Category Archives: Budgets

School Choice Tax Credits Reduced in New Budget

by Steve Haner

The famous phrase about no one’s life, liberty or property being safe while the legislature sits probably arose after somebody got burned by an out-of-control conference committee. It just happened again to Virginia’s private schools, who had a popular scholarship tax credit program chopped Wednesday.

The Education Improvement Scholarship Tax Credit (EISTC) is available for donations to support free or reduced tuition for the lowest income Virginia students, those who otherwise would never have a way into a private school. It dates back to Governor Bob McDonnell (R).  Continue reading

Sales Tax On Groceries With Us Through Christmas

The food tax will still be with us for Thanksgiving and Christmas?

by Steve Haner

Everybody eats. With all the money sloshing around the Virginia treasury for the General Assembly to play with, it is hard to see the logic in continuing the state sales tax on groceries an additional six months, delaying that particular tax cut until January 1.

The inflation on everything at the grocery store means more tax revenue is coming in from that source than was expected when the initial budget was prepared last year. If they had allowed the tax cut effective July 1 rather than January 1, inflation on other items people buy (restaurant meals, furniture, electronics, clothing, non-food items) would protect the state’s spending in full (necessities and niceties.)  Continue reading

Home Price Volatility and Virginia Property Taxes

Case-Schiller Home Price Index – National

by James C. Sherlock

Housing prices have more than doubled since 2012, reflecting shortages of supply and the resulting speculation. The increasing slope of those curves above is not comforting.

Prices have soared over 20% in a year. Mortgage rates are up. What could possibly happen next? Most can figure that out.

But this article is about the effects on local government property taxes of what most predict will be extreme volatility in the housing market going forward.

How are Virginia real property taxes adjusted to mitigate the effects on both property owner tax bills and government receipts in this boom and very likely bust cycle?

We’ll look at the law. Continue reading

Progress: Standard Deduction Up 166% since 2018

by Steve Haner

First published today by the Thomas Jefferson Institute for Public Policy.

Do not be surprised if, by the time the next Virginia General Assembly elections roll around, the Democrats who are now complaining about the level of tax relief in the pending budget compromise switch positions, and campaign as champions of the deal.

The two key elements – a substantial increase in the standard deduction for income tax filers and a cut in sales and use tax on groceries for everybody – are ideas with long and bipartisan histories. Only the reluctance of previous governors and General Assemblies to part with the revenue stood in their way. Both are logical, populist reforms many Democrats had also championed in the past.

The Thomas Jefferson Institute has long been an advocate for a higher standard deduction, and the proposed 78% increase from $4,500 to $8,000 per person (up to $16,000 for a couple) falls just short of the recommended 100% increase.  Remember, as recently as tax year 2018 it was only $3,000 (or $6,000 per couple) and raising it in 2019 was also a major recommendation of ours that was adopted.

This new amount will apply to this tax year. So in two steps over three years, the standard deduction has risen by $10,000 for a working couple. That 166% increase saves most of them $575 per year. Continue reading

Who Needs the General Assembly? Let the Budget Conferees Do It.

Sen. Janet Howell (D-Fairfax), chair of Senate Finance and Del. Barry Knight (R-Virginia Beach), chair of House Appropriations. Photo credit: Richmond Times Dispatch

by Dick Hall-Sizemore

Although legislating through the budget, a practice that used to be frowned upon, is not new, this year’s budget conferees are taking the practice to a new dimension.

The amendments released by the budget conferees include the following new provisions in the “General Provisions” section. In most cases, the Code of Virginia is amended. The remaining cases involve just language in the Appropriation Act.

  1. Changes to the tax code. These have become a standard practice.  This year there are provisions to increase the standard deduction, eliminate the state portion of the sales tax on groceries, increase income tax credits for military benefits, and make significant changes to the statutory  language regarding housing opportunity credits.
  2. University housing. To the extent that institutions of higher education operate student housing during breaks, requires them to allow eligible foster students to stay in them free of charge.
  3. Casino referendum. Prevents the city of Richmond from having a second referendum on casinos until November 2023.
  4. Private school. Exempts a private school from licensing requirements.  (The school was previously exempted until repeal of the applicable statutory provision in 2020.)
  5. Games of skill. Changes the definition of games of skill.
  6. Marijuana and hemp. Establishes a criminal penalty for possession of four ounces to one pound of marijuana. Changes requirements for labeling of products including industrial hemp. This is the first time that I remember the budget bill being used to amend the criminal code and impose a new criminal penalty.

