Category Archives: Budgets

Will Virginia COVID “Rescue” Be Big and Bold or Come in Dribs and Drabs?

by James A. Bacon

About two weeks ago, Secretary of Finance Aubrey Layne floated a trial balloon on Bacon’s Rebellion, suggesting that Virginia do something “transformational” with the $6.8 billion the federal government is showering upon Virginia in the latest COVID-relief package, the American Rescue Plan.

Transformational? Like what? Like patching up Virginia’s under-funded unemployment insurance program, extending affordable broadband into every corner of the state, or fixing antiquated school buildings, Layne suggested.

Now others are beginning to entertain similar thoughts. Reports Michael Martz with the Richmond Times-Dispatch:

“This is an extraordinary opportunity to meet long-term obligations and challenges,” said Michelle Gowdy, executive director of the Virginia Municipal League, in a letter to General Assembly leaders on Tuesday that asks them to work with local governments and Gov. Ralph Northam to collaborate on using billions of dollars coming to them under the American Rescue Plan Act.

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Do Something “Transformational” with $6.8 Billion in COVID Relief

by James A. Bacon

The $1.9 trillion COVID-relief bill just passed by Congress will shower billions of dollars upon Virginia citizens, businesses and government. State Secretary of Finance Aubrey Layne expects Virginia state government to receive about $3.8 billion and local governments to get about $3 billion, for a total of $6.8 billion.

The crazy thing, says Layne, is that Virginia made it through the COVID-19 pandemic in decent fiscal shape, so it doesn’t need the federal funds to maintain core functions of government as some other states do. Rather, he worries, legislators will be tempted to fritter away this once-in-a-lifetime bounty on pet projects or, worse, on new programs. This COVID-relief money is a one-time source of funding, he says, and it would be unwise to make financial commitments the state will have to continue honoring in subsequent years.

Congress has limited what the states can do with the money. Virginia can’t share this manna from heaven to citizens by reducing taxes. Nor can the state use it to reduce unfunded pension liabilities. As the guardian of the state fisc, Layne would like plow the revenue into one-time capital investment projects. This is Virginia’s opportunity to do something “transformational,” he says. Continue reading

We Pay For All the COVID Funerals, Too?

by Steve Haner

Per the Centers for Disease Control’s tracking, more than 4 million death certificates have been recorded in the U.S. during the COVID-19 pandemic. Only 520,000 of them (those recorded so far) listed COVID as primary or contributing cause of death.  The survivors of those individuals are eligible for 100% compensation for funeral expenses under the new round of federal COVID spending.  Continue reading

Podcast: How the General Assembly Has Changed

By Peter Galuszka

I haven’t contributed much to BR lately since I am slammed with non-Virginia work. I did manage to help out on a Podcast about how the General Assembly has changed the state over the last two years as Democrats have gained power.

This Podcast is produced by WTJU, the University of Virginia radio station. I do a weekly talk show on state politics and economics and, on occasion, work on Podcasts.

Joining me is Sally Hudson, a delegate from the Charlottesville area. She is Assistant Professor of Public Policy, Education and Economics. Sally studied at the Massachusetts Institute of Technology and Stanford and is one of the youngest members of the General Assembly.

I hope you enjoy it.

Analysis of State Use of Federal COVID Funds

Design credit: Atlantic Cape Community College

By Dick Hall-Sizemore

(Note:  All of the data presented in this post is based on the author’s analysis of raw expenditure data from the state’s accounting system (CARDINAL) for FY 2020 and FY 2021 through 2/22/2021.)

As of February 22, state agencies had spent or disbursed $11.9 billion in federal COVID funds.

