Category Archives: Budgets

RVA 5X5: A Five-Part Series of Stories

Posted on December 10, 2022 by | 4 comments

by Jon Baliles

STORY #1 — The Pot Overfloweth

There have been a lot of stories this week about the $21 million surplus announced by Mayor Levar Stoney and what he is asking City Council to endorse and how to disburse it in a budget amendment vote scheduled for a Monday evening vote. “The growth of the real estate market has caused the taxable real property revenue to exceed the budgeted amount,” the mayor wrote in a letter to Council.

Dean Mirshahi at WRIC reports that out of the $17 million, $5 million would be used to improve pay scales for first responders and $3.1 million for inclement weather shelters — two things that are definitely needed and long overdue.

There is an allocation of $1,750,000 to the Department of Economic Development for “contractual increases” involving Richmond’s Diamond District and City Center projects. No one knows what this means, but the Diamond District developer made it clear to VPM News that they were not recipients of any of that allocation (so put away the conspiracy theories). Maybe an explanation is forthcoming Monday night (or maybe not).

Some of the other funding includes $1.1 million for traffic calming projects; $1 million each for the nonprofits HumanKind and Homeward to provide family crisis services and homeless services; $500,000 to NextUP RVA, a free program for Richmond Public Schools middle school students; $2 million would go to a reserve fund to help offset rising health care costs for city employees; about $450,000 for employees assisting with added translation and interpretation services; and $400,000 for the YMCA’s Help1RVA helpline for people in crisis or considering suicide.

The biggest item is $5 million for first responders, which includes $2.6 million for the Richmond Police Department, $1.9 million for the Richmond Fire Department, and $559,000 for the Department of Emergency Communications for pay adjustments that the city says were not accounted for in the pay raises approved last May.

VPM noted that “a press release from the mayor’s office said those pay adjustments would be for employees not accounted for in a $17 million increase in first-responder wages in May’s budget.” Continue reading →

4 Comments

Posted in Blogs and blog administration, Budgets, Efficiency in government, Governance, Government Oversight, Uncategorized

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Virginia Mental Health Services in Deep Trouble – A Survey

Posted on November 28, 2022 by | 42 comments

Eastern State Hospital. Courtesy Virginia Department of Behavioral Health and Development

by James C. Sherlock

Nov. 29 updates in blue.

Supply cannot begin to keep up with demand.

In this case, the consequences involve personal welfare and public safety. And they can be terrible in both cases.

Governor Youngkin will propose to the 2023 General Assembly additional funding and policy prescriptions for the state’s mental health system.

The state offers inpatient services, community-based government services, and Medicaid-funded services.  Medicare offers payments to participating hospitals. Private insurances offer coverage.

I say “offer,” because much of what policy prescribes has proven difficult to fill in practice.

Virginia’s mental health system is in deep trouble because of shortages of personnel and facilities to absorb the very steep rates of increases in persons needing assistance.

The personnel problems are twofold and affect both government and private services.

  1. Key personnel positions require trained specialists, the shortages of whom are manifest across the country; and
  2. Working conditions in mental health care are very stressful, physically demanding and dangerous, driving away badly needed low skilled workers who can easily find jobs elsewhere.

Medicaid programs offer services that private facilities and practitioners, facing the same labor shortages, have proven in some combination unable or unwilling to provide at Medicaid reimbursement rates. State-contracted Medicaid Managed Care Organizations (MMCOs) have not solved those problems.

So part of the answer is money, but we really don’t know how much. And in this case, money alone may not provide sufficient services to satisfy demand. Continue reading →

42 Comments

Posted in Budgets, Entitlements, General Assembly, Governance, Health Care, Insurance, Mental illness and substance abuse, Public safety & health, Social services

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State Treasury Brings In More General Fund Revenues Than Projected

Posted on October 19, 2022 by | 40 comments

by Dick Hall-Sizemore

Some commenters on this blog have expressed serious concern about the choices facing Governor Youngkin this fall in the development of his recommended amendments to the state’s two-year budget. They cite the prospects of recession and the uncertainty created by such prospects. They can rest a little easier for now.

