Category Archives: Budgets

Juggling the Revenue

By Dick Hall-Sizemore

Jim Bacon mentioned in an earlier post that the state’s revenues for April were $700 million less than in April of last year.  I was surprised that there were no cries of outrage from readers and dire warnings of the state running a budget deficit. I was also surprised that I did not detect any signs of panic on the part of the administration.

After I dug into the details and thought about them for a while, I realized that, for reasons to be set out later, the state is in position to finish this fiscal year in the black. It is next year that has the administration worried.

Total general fund revenues for April 2020 were 26% lower than those for April 2019, leading to the $700 million decrease. Although total General Fund (GF) revenue year-to-date was higher (1.4%) than the comparable period in FY 2019, 3.1% growth for the year is needed to meet the forecast. In summary, the state revenue growth rate through April was less than half what was needed to meet the forecast. Continue reading

WTJU Podcast: COVID-19 and the Economy

By Peter Galuszka

Here’s is the twice-monthly podcast produced by WTJU, the official radio station of the University of Virginia. With me on this podcast  are Nathan Moore, the station general manager, and Sarah Vogelsong, who covers, labor, energy and environmental issues across the state for the Virginia Mercury, a fairly new and highly regarded non-profit news outlet. Our topic is how Virginia is handling the economic fallout from the COVID-19 pandemic.

State Spending Hike Also Postponed, Not Canceled

By Steve Haner

 Originally published in the May 3 Fredericksburg Free Lance-Star and then distributed by the Thomas Jefferson Institute for Public Policy. 

Just as COVID-19 was starting its destruction of the world’s economy in early March, the Virginia General Assembly took final action on an exuberant two-year state budget within shouting distance of $140 billion. Six weeks later at the Reconvened Session, with the economic damage obvious but not yet measured, the Assembly reaffirmed the same spending plan.

Rather than substantially cut the budget, Governor Ralph Northam and his finance team proposed to delay the vast majority of the newly authorized spending and decide later whether the state can afford it. About $2.3 billion in increased spending will remain in the budget, but frozen until a new revenue forecast is presented later this year. A special session will then be called where legislators either release the freezes or approve other actions.  Continue reading

Screwing Workers On Safety and Liability

A GRTC bus driver in better times

By Peter Galuszka

At 4:30 a.m. on April 27, about 100 workers of the Greater Richmond Transit Company — half of the total – failed to show up for work.

Worried about the health of its membership, Local 1220 of the International Amalgamated Transit Union demanded additional safety measures such as full personal protection equipment, time and a half hazardous pay, limits on the numbers of passenger and testing.

GRTC management threatened to fire workers who stayed away from work but agreed to talk. A resolution may come at a May 19 board meeting.

Indeed, stories are showing up throughout Virginia and across the country as workers most likely to be exposed to COVID-19 often have the least protection and no guarantees their employers will provide testing, hospitalization and sick pay.

In Timberville near Harrisonburg, workers at a Pilgrim’s Pride poultry plant worry that they are required to work at less than six feet –- considered safe distancing –- from each other. In Norfolk, non-union workers at a General Dynamics ship facility were required to do electrical work until they refused, citing exposure threats and a death. Continue reading

Why Northam Is Such An Important Governor

By Peter Galuszka

This is a bit like throwing chum at a school of sharks, but here is my latest in Style Weekly.

I wrote an assessment of Gov. Ralph Northam that is overall, quite positive. My take goes against much of the sentiment of other contributors on this blog.

They are entitled to their views but, to be honest, I find some of the essays shrill and not really fact based. If Northam wants to delay elective surgeries at hospitals for a week or so, some want to empanel a grand jury.

An acute care health facility in Henrico County becomes one of the most notorious hot spots for coronavirus deaths and it is immediately Northam’s fault even though the care center has had serious problems that long predated the governor’s term in office.

He’s a trained physician who served as an Army doctor in combat during the Iraq War yet he is vilified as being incompetent and incapable of understanding the COVID-19 pandemic.

It’s like the constant repetition of the “Sins of Hillary” on Breitbart and Fox News about emails and Benghazi.

Like him or not, Northam is bound to be one of the most consequential governors in Virginia history given the gigantic problem of the pandemic. He’s not a showboat salesman like Terry McAuliffe nor a smarmy, small-time crook like Robert F. McDonnell.

Anyway, here’s the piece.

Stop Gap Budget Amendments

By Dick Hall-Sizemore

Not surprisingly, the Governor did not try to re-write the budget in the reconvened session. There is just not enough information available now regarding the extent to which state revenues will be affected by the economic downturn brought on by the novel coronavirus. Using the process set out in the Appropriation Act and implemented several times in recent years, the re-rewrite (with major cuts) will happen next fall.