Continue reading

Medicaid, Public Health and Chronic Disease Management

UVa Hospital

by James C. Sherlock

From the CDC:

Chronic diseases have significant health and economic costs in the United States. Preventing chronic diseases, or managing symptoms when prevention is not possible, can reduce these costs.

Virginia pays a great deal of money every year to contractors who manage the care of its Medicaid population.

It is a hard job, but even though the challenges are tough, it has appeared to me for a long time that we are not getting our money’s worth from $18 billion annually in Medicaid payments for the populations managed by these contractors.

A white paper, “Prevent Costly Chronic Disease Through Member Engagement” caught my eye as the basis for a follow up to my earlier report on public health and Medicaid managed care in Petersburg.

This is that update. Continue reading

Fix One Thing — School Physical and Electronic Security

by James C. Sherlock

I offer an apolitical suggestion. We know how to begin to fix school security.

Do it.

Step 1. Every school division has a security instruction. How many of them monitor whether that guidance is being followed? I will let them answer that.

Step 2. The more complete solution is deployment of integrated combinations of physical and electronic security systems. System integrators who specialize in school security can help with requirements definition for any facility and tailor expandable solutions to budgets. That is their business and they are good at it.

As an example of what is possible, see ADT’s integrated intrusion security and fire detection and alarm system offerings for K-12 schools.

When people say “do something”, this is the kind of solution on which all of us can agree. Do it. Continue reading

A Budget Deal Emerges

Sen. Janet Howell (D-Fairfax), chair of Senate Finance and Del. Barry Knight (R-Virginia Beach), chair of House Appropriations. Photo credit: Richmond Times Dispatch

by Dick Hall-Sizemore

The Richmond Times-Dispatch reports there is an agreement on the state budget. There have been hints in the news about it all week, with the General Assembly announcing that it would come back to Richmond June 1 to take up various measures. All the details will not be available until late Sunday or Monday, but the chairs of the two money committees have released the highlights.

I will defer to our tax expert, Steve Haner, to discuss the revenue aspects of the deal. It looks to be the compromise that he has said was on the table all along—some increase in the standard deduction (but not entirely what the Governor proposed) along with a refundable tax credit.

I want to focus on one surprise in the package that represents two major changes in state policy. The proposed deal includes $320 million in general fund appropriations this year and an additional $150 million in the future, contingent on revenue, to help fund the expansion of the “I-64 gap” between Bottoms Bridge near the Henrico/New Kent border and James City County. This is the project I wrote about earlier and, surprisingly to me, engendered a lot of comments. Continue reading

Personnel Shortages that Plague Virginia’s Health Facilities Inspection Staff in the Hands of Budget Negotiators

UVa Hospital

by James C. Sherlock

One of the most important responsibilities of Virginia state government is to inspect medical facilities and home care providers to ensure we are safe when we enter their care.

It continues to fail in that responsibility thanks to years of Virginia budgets that have consciously ignored the need for increased inspector staff and increased salaries with which to competitively hire that staff.

I have reported for a long time that the staffing of the Virginia Department of Health (VDH) Office of Licensing and Certification (OLC) is scandalously deficient. Based upon an update today from OLC, it remains so.

That organization has only half of the inspectors it needs to carry out its defined responsibilities.

Those highly skilled and very dedicated people, largely registered nurses, are asked to do every day for Virginians what we cannot do for ourselves and what our elected representatives have refused for decades to properly fund them to do.

Think of that next time you use the facilities and home providers they are required for your safety to inspect.

We hope the current General Assembly budget negotiators keep it in mind for themselves and their families.

Or the Governor sends the budget back until they do. Continue reading

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