The Secretary of Finance has informed the Governor that the Commonwealth’s first quarter general fund revenues for the current fiscal year are $500 million ahead of projections, or 7.6%. In September alone, after adjusting for timing differences, “total general fund revenues increased 10.7 percent for the month compared to a year ago.” Continue reading →

40 Comments

Posted in Budgets, Finance (government)

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Predicting State Revenue in the Face of Inflation and Recession – Bipartisan Issues, Bipartisan Approach, Damnably Difficult

Posted on October 13, 2022 by | 39 comments

Courtesy WTAE TV Pittsburg

by James C. Sherlock

Governor Youngkin on Wednesday spoke to the Joint Advisory Board of Economists (the Board), part of a genuinely bipartisan structure established under Virginia law to support revenue assessments.

Which in turn must be used to support budgets. Which are, at least in Virginia, far more political than the revenue estimates.

The process is governed by Code of Virginia § 2.2-1503. Filing of six-year revenue plan by Governor.

In accordance with that law, every year by December 15 the Governor  must prepare and submit to the members of the General Assembly an estimate of anticipated General Fund revenue, an estimate of anticipated transportation fund revenues, and estimates of anticipated revenues for each of the remaining major non-general funds, for a prospective period of six years.

In Glenn Youngkin, Virginia may never have had a governor with large scale revenue estimates so clearly in his experiential wheelhouse. He is a valuable asset when this year those estimates will be perhaps as difficult as they have been in at least four decades.

Wrong or right, especially for the coming year, they will have major impacts.

  • Inflation can inflate both government revenues and government costs in perhaps unequal measure; and
  • Recession can bring decreased revenue in the face of increasing demands for services.

Continue reading →

39 Comments

Posted in Budgets

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Budget Earmarks for Nonstate Entities

Posted on September 12, 2022 by | 8 comments

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. Continue reading →

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Posted in Budgets, General Assembly, Not-for-profits, Politics, Uncategorized

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What Surplus? Virginia Doesn’t Allow Surpluses!

Posted on August 22, 2022 by | 29 comments

Secretary of Finance Stephen Cumming’s slide showing most of the final surge of unexpected revenue before June 30 came from payments from business owners and investors. Click for larger view.

by Steve Haner

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

Does last week’s glowing report on Virginia’s state tax collections presage additional tax relief for struggling families? The first question is, was the news really glowing? Continue reading →

29 Comments

Posted in Budgets, Business and Economy, General Assembly, Taxes

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Uh, Governor? This is How It Works

Posted on August 19, 2022 by | 25 comments

by Dick Hall-Sizemore

Someone needs to tell Governor Youngkin or his Secretary of Finance how things work in the state’s financial structure.

According to a recent report in the Richmond Times-Dispatch, the Governor said that he has directed Randy McCabe, the Comptroller, or director of the Department of Accounts, to “to set aside $397 million for a taxpayer relief fund that the governor will ask the General Assembly to create in its next legislative session.”

That sounds impressive. The only problem is that it cannot be done legally. The Comptroller cannot just “set aside” general fund revenues. As Randy McCabe had to remind us in the Department of Planning and Budget on more than one occasion, there has to be some legislative authority to move general fund revenues to a special fund. Therefore, that $397 million has got to sit in the general fund, earning interest, by the way, until the General Assembly authorizes the creation of the special taxpayer relief fund.

There is another factor. There is already a Taxpayer Relief Fund on the state’s books. It was authorized by the 2019 General Assembly for the receipt of “excess” general fund tax collections resulting from the significant changes in federal tax law. The General Assembly authorized tax rebates to Virginia taxpayers from that fund. In FY 2020, more than $425 million was distributed to taxpayers. Continue reading →

25 Comments

Posted in Budgets, Governance, Uncategorized

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Higher Ed to General Assembly: More, More, More

Posted on August 11, 2022 by | 57 comments

Rendering of new Va. Tech. Data and Digital Sciences Building, (authorized 2020) Photo credit: Va Tech

by Dick Hall-Sizemore

The 2022-2024 biennial state budget that became effective on July 1 included more than $1 billion in general fund appropriation for capital projects for institutions of higher education. This was in addition to at least $1 billion in general fund-supported appropriations in the previous biennial budget.

One would think that more than $2 billion in the last two biennial budgets would be enough to satisfy the capital needs of higher ed, at least for a while. But, as my colleagues in the Department of Planning and Budget were prone to say, “There is no satisfying higher ed.”