The Governor used his proposed budget amendments to accomplish several objectives: increase the amount of general fund cash available to address revenue shortfalls; freeze spending on his and on General Assembly initiatives; allow additional spending to proceed in specified, de facto mandated areas; and give himself and agencies administrative flexibility in dealing with COVID-19 situations. Continue reading

No Fed Return Required, Other Questions Answered

by Steve Haner

There were various factual debates over my post on tax payments yesterday, and these updates are worth special attention. A morning conversation with a certified public accounting familiar with Virginia taxes brought to light the following:

  • If you fail to file a state return by May 1, the six-month extension truly is automatic. Your return is not considered “late” until November. The state doesn’t care. You don’t need to request the extension.
  • If by June 1 the state has received tax payments either equal to what you paid for 2018, or 90% of your eventual 2019 liability, there is no penalty assessed once your return is settled.
  • The issue of interest on late payments will be addressed at the Reconvened General Assembly session on April 22, and it can take action to relieve taxpayers of that concern during this crisis. Our debate may have spurred an announcement on that before the day is done.
  • You do not need to have filed a federal tax return to file your state return, should you choose to. If owed a refund by the state, while owing an additional payment to the feds, file the state return now and the federal return in July. It creates no problem for the state.
  • Virginia is just weeks away from the end of its fiscal year June 30 and is constitutionally barred from deficit spending. Even the General Assembly could not have authorized a delay in the payment deadline beyond June 30 without risking a major financial default. As I’ve been saying with regard to businesses and government, cash flow is crucial.

Despite Offered Delays, Pay Your Taxes On Time

By Steve Haner

The latest complaint against the Northam Administration’s response to the COVID-19 pandemic is failing to provide adequate state tax relief. The complaint comes from the Tax Foundation and surfaced in a news report in Wednesday’s Fredericksburg Free Lance-Star.  The Richmond Times-Dispatch has now chimed in with an editorial.

Apparently most other states have matched the new (and temporary) federal income tax filing deadline of July 15 rather than April 15. Virginia has delayed the deadline for paying any taxes still owed for 2019 from May 1 to June 1. But the 2019 income tax returns are still due on May 1, and the common complaint is that since Virginia taxes are based on your federal adjusted gross income, you need to know your federal AGI figure to file.

“Virginia has done the least to help taxpayers with delayed filings or delayed payments than any other state,” said Jared Walczak, director of state tax policy with the Tax Foundation.

Walczak said although Virginia requires that state tax returns be filed by May 1, the payment deadline has been extended until June 1. But even with an extension on tax payments, Walczak said interest starts to accrue on the amount you owe.

“Virginia is the only state in the nation that is doing that,” said Walczak. “Everywhere else, there is at least some relief on both filing and payment deadlines.”

Continue reading

Virginia’s Let-the-Good-Times-Roll Budget

Laissez les bon temps roulez!

by Kerry Dougherty

We’re in a hell of a mess here in Virginia, folks.

Oh, other states are in trouble too. But how many of them saw their state legislatures go on a wild spending spree less than a month ago, even while the coronavirus was spreading across the globe? How many of them have governors who rashly extended economy-wrecking stay-at-home orders through June 10?

On March 12th Michael Bloomberg’s — oops, Virginia’s — General Assembly giddily approved a $135 billion two-year let-the-good-times-roll budget.

That plan included 16 different tax increases, including levies on cigarettes, hotels, gas and plastic bags. (Those taxes are expected to cost the average Virginian $500 a year. The feds are about to give everyone $1,200. Here in Virginia, a chunk of that will go in the form of tributes to the state. )

Lucky us.

In addition, state lawmakers voted to hike the minimum wage, give some state workers bonuses and all state workers raises. Government workers also got the right to collectively bargain so they could negotiate for even higher wages.

Then came the virus. And Gov. Ralph Northam’s extreme shutdowns. Continue reading

The Budget Sausage Factory

by Dick Hall-Sizemore

I have been going through the individual budget amendments adopted by the General Assembly. I admit it — I am a budget nerd who finds this stuff interesting. Plus, in this instance, my immersion into budget wonkery had the advantage of providing a diversion from the omnipresent discussion of the coronavirus.

Budgets are a great guide to a government’s policies. Governments put their money where their priorities lie. There was a summary recently in this blog of the major amendments to the recently passed budget bill.

In addition to the major policy initiatives such as public employee compensation, education, and health care, it is instructive to examine the smaller amendments.  They provide further insight into the legislative process (another area I find fascinating): Who has influence, what areas or policies are favored, etc.? Continue reading

Buying Time to Fix the Budget Hole

by Dick Hall-Sizemore

To deal with the virus-created budget crisis in the short term, the Northam administration has announced sort of a “time out.” According to the Richmond Times-Dispatch, the plan will consist of two primary components: freezing all new spending and diverting planned deposits in the cash reserve to pay for essential services in the current year.