Two major categories of expenditures accounted for about 86 percent of that total.  The Virginia Employment Commission had paid out $8.8 billion in unemployment claims.  Secondly, in accordance with federal law, the state had transferred $1.4 billion to local governments.  The remaining $1.7 billion was spent directly by state agencies or disbursed by them as grants to local or regional government agencies or to private entities. Continue reading

Virginia’s Progressive Assembly Turns to Taxes

by Steve Haner

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

The COVID-19 recession barely dented Virginia’s state budget. The massive spending growth adopted in the pre-COVID budget a year ago is largely back on track. Yet some legislators think the time is ripe to hunt for more revenue by re-writing the state’s tax code.

The two-year $48.2 billion General Fund revenue estimate endorsed by the General Assembly Saturday is less than $200 million lower than the comparable figure a year ago, a rounding error in a $143 billion overall budget. There is every reason to believe the current tax estimates will prove too low as another round of federal stimulus revs the economy in coming months.  Continue reading

Equity in Virginia School Funding

by Matt Hurt

Virginia Public School Region VII has demonstrated that large per-student budgets are not a prerequisite to ensure success on Virginia’s Standards of Learning assessments. High pass rates indicate that the schools and divisions in the Southwest are meeting the needs of their students for basic skill attainment. However, to achieve Virginia’s 5 C’s — Critical Thinking Skills, Collaboration Skills, Communication Skills, Creative Thinking Skills, and Citizenship Skills — students need access to more educational opportunities than the current state funding formula provides. Affluent localities have provided these opportunities for their students, whereas others have not found the means.

School funding is very complicated as there are so many variables at play. Public school budgets can be broken into four funding sources — federal, state, state sales tax, and local dollars. There are differing criteria for each, which impact the overall budget for a given school division. The degree to which school division budgets vary by funding source can be seen in the table below, drawn from the 2019 Superintendent’s Annual Report. Also included is the range of per pupil funding that year.

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Demanding Openness about UVa’s Cost Structure

by James A. Bacon

Last week the University of Virginia Board of Visitors held a workshop to discuss next year’s increase in tuition, fees, and other charges and to hear input from the public — mostly students begging the board for relief from the ever-escalating cost of attendance.

A PowerPoint presentation released at the meeting essentially made the case for hiking tuition again, although the exact percentage will depend upon the level of financial support provided by the Commonwealth. The estimated increase for undergraduate, in-state tuition will range between 0% and 3.1%. Additional fees are set at $114.

The presentation reflects the Ryan administration’s spin on the numbers. It’s the job of the Board of Visitors to probe deeper. In this post, I will first summarize the administration’s stats, and then I will provide some numbers that the board should consider as it ponders the tuition increases.

“Tuition is last resort,” states a slide expressing UVa’s tuition philosophy. “[We first] look to other revenues and savings.”

We’ll see about that. Continue reading

More Money, Same Level of Service

Photo Credit: Richmond Times Dispatch

By Dick Hall-Sizemore

There are often cries of anguish or outrage on this blog and elsewhere over the increases in spending proposed in budget proposals and then authorized by the General Assembly. Some of this criticism of increased spending is justified, but, sometimes, the increase is the result of circumstances beyond an agency’s control. Sometimes, stuff just costs more.

Replacing State Police cruisers is a good example of this quandary. For many years, the State Police used the Ford Crown Victoria Police Interceptor. When Ford stopped production of that model in 2011, the State Police began using the Ford Taurus Police Interceptor.  (It took me a little while to get used to seeing the State Police in those smaller cars.) Next, Ford discontinued production of the Taurus in 2019. After testing Dodge and Chevrolet vehicles as potential replacements, the State Police selected the Ford Police Interceptor Utility. (This is a modified SUV and it explains why I have been seeing local police driving SUVs, which was a little disconcerting.) Continue reading

What Texas’s Crisis Means for Virginia

by Peter Galuszka

The Texas freeze and ensuing energy disaster has clear lessons for Virginia as it sorts out its energy future.

Yet much of the media coverage in Virginia and certainly on Bacon’s Rebellion conveniently leaves out pertinent observations.

The statewide freeze in Texas completely fouled up the entire energy infrastructure as natural gas pipelines and oil wells stopped working, coal at generating plants iced over and wind turbines stopped working.