The ink was hardly dry on the governor’s signature on the new budget bill when higher ed institutions submitted capital budget requests totaling $3.2 billion for the amended budget to be submitted to the 2023 General Assembly, of which $2.6 billion would come from the general fund or be supported by general fund-backed bonds. Continue reading →

57 Comments

Posted in Budgets, Education (higher ed), General Assembly

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Virginia Needs Better Information Sharing to Provide Mandated Public Services to Illegals Efficiently and Effectively

Posted on August 3, 2022 by | 15 comments

by James C. Sherlock

I am on record as a persistent advocate of improving the quality of both schools and medical services for poor and minority citizens. It has been the main focus of my work for years.

In a directly related matter, we read, with different reactions depending upon our politics, of the struggles with uncontrolled immigration on border states on the one hand and D.C, New York City and Los Angeles on the other.

We are treated to the public spectacle of the mayors of sanctuary cities deploring massive new influxes of illegal border-crossers and asking for federal assistance. It provides one of the best object lessons in being careful what you ask for in recent public life.

All of that is interesting, but Virginians know that the problem is increasing. They know Virginia can’t fix it, and they want to know how Virginia will deal with it.

By law we owe illegals services. And we need to provide them efficiently and effectively both for humanitarian reasons and to ensure that citizens are not unnecessarily negatively affected.

There is work to do. Continue reading →

15 Comments

Posted in Budgets, Charity and philanthropy, Children and families, Demographics, Education (K-12), Efficiency in government, Entitlements, Immigration, National Security, Planning, Social services, Virginia Law

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Love that Budget Surplus! Use It to Bullet-Proof State Finances.

Posted on July 22, 2022 by | 16 comments

by James A. Bacon

There’s good news for Virginia on the fiscal front. We need to make the most of it.

The Old Dominion closed fiscal 2022 with a $1.94 billion General Fund revenue surplus, Governor Glenn Youngkin announced yesterday. Total revenue rose 16.3% from the previous fiscal year.

“Fiscal 2022 was an extraordinary year for revenues and finished strong,” Secretary of Finance Stephen Cummings said. While the state has yet to recover all the 133,000 jobs it lost during the pandemic, job growth has been strong this calendar year — 3.5%. And, while competitor states all exceed their pre-pandemic employment levels, Virginia has scored some economic-development coups — LEGO, Raytheon and Boeing most notably. Over the first four months of 2022, Virginia ranked 15th nationally among the states in employment growth. 

Youngkin makes a case for giving some of the revenue surplus back to taxpayers, who are getting clobbered by 9% inflation. I’m sympathetic. Taxpayers are getting the shaft. But I have bigger concerns.

In all likelihood, Virginia’s economic and budget surges are unsustainable. They are byproducts of economic recovery from the COVID-19 shutdowns and massive federal stimulus. The effects of COVID recovery are largely spent, and the federal stimulus is unsustainable. Washington’s political class may delude itself that it can continue ramping up deficit spending with economic impunity, but history suggests that it cannot. Continue reading →

16 Comments

Posted in Budgets, Taxes

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Public Featherbedding at the Norfolk Redevelopment and Housing Authority?

Posted on July 19, 2022 by | 27 comments

The Young Terrace public housing community is along St. Paul’s Boulevard, just north of downtown. (Bill Tiernan) Credit Virginian Pilot

by James C. Sherlock

Daniel Berti published an excellent investigative report this morning in The Virginian-Pilot.

“Norfolk’s housing authority is in ‘dire’ financial condition, bloated after years of failing to downsize” details what may prove to be waste and abuse at that agency to preserve jobs as the administrative requirements and funding of the mission have diminished.

In other words, the report details what some may construe as government agency featherbedding. If it is true, it has been a big mistake, because federal dollars are involved.

I congratulate both the author and the paper on this exclusive. Please read it.

The article, as revealing as it is, does not mention the annual independent audits the Norfolk Redevelopment and Housing Authority (NRHA) is required by federal regulation to undergo.

It has been my experience over the years that local agencies spending federal funds often get into financial trouble that is traceable to audits.

