Category Archives: Government Finance

Greasing the Skids for the Budget

Oxen hauling logs over greased skids Photo courtesy of Museum at Campbell River

by Dick Hall-Sizemore

The Virginia General Assembly can be efficient when it puts its mind to it.

Consider the 2024 Special Session that convened on Monday.  The House convened at noon and adjourned at 3:15. The Senate stayed around a little bit longer.  It convened at noon and adjourned at 3:51.  (Technically, both houses actually recessed, rather than adjourned, but that was done so they could come back into session later in the year if they so desire.)

During that period of a little over three hours, both houses accomplished the following: introduced guests in the galleries,  recessed so that their money committees could consider the budget bill, elected eight judges, passed a bunch of commending resolutions, and passed the budget bill.

Speaking of the budget bill, here is the legislative history of that most important piece of legislation:

Sat.  May 11

  • Prefiled
  • Referred to the House Appropriations Committee

Mon. May 13

  • Reported from House Appropriations Committee
  • Read first time
  • Constitutional readings dispensed
  • Passed by House  (94-6)
  • Constitutional reading dispensed by Senate
  • Referred to Senate Finance and Appropriations Committee
  • Reported from Senate Finance and Appropriations Committee
  • Read second time
  • Constitutional reading dispensed
  • Passed by Senate (39-1)
  • Enrolled
  • Signed by Speaker
  • Signed by President of the Senate
  • Signed by the Governor Continue reading

No Need to Call the Budget Bluff

by Dick Hall-Sizemore

Governor Youngkin and General Assembly leaders have reached a deal on the budget for the next biennium. Based on press reports, it is difficult to say who won this battle. That’s the hallmark of a compromise.

The process started off in December with the governor saying the state had more than enough money to fund its needs and, thus, he proposed an overall cut in tax revenue. The legislature responded by saying, “Oh, no. There are a lot of unmet needs. We need all the extra revenue that is available and more on top of that.” Therefore, they proposed a tax increase. The governor responded with a bushel of proposed amendments that would have undone much of what the legislature had proposed. The Democratic majorities in both chambers rejected those amendments. Both sides agreed to adjourn and negotiate.

In the meantime, the Virginia economy was perking along and producing even more tax revenue than projected. Now the Democrats have the money they need to fund their priorities without raising taxes. The compromise proposal provides healthy raises for state employees and teachers, more funding for K-12, more money for higher ed so as to discourage tuition increases, money for Metro in Northern Virginia and for toll relief in Hampton Roads, and lots more money for mental health services. The result is that the Governor does not get his proposed tax decrease and the Democrats do not get their proposed tax increase but do have enough proposed funding to pay for their highest priorities. In a way, the Democrats seem the winners, but the governor has not objected to the uses of the additional money. In fact, his proposed budget included additional money in all these areas, just not as much as the Democrats wanted.

So far, there has been no mention in the press whether all this additional available revenue will be sustainable in the future. In budget terms, is the proposed budget “structurally balanced’? Is there a lot of one-time revenue included that will not be available for future biennia? Some of the staff at the Department of Planning and Budget and the staffs of the money committees, as well as some of the General Assembly leaders, have a good idea as to the answer to this question, but they will not be talking about it. Continue reading

Parking Decks, Debt, & Trap Doors

by Jon Baliles

On Wednesday afternoon at 3:00pm in City Council chambers, City Council will vote and approve the plan presented by the Mayor and Chief Administrative Officer (CAO) to allow Richmond to issue $170 million in bonds to pay for the new baseball stadium on ten acres that will be surrounded by about 57 acres of new development built out over the next decade plus.

Two years after kicking off the Diamond District process, the new plan announced a month ago was suddenly hailed as the fastest way to build a new stadium so Major League Baseball (MLB) doesn’t move the franchise for failing to upgrade stadium facilities as promised since The Diamond is too archaic to be retrofitted or modernized.

Wednesday will be a rosy “kumbayah” meeting in which all the positives will be laid out in front of the Council and the public and none of the negatives or risks will be discussed. The public hearing will take place, but many people will be at work in the afternoon or picking kids up from school, and others might decide to stay home knowing this deal will be approved by Council on a 9-0 (or maybe an 8-1) vote.

The city’s “leaders” and financial experts promise this new plan will save millions over the next three decades because of lower interest rates and “almost no risk,” compared to the original plan they started out with two years ago. But the Mayor and CAO, in their desperation to get any deal done and not lose a second baseball franchise, forgot to put any protections in the deal for the city and managed to leave a trap door.