The Governor will propose an amendment that would allow the administration to use about $600 million that had been planned for deposit in the cash reserve fund for essential operations of state government. This is not the Rainy Day fund, but money in the additional cash reserve established a couple of years ago.  Under the provisions of the state constitution, the Rainy Day fund cannot be tapped “unless the general fund revenues appropriated exceed such revised general fund revenue forecast by more than two percent of certified tax revenues collected in the most recently ended fiscal year. “Therefore, the state would need to wait until a re-forecast is conducted in the late summer before counting on the Rainy Day fund. Continue reading

Boomergeddon Update: Back on Track to Self-Destruction!

by James A. Bacon

It’s been ten years since I published my book, “Boomergeddon,” in which I advanced the argument that the fiscal/monetary system of the United States would collapse into chaos by the late 2020s or so. The nation has continued down the path to perdition, but not at the rate I had expected. I did not anticipate private-sector innovations like fracking, which put an end to fears of “peak oil,” nor did I foresee policy innovations such as Quantitative Easing, which repressed interest rates and bilked lenders and investors (retirees, pension funds) but eased the burden of paying interest on the national debt. And I never imagined that the nation could last a decade without a recession.

Our national leaders did a brilliant job of fighting the last financially-led recession through regulations that strengthened the finances of our biggest banks. But a true “black swan” — a rare and unanticipated event, the COVID-19 epidemic — and the governmental response of shutting down large swaths of the economy are plunging us into a severe downturn that no one saw coming. The Congressional Budget Office estimates that Gross Domestic Product for the 2nd Quarter of 2020 will “decline by at least 7 percent or at least 28 percent at the annualized rate.” Unemployment is spiking, and will likely linger. The CBO expects joblessness to linger around 9 percent through the end of 2021.

Needless to say, a recession of this severity will have devastating impact on federal, state, and local finances. The federal government was already running a $1 trillion-a-year deficit. To that, we can add another $1 trillion or so (the CBO offers no official forecasts) from lost tax revenue, and another $2.3 trillion from the congressional rescue package, and that doesn’t include a second-round package. This year alone, the U.S. will likely add $4 trillion or more to the national debt, which is already approaching $24 trillion. That compares to a $21.4 trillion GDP. By the end of this year, the debt as a ratio of GDP could well stand at 140% — totally uncharted waters. Continue reading

Right Wing Uses Virus To Stifle Needed Reforms

Statue of Gov. Harry F. Byrd on the state capitol grounds.

By Peter Galuszka

Right-wingers in Virginia have been apoplectic for months that Democrats finally captured the General Assembly after years of Republican control.

They also were enraged that the legislature this winter passed a number of reforms that would draw Virginia into the 21st Century such raising the minimum wage, boosting collective bargaining, tightening rules on carbon pollution and raising taxes for cigarettes, a deadly product.

Now such conservatives are using the COVID-19 pandemic as an excuse to throttle or delay such needed reforms. They have banded into groups such as the Coalition fort a Strong Virginia Economy. They have used the Virginia Municipal League’s complaints against the reforms, claiming they cost too much, as a way to derail new measures.

According to the left-leaning blog site Blue Virginia, one of the more extreme advocates for scrambling changes is Dave LaRock, a far-right Republican delegate from Loudoun County. A pronounced gay-basher, LaRock wants to squelch all of the reforms made by the more progressive General Assembly. Continue reading

Thank God for Medicaid Expansion

By Peter Galuszka

For years after the Affordable Care Act, “Obamacare,” made millions of federal dollars available for states to expand Medicaid health coverage, Virginia Republicans steadfastly blocked Virginia from using the money.

Led by former House Speaker Bill Howell and Sen. Tommy Norment, the GOP claimed that expanding Medicaid to nearly 400,000 people would be too expensive and would blow out state funding.

This skinflint approach was finally put to rest after Democrat Ralph Northam became governor in 2018, foreshadowing a Democratic sweep of the General Assembly in elections last year.

Thank God the Democrats prevailed.

Virginia’s formerly robust economy has been shattered by the COVID 19 pandemic. Last week, some 110,000 Virginians filed for unemployment support. It was 46,277 the week before.

Who covers them is an open question but many would qualify for Medicaid. Expansion has boosted lower-income Virginians so that they may be able to better ride out the pandemic. Continue reading

New Northam Financial Directive Late, Clueless

By Steve Haner

When I’m wrong, I should rush to admit it. The concerns expressed by others on this blog that the Northam Administration was failing to recognize the financial aspects to the COVID-19 pandemic were valid. The person exhibiting wishful thinking was me, with my assumption they were already acting.

That’s because they just acted, with an executive order to state agencies to freeze hiring, tighten spending and otherwise batten down the fiscal hatches for a storm. “We can expect to enter a recession soon,” Chief of Staff Clark Mercer writes in a four-page memo quoted by the Richmond Times-Dispatch.   

Wrong. The economy has been in recession for a month. A month. The concern now is a depression.

Mercer said the state expects “significantly less revenue” than the most pessimistic forecast Northam’s economic and revenue advisory councils considered last fall and reduced cash balances at the end of this fiscal year that will carry into the next two-year budget and require cuts in spending.

“Our intention is not to cut the budget in the short term, but decisions will depend on how much revenue comes in,” he said.

Wrong again. The state will be slashing the budget as never before, and the Governor should have started the process weeks ago. One can only hope, and it may be a forlorn one, that agency financial managers saw the clouds and acted on their own. If the Governor’s people are only now getting serious about the amendments to the budget due in seven days, shame.  Continue reading