Most often to good audits that are ignored. Continue reading →

27 Comments

Posted in Budgets, Efficiency in government, Finance (government), Government Oversight, Housing

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The Crisis of Reducing Costs and Maintaining Standards at Virginia’s State Colleges and Universities

Posted on July 14, 2022 by | 55 comments

Courtesy Virginia Tech

by James C. Sherlock

Virginia’s state-funded colleges and universities are too expensive.

Tuitions are the headline numbers.

But student fees and food and housing costs are as important to the budgets of families and individual students as tuition.

Costs within the college system have gone up because of a general lack of management systems and data to support oversight. They are going up further because of inflation in the economy.

Demand is going to plummet starting in 2025 as the “demographic cliff” of a 15 % drop in freshman prospects approaches due to the decline in birth rate in the 2008 recession that lasted for years thereafter.

The missing babies from 2008 would have begun entering college in 2025. Not a rosy scenario for the colleges. They all talk about it a great deal internally.

Some will have to get smaller to maintain student quality admissions standards or, alternately, lower those standards along with those of the programs of instruction.

Maintaining the same staff with smaller numbers of students will not work without massive price increases that they will not be able effectively to pass on without exacerbating the demand crisis.

Action is demanded, or parts of the Virginia higher education system, generally the smaller ones, are going to price themselves out of existence. The ones that do not act will be in a continuing crisis of their own making.

In the realm of enterprise disruptions, declining demand and increased costs are the big leagues. Continue reading →

55 Comments

Posted in Budgets, Education (higher ed), Efficiency in government, Finance (government), Government Oversight

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The Governor’s Tuition Freeze Request and the Board at UVa – It’s Complicated

Posted on July 12, 2022 by | 46 comments

Signatures from the first meeting recorded in the Minute Book of the UVa board of visitors, May 5, 1817 – ALBERT AND SHIRLEY SMALL SPECIAL COLLECTIONS LIBRARY, UNIVERSITY OF VIRGINIA

by James C. Sherlock

Much has been made of a recent request by Governor Glenn Youngkin to eliminate a tuition increase at the University of Virginia and the Board’s decision not to honor it.

The tensions between means and ends that have to be resolved in producing a budget at any large and complex university are enormous.

UVa has implemented a Responsibility Center Management (RCM) budget model.

An RCM budget model decentralizes decision-making, provides incentives for innovation, and improves overall financial results and stewardship. It couples distributed program responsibility with meaningful authority over resources.

A central RCM budget product is thus fragile, in that changes have far reaching effects unpredictable at the board level. The later the changes, the bigger the disruptions.

The Governor’s request, while appropriate to his goal to help parents deal with inflation, arrived just before the start of the fiscal year. The board judged it to be too late to be accommodated.

This is the story of the budgeting process that drove that decision and why the endowment could not be used to fund the difference.  I think elements of this may prove be informative to all who send their kids off to college. Continue reading →

46 Comments

Posted in Budgets, Charity and philanthropy, Education (higher ed), Finance (government), Governance

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This Year the VRS “Diet COLA” Will Really Hurt

Posted on June 24, 2022 by | 94 comments

by Steve Haner

The most recent year-over-year inflation measure approached 9%, with many key food or energy items growing in cost even faster. The official inflation estimate just used to increase the state’s gasoline taxes as of July 1 was 7%. So what inflation factor will be used to adjust state and local employee pensions this summer? Those will go up less than 4%.  Continue reading →

94 Comments

Posted in Budgets, Business and Economy, General Assembly, Inflation

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Only Part of the Gas Tax Would Be Suspended

Posted on June 16, 2022 by | 29 comments

by Steve Haner

The gas tax in Virginia today is 33.8 cents per gallon and the diesel tax is 34.7 cents per gallon.  The fresh proposal from Governor Glenn Youngkin (R) for a 90-day suspension of those taxes does not eliminate Virginia’s full fuel tax bite.  The oft-ignored wholesale tax will remain while only the retail tax goes away.

Bacon’s Rebellion has plowed this ground before.  The Division of Motor Vehicles’ posted information on taxes remains intentionally misleading, listing the retail taxes in one place and mentioning the wholesale taxes somewhere else.   These taxes are also set up by different sections of the Code of Virginia.  Youngkin’s proposal would amend only one of those Code sections. Continue reading →

29 Comments

Posted in Budgets, General Assembly, Taxes, Transportation

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