They swear up and down that the development that has been occurring organically in and around Ashe Boulevard and Scott’s Addition will continue (which is very probable), and that the new development in the Diamond District will produce enough new tax revenue to cover, or almost cover, the annual debt required to pay the bonds back (or so we are told).

But what no one will talk about on Wednesday is the trap door in the form of a blank check called the Community Development Authority (CDA) that will have a real impact on future city budgets and city services for decades to come. Two years ago when the Diamond District was announced, the plan was to create a CDA to issue bonds for the stadium that would be paid back by tax revenue from the development within the district’s boundaries. Continue reading

Fairness + Accountability = Thriving City

by Jon Baliles

The city of Richmond seems to be trying to plug all of the holes in its boat, also known as the U.S.S. Meals Tax Fiasco, that has been taking on water for months. It seems that the city is finally wiping out the erroneous meals tax payments and interest they had charged numerous restaurant accounts in recent years, often amounting to tens of thousands of dollars, without ever telling them the bills were so enormous.

Tyler Layne at CBS6 reported last week that Matt Mullett, the owner of Richbrau Brewing, recently got a call from the city’s Finance Director, who said the city would clear his $50,000 bill that accrued due to bad advice he received four years ago from the Finance Department when they told him he did not need to collect meals taxes on draft beer, even though the department had lost a case just a few years prior.

In addition, Mullet’s business was now finally eligible to receive Enterprise Zone grant money to improve his business. This money had already been approved several years ago, but was not released because the city said they owed all the back meals tax money. Which he didn’t. Nevertheless, Mullet took the high road and was thankful the unnecessary drama and delays were behind him so he can move forward with his business. Continue reading

Freebees Aren’t Free

by Kerry Dougherty

I can’t be the only Virginia Beach taxpayer sick of watching my real estate taxes climb every year while the city council wastes money on pricey gimmicks like “free” Tesla rides for residents and visitors to the city.

For two years we’ve picked up the tab for a small fleet of Teslas to be summoned to haul swells and drunks around the oceanfront.

The first year, the misnamed “Freebee” program cost taxpayers $500,000. Last year the project cost $1.3 million. According to city officials, 52% of riders who were too cheap to call a cab or Uber were visitors, while 48% were locals suffering from the same freeloading mentality.

Notice a pattern?

Thankfully, City Manager Patrick Duhaney left this free-market-tampering boondoggle out of this year’s proposed city budget, although some of the Beach’s tax-and-spend knuckleheads are lobbying to put it back. Continue reading

The Budget Do-Over: A Game of Chicken?

by Jock Yellott 

Speaking off-the-cuff at a Charlottesville/Albemarle Bar Association lunch on April 18, 2024, Senator Creigh Deeds offered some pointed remarks about Governor Youngkin.

The Governor and the General Assembly had just the day before agreed to scrap the budget and the Governor’s proposed amendments and start over from scratch in May, averting a crisis. 

Youngkin’s more than 200 proposed budget amendments are evidence of a CEO mentality, Deeds observed. Compared to other governors the Senator has worked with, this one seems disengaged from the political process.  

Senator Deeds told his lawyer colleagues he anticipates that in May the General Assembly will vote essentially the same budget.  

Consider the implications of that.

To me as an outsider it had looked like the politicos starting over in a spirit of cooperation, this time with more realistic expectations. I was not alone in this: Steve Haner hoped they’ll “finally sit down like adults and negotiate the budget.”

Maybe we were naïve. Continue reading

State Legislatures Control Budgets — Virginia’s More Than Most

Virginia General Assembly Building (new)

by David J. Toscano

For over a month, Virginia’s legislature and governor have been embroiled in a “two scorpions in a bottle” fight over the new biennial budget, which must be passed by June 30, 2024, to fund the government. Last Wednesday, each of them loosened the cork in the carafe. After Assembly-initiated discussions with the governor, Virginia leaders showed, for one moment at least, how the commonwealth operates differently from Washington, D.C. Rather than force Youngkin to take the political hit from vetoing the first Virginia budget in recent history, the House of Delegates used an unusual procedural move, and killed it themselves. All sides committed to producing a new budget and to return on May 15 to pass it. As Churchill once said, “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”   

Budget battles in the commonwealth are not unusual, but this one has been unique, both in the number of changes Republican Gov. Glenn Youngkin proposed to the bipartisan spending plan, and in the rhetoric that has accompanied the process. Youngkin called the bill a “backward budget” and traveled the state on this theme. Legislators fired back, did their own tour, and likened Youngkin’s actions to “what spoiled brats do when they don’t get what they want.”

