RICHMOND — Almost six weeks into a special session of the General Assembly called to revise the state budget, the legislature’s money committees have adopted a pair of competing two-year spending plans that rely heavily on federal emergency aid for the COVID-19 pandemic, while proposing targeted investments in K-12 and higher education, child care, behavioral health, Medicaid services and protections for the most vulnerable Virginians.
The budgets adopted Friday by the House Appropriations Committee and Senate Finance & Appropriations Committee also look to the next budget — which Gov. Ralph Northam will introduce on Dec. 15 and the assembly will consider in January — to restore spending priorities lost because of a projected $2.8 billion revenue shortfall. Those contingent spending priorities include potential bonuses for state employees, state-supported local employees and, in the Senate plan, teachers.
“This is a special session, and it is not our last opportunity,” House Appropriations Chairman Luke Torian, D-Prince William, told the committee, which adopted the budget by a 14-7 vote.
Senate Finance Chairwoman Janet Howell, D-Fairfax, said the proposed budget would restore some important initiatives that Northam had cut to compensate for the revenue shortfall, such as a Medicaid dental benefit for adults and more than $50 million in behavioral health initiatives.
“This budget is still a great budget for the people of Virginia,” Howell told her committee, which adopted the budget by 14-2 vote.
The two chambers will act on the proposed committee budgets on different days this coming week — Tuesday in the House and Thursday in the Senate — because the bodies could not agree on a joint procedural resolution at the beginning of the session to set rules and a timetable for their work.
Both committees proposed to gain more legislative control over the $3.1 billion in federal emergency aid that Virginia received under the CARES Act, which included $1.2 billion distributed to all local governments except Fairfax County, which received its own $200 million federal check.
Those funds are crucial to COVID-19-related priorities such as helping public schools reopen, bolstering financially crippled colleges and universities and providing hazard pay to a wide range of health care workers, as well as money for public housing to prevent evictions, expanding broadband networks for remote work and learning and for preventing Virginians from having their electric utility service cut off.
The House also would use $210 million in federal aid to either provide additional unemployment benefits to people who’ve lost their jobs because of the pandemic, or help reduce a projected $750 million shortfall in the state’s unemployment insurance trust fund.
“Unfortunately, the pandemic has hit our most vulnerable citizens the hardest and exacerbated the division between the haves and the have-nots,” Torian said.
The budgets also provide money for pending legislation in both chambers for criminal justice and police reforms that dominated the first five weeks of the special session, prompted by a summer of public unrest that ignited after the death of George Floyd in police custody in Minneapolis in late May.
The House budget includes $28.4 million in projected spending on criminal justice and policing reforms, including expensive initiatives to expunge criminal records for certain types of convictions and create a new system for crediting prison inmates with earned time off their sentences.
The Senate budget includes about $11.2 million for its criminal justice and police reform bills, as well as a $500 bonus on Dec. 1 for every state and local law enforcement officer.
The actual cost of the criminal justice and policing reforms remains uncertain because the House and Senate have yet to complete action on each other’s bills or reconcile differences between competing versions.
House Appropriations endorsed a Senate omnibus policing reform bill, but first amended it over the sponsor’s objection to eliminate provisions that would have withheld some state money for police departments if they failed to collect and report data on their use of force, handling of traffic stops and frisking of people, based on race and ethnicity.
Vice Chairman Mark Sickles, D-Fairfax, proposed the substitute bill to prevent “confusion to the public” about the effect of the reforms on funding for state and local law enforcement, with House members facing re-election next year.
“I don’t want the Virginia public to believe we want to reduce police funding,” Sickles said.
Sen. Mamie Locke, D-Hampton, objected strongly to the substitute, which she said would undercut legislative efforts to require police and sheriff’s departments to collect and report data on how they enforce the law.
“That’s disappointing, Mr. Chairman,” Locke told Torian after the substitute passed by a 14-7 vote with support of Republicans, who all voted no against the amended bill itself.
Six of the committee’s nine Republicans, led by former House Speaker Kirk Cox, R-Colonial Heights, voted against the proposed House budget. Cox, who is considering running for the Republican nomination for governor next year, faulted the level of additional spending and objected strongly to the emphasis on criminal justice and police reforms that he warned would have “a negative psychological effect on law enforcement.”
In the Senate committee, two Republicans voted against the proposed budget, Sen. Steve Newman, R-Lynchburg, and Sen. Frank Ruff, R-Mecklenburg.
Newman called the Senate proposal “just a vastly superior budget” to the plan the House committee adopted, but he and other senators raised concerns about language for moratoriums on evictions and utility disconnections that he and other senators said would conflict with legislation adopted by the Senate to address both issues. He also faulted the governor’s underlying budget for removing restrictions on state funding for Planned Parenthood and other organizations that offer abortion services.
Both budgets would increase spending beyond what Northam had proposed last month, while looking for new sources of revenue to pay for it. For example, they would rely on a new tax on electronic skill