Making matters much worse, Texas opted not to have power links with other states. Its “free market” system of purchasing power meant utilities skimped on maintenance and adding weather-relative preventive measures such as making sure key generation components were weatherproof.

The result? Scores dead and millions without electricity. Here are more points worth considering in Virginia:

Climate Change is For Real

It is a shame that so much comment in Bacon’s Rebellion is propaganda from people who are or were paid, either directly or indirectly, by the fossil fuel industry. Thus, the blog diminishes the importance of dealing with climate change in a progressive way.  Continue reading

Updates: PPP, PIPP, Dominion’s School Buses

by Steve Haner

Tax on Paycheck Protection Program Grants

The General Assembly session deadlines require final decisions on various revenue bills before the final budget bill is adopted, in theory keeping the two issues separate. What is good tax policy should not be driven by the need or greed of the appropriators.  Continue reading

A Really Sweet Valentine

Photo Credit: WHSV

By Dick Hall-Sizemore

Governor Northam recently gave the budget conferees a $730 million Valentine.

Based on January’s revenue report and year-to-date collections, the Governor has revised the general fund forecast to include an additional $410 million in FY 2021 and $320 million in FY 2022.

The main factor leading to the increase was the unanticipated growth in sales tax revenues. Overall, the General Fund revenues through January grew by 6.0% over the same period a year ago. By comparison, the current budget is based on an estimated annual General Fund revenue growth of 1.2%.  The Governor’s letter to the money committees is here; a Power Point summation of the forecast increase is here; and the detailed January revenue report is here. Continue reading

The Latest Federal COVID Money Pot

Illustration credit: YouTube

By Dick Hall-Sizemore

The federal COVID money keeps rolling into the Commonwealth.

According to the Secretary of Finance, as of January 13, it was estimated that the state would receive $2.4 billion from the stimulus bill passed by Congress in late December (the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSA)).

Unlike the earlier COVID stimulus money (CRF from the CARES Act), the December federal legislation provided less flexibility with this pot of money, directing it to specific agencies and purposes.

K-12 education gets the biggest share. The estimates for Virginia are:

  • Governor’s Emergency Education Relief (GEER) Fund—Flexible—$30.0 million
  • GEER Fund—Private Schools–$46.6 million
  • K-12 Fund–$939.3 million.

Continue reading

How the CARES Funding is Being Allocated

Design credit: Atlantic Cape Community College

By Dick Hall-Sizemore

Upon Jim Bacon’s suggestion, Jim Sherlock and I have taken on the task of looking closer at the federal COVID money that is coming the Commonwealth’s way and trying to discern how it is being spent.  Unfortunately, this is not an analysis one finds in the general news media.

We have taken different approaches, perhaps reflective of our different backgrounds.  Jim has started with the federal programs and their components and requirements, along with the amounts of funding allocated to Virginia. I am looking at how the federal  pot is being split up among state agencies, as reflected in the state budget.  Later, I hope to examine how some of those agencies are spending the money. Continue reading

Senate Taxes Less PPP, House Bill Almost All

by Steve Haner

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

Majorities in both chambers of the Virginia General Assembly agree with Governor Ralph Northam and have voted to tax the federal Payroll Protection Plan grants that saved Virginia jobs in the pandemic. They only remain at odds over how much to tax.

The Virginia Senate has passed a bill 39-0 that allows employers, who used the money to maintain their workforce, to exempt the first $100,000 of their PPP grant from 2020. The rest is taxed. The bipartisan compromise allowed the bill to pass with the emergency clause it needs to go into effect immediately upon approval, in time for this tax filing season.

The average Virginia PPP grant was about $107,000, state officials reported. More than 20,000 employers would still see some taxes on their grants under the Senate bill. This state and its localities have received multiple billions of dollars of direct federal funding during the COVID pandemic, with more on the way, yet Governor Northam also wants to skim 6% off the top of what Virginia employers received.

It is that simple. Continue reading