Last Wednesday, both sides returned to Richmond for the “reconvened” or “veto” session. The governor had vetoed a record number of bills, including measures to protect reproductive rights and enhance gun safety. Since overriding a veto requires a two-thirds vote, the governor was successful with every veto.

The fight over the budget bill is different. Youngkin, like governors in 44 states and unlike our U.S. President, has the power to “line-item veto” specific provisions in the budget. His targets were thought to be a tax on digital services he originally proposed and language that requires the commonwealth to rejoin the Regional Greenhouse Gas Initiative (RGGI). But he abandoned this approach when legislators shrewdly drafted these provisions to make a line-item veto legally problematic.

It does not matter whether you are a Republican or Democratic governor; legislative power is clear in the budget process. Several years ago, Governor McAuliffe learned how crafty legislative budget writing can frustrate key executive goals. The governor hoped to expand Medicaid through the budget, but Republican leadership was resistant, and explicitly included language in the budget to prevent it. McAuliffe attempted to line-item veto that provision, only to have House Republican leadership opine that the Governor had no such constitutional or statutory power to do so. When it comes to the budget, legislators enjoy proclaiming “governors propose; the legislature disposes.” Continue reading

Ready for Taxes on Netflix, NFL Sunday Ticket?

By Steve Haner

After a month of unproductive political theater, Virginia’s leaders will finally sit down like adults and negotiate the budget. Better late than never.  The message is “everything is back on the table,” which leaves the door wide open for the tax increase central to the Democrat’s demands. That deserves a quick no.

At this point, Virginians do not pay sales tax on their Netflix, Disney, or sports streaming package subscriptions. That is what they want to tax now. If you just paid an online vendor to file a tax return, next year a sales tax of up to 6 or 7% will be added to that bill. Likewise, any annual subscription for Microsoft Office or One Drive storage, or for an internet security system, will be taxed. Continue reading

Diamonds Aren’t Forever

by Jon Baliles

The entire saga of the development of the Diamond District project in Richmond has come full circle in the last 18 months, as Mayor Levar Stoney, desperate for an economic development win after the failure of his Navy Hill boondoggle and two failed casino referendums, has rounded the bases trying to get a baseball stadium built before the franchise was going to be moved by the powers at Major League Baseball (MLB). Finally scoring a run, however, will come with a cost: $170 million to be exact, because that is how much debt the city will issue  to pay for building the stadium and surrounding infrastructure for the rest of the Diamond District development.

The big news broke last week about the new plan to build the baseball stadium but is also being accompanied by a new financing and development structure and procedures. The announcement unfortunately pre-empted the planned Part 3 of our baseball stadium series, which explained that, at this late date, the only option left to get the stadium built in time and not have MLB yank the franchise was for the city to issue general obligation (G.O.) bonds. That was the only evidence MLB was going to accept to prove the money to build the stadium was actually there and construction could actually begin, because all the talk from the city had been just one missed promise after another, and delay after delay.

The bomb was set to explode and the Mayor and Chief Administrative Officer (CAO) played the last card they had left. They will put the onus of the debt and risk all on the city’s shoulders, issue the debt quickly and get the shovels turning to meet the deadline. But that is not at all how this process began, and it has changed drastically in the many months the city spent dithering. Continue reading

Will Democrats Shut Down State Over Tax Hike?

By Steve Haner

The fight that is about to occur at the Assembly’s reconvened session on Wednesday is entirely about taxes, not about spending.

An analysis of Governor Glenn Youngkin’s proposed compromise budget – done by the Democrats’ favorite financial bean counters, not by conservatives – confirms his budget comes extremely close to the spending levels Democrats approved at the end of the General Assembly.  The gap compared to the $188 billion overall budget is little more than a rounding error. Continue reading

Fairfax Spends More, Teaches Less

by Arthur Purves

(Editor’s note: Arthur Purves, president of the Fairfax County Taxpayers Alliance, addressed the Fairfax County School Board on Feb. 13, 2024. His remarks, with updated numbers, are posted below.)

At church I get to ask students and parents around Vienna about our schools. The feedback is positive, and we appreciate your dedicated teachers and administrators.

However, as FCPS spending goes up, achievement goes down. Over the past 5 years, per-student cost has increased, from $16K to $21K, while SAT scores fell, from 1212 to 1181. Never in half a century have FCPS SAT scores seen such a precipitous decline.

