittee for an obscure commission are followed in detail because those in the know understand that what happens there will end up as a new regulation. Continue reading

Richmond Parents and Taxpayers, Welcome to Chicago Public Schools

by James C. Sherlock

The gulf between what the City of Richmond School Board (RSB) and the Richmond City Council (RCC) on what will be negotiated with their public unions is actually an ocean.

The RSB has authorized the negotiation of virtually everything about how the schools are run. It leaves nothing off the table except the right to strike and the right to negotiate a closed shop (Virginia is still a right to work state), both of which state law still prohibits. But the unions can negotiate what are essentially the work rules of a closed shop.

In contrast, the City Council is poised to pass an ordinance on May 5th from two candidate drafts, one from Mayor Stoney and the other from three Council members. The Mayor’s version states what will be negotiated — pay and benefits. The other states what will not be negotiated with an eleven-point description of the City’s Rights and Authorities.

The City Council drafts, especially the Mayor’s, have it right. They note the City Council’s duties under the laws of Virginia and to the citizens of their city.

Not so the school board. The RSB resolution acknowledges only one stakeholder: its unions.

Unmentioned in the RSB resolution is exactly who is going to represent the city in its negotiations with its unions. Ideally it will be a team composed of City Council (finance) and School Board subject-matter experts. If so the city reps will be operating under two sets of negotiating rules in direct opposition to one another.

I’d buy a ticket, but maybe under the sunshine laws negotiations will be on TV. Continue reading

A Narrative About Virginia’s Rural Hospitals that Obscures the Facts

by James C. Sherlock

Becker’s Healthcare, a widely read medical news organization, published a story on Friday, “892 hospitals at risk of closure, state by state.” Rural hospitals were the topic.

It cited as its source a report from a non-profit named The Center for Healthcare Quality and Payment Reform (CHQPR), which presents itself as “a national policy center that facilitates improvements in healthcare payment and delivery systems.”

The CHQPR report Rural Hospitals at Risk of Closing claims that twelve of Virginia’s “27″ rural hospitals are at immediate risk of closing. It certainly engaged my interest.

Another CHQPR report, The Crisis in Rural Health Care, has an interactive map where the twelve perhaps can be found.

But the sources of both reports are a mystery, at least to me.

  • First it must be noted that the Virginia Department of Health lists only 20 rural hospitals in the state.
  • Only five of them lost money in 2020 (see the column “Revenue and Gains in Excess of Expenses and Losses”).
  • Four of those are owned by large and profitable health systems that use them to feed more profitable cases to other system hospitals.

It is dangerous to the cause of improving rural healthcare to create “reports” like this. Continue reading

The State Budget: The House Reductions to Cover Tax Cuts

Del. Barry Knight (R-Virginia Beach, chairman, House Appropriations Committee

Budget is policy. A budget reflects what an organization chooses to spend its money on.

The differences between the versions of the 2022-2024 biennial budget passed by the House and Senate this year are starker than they have been in recent memory. There are major philosophical and policy differences that the conferees will need to work out.

However, before they even get to those differences, there is another obstacle they will need to confront: they differ significantly on how much money the state will bring in. They have to agree on ow much money they have to spend before they can seriously discuss how to spend it.

The Senate budget is based on total general fund revenue that is about $3.4 billion higher than projected by the House. (Unless otherwise specified, all funding amounts in this article refer to the general fund.) The reason for the wide gap, of course, is the House adopting greater tax cuts than the Senate. Steve Haner has very ably compared the different approaches to tax cuts on this blog here, here, and here. Continue reading

Last Stand for a Higher Standard Deduction

by Steve Haner

First published this morning by the Thomas Jefferson Institute for Public Policy.

The argument now dividing the General Assembly on partisan lines is not whether to cut the state income tax, but for whom. The House of Delegates goes big with a broad tax cut that brings Virginia into line with other states, but the Senate only wants small changes aimed at smaller groups of taxpayers. Continue reading

“Frozen” Property Taxes

by James C. Sherlock

I admit my fascination with how newspapers present various issues. It is an important window into the information their readers are getting.

City manager and county executive proclamations that property tax rates are “frozen” are meant to sound like fiscal constraint. Consider this headline from The Washington Post:

“Fairfax County executive proposes budget with tax-rate freeze, less pandemic austerity”

First paragraph:

“Fairfax County Executive Bryan Hill proposed a budget Tuesday that would freeze the residential property tax rate while spending more on county services — part of a push to end fiscal austerity in Northern Virginia amid signs of economic stability”

End “fiscal austerity” in Fairfax County. Seriously?

“Hill was able to present a $4.85 billion spending plan that focuses on some key areas of growth for Virginia’s most populous jurisdiction while keeping the residential property tax rate at $1.14 per $100 of assessed value.”

Where do we get such men? Everybody wins, right? Continue reading

A Conservative Proposal

by Dick Hall-Sizemore

Gov. Glenn Youngkin has reported to the General Assembly that the state can expect to bring in an additional $1.25 billion in general fund revenue in the current fiscal year. This is an astounding mid-session revenue projection. He is proposing that the state “give it back” to taxpayers.

Of the projected $1.25 billion in additional revenue, under the provisions of the state constitution, about $499 million would have to be deposited into the state’s rainy day fund, leaving approximately $751.4 million.

The Governor obviously thinks there is already enough general fund revenue to fund the operating and capital needs of the Commonwealth. I could identify a few, relatively small items that I feel should be better funded than they are, but I will desist. Instead, I have a proposal that should appeal to conservatives everywhere — pay off some of the Commonwealth’s credit card balance. Continue reading

Senate: “Trust Us This Time on Tax Reform”

One of Charles Schulz’s most iconic and useful images.

by Steve Haner

First published this morning by the Thomas Jefferson Institute for Public Policy.

Virginia government is flooded with cash — tax revenues far in excess of what is needed to maintain its current level of services and a fair reserve. Key votes have now been taken and the House of Delegates is poised to return much of the excess money back to taxpayers. The Senate of Virginia wants to keep the money and continue growing government ever larger.

Yet another monthly financial update showing surging tax receipts was released Friday.

Governor Glenn Youngkin (R) campaigned on and has introduced a series of tax reductions, most (but not all) of which will likely receive approval by the full House by today or tomorrow. Some of them (but not all) have received bipartisan support during their consideration in committee.

But the Senate Finance and Appropriations Committee, meeting late Thursday, voted to stay with the minor tax cuts/more spending approach proposed by outgoing Governor Ralph Northam (D). Some committee Republicans joined in voting against Youngkin’s proposals, delaying others for a promised study. Continue reading

HB 646 on Nursing Home Staffing Misses the Mark – So Does Its Fiscal Impact Statement

Courtesy NPR

by James C. Sherlock

There is a bill, HB 646, Nursing homes; standards of care and staff requirements, regulations in the General Assembly.

I support its intent.

As written it specifies minimum hours of direct care services for each
resident per 24-hour period.

In actuality, numbers of personnel required to provide the services depend upon the physical health of the patient population of each home. Specific numbers in the current bill also make the law vulnerable to changes in Centers for Medicare & Medicaid Services (CMS) policy. Such specificity is neither necessary nor, I suggest, appropriate.

  • The law can be amended to leverage existing federal monitoring of staffing to make it much easier to administer, less vulnerable to federal policy changes and tailored to the needs of the patients of each nursing home;
  • The amendment that I recommend will also enable the fiscal impact statement to be far more precise and far lower.

These goals can be achieved with an amended bill. Continue reading