Your crucial failure is in teaching minority students mastery of reading and arithmetic by third grade. Most of our crime is committed by individuals whom the public schools failed to teach reading. The fault is the curriculum and unaccountable administrators,not the students, their race, nor their families. Your budget does not even mention Equal Access to Literacy, which was supposed to replace whole word reading instruction with phonics. Continue reading

Jefferson Institute’s Hit List Bills Mostly Gone

By Derrick Max

Monday was not just the near total solar eclipse in Virginia, but also the deadline for Governor Glenn Youngkin (R) to act on the budget and the remaining bills on his desk. As our Steve Haner wrote, in “Governor’s Budget Compromise Eclipses Fears of Stalemate,” we are generally positive about the approximately 230 budget amendments Governor Youngkin made.

The Governor sacrificed two-thirds of his spending priorities while giving Democrats almost all of theirs. He did this while removing any tax increases from the budget and forgoing all of his recommended tax reforms (reductions). This was more than a good faith offer and should be embraced by any member of the General Assembly, Democrat or Republican, serious about getting a budget compromise passed before the end of the fiscal year.

Just before midnight on Monday, Governor Youngkin acted on the last of the 1,046 bills he had been sent this legislative session. The final tally: he signed 777, proposed amendments for 116, and vetoed 153. He will have a second chance to veto bills where his suggested amendments are rejected.

While I am sure much will be made of the record number of vetoes, Democrats in the General Assembly opted to send a wish list of bills to the Governor that they knew would never get his signature. Nor would some have even passed the muster with previous Democratically controlled General Assemblies or liberal Governors around the country. This is due, in part, to the retirement or defeat of the more moderate members of the Democratic caucuses in the General Assembly. Continue reading

Compromise Budget Can Eclipse Stalemate

Gov. Glenn Youngkin

By Steve Haner

Governor Glenn Youngkin (R) is offering a compromise on the disputed state budget that gives Virginia’s Democratic legislators most of the spending they were initially demanding, especially for local schools and early childhood education. The Governor is also offering a quick path to a resolution that avoids additional months of budget stalemate and political division.

“On a day when Virginians were thrilled to witness an 80% eclipse of the sun, they should also cheer a budget compromise where a Republican governor moved about that far in the direction of meeting the Democrats’ stated goals without added taxes,” stated Derrick Max, President of the Thomas Jefferson Institute. “This is a more than reasonable good faith offer, recognizing that in a divided government, compromise is key.” Continue reading

Time for a Fairfax County Salary Freeze

by Arthur Purves

Local government compensation is better than private sector.

On April 30 the Fairfax County Board of Supervisors will vote on next year’s (FY2025) tax increase. The supervisors have advertised a 7% increase in real estate and car taxes to help pay for $360 million in raises for 38,000 school and county employees.

School raises are 6% and county raises range from 4% to 10%. By comparison, the county says that inflation is 2.5%. For next year, the Fairfax County Board of Supervisors, under Chairman Jeff McKay, is proposing a 7.1% or $618 tax increase for the typical residential household. This is the second largest tax hike in ten years, exceeded only by last year’s 8.9% increase.

Next year’s tax hike is made up of an average 6.5% or $531 increase in the combined real estate and stormwater tax, both of which are based on household assessments, plus a 16% or $87 increase in the car tax.

This continues the supervisors’ quarter-of-a century habit of increasing residential taxes three times faster than household income. They are advertising a 4-cent increase in the real estate tax rate, from $1.13 to $1.17 (includes the 3-cent stormwater tax), on top of a nearly 3% average increase in residential assessments.

Unless they hear from homeowners, the supervisors will probably adopt a rate of $1.16 when they finalize the budget on April 30, in hopes that homeowners will be relieved that the rate increased 3 cents instead of 4 cents. Continue reading

Call the Governor a Spoiled Brat? That’ll Work!

Not a visual that communicates the Democrats are leading an army in this fight. It screams loneliness.

By Steve Haner

A senior Democrat on the Senate Finance Committee just called the Governor of Virginia a spoiled brat, which of course became a headline. Is everybody getting the nonsense out of their systems? It is time for the grown-ups to intervene or we will be stuck in a stupid loop until July.

The state budget as it passed a few weeks ago will not stand. Governor Glenn Youngkin (R) will either impose line-item vetoes that drastically reduce the available revenue, or he will veto the entire $188 billion document. He has sufficient votes behind him to sustain those vetoes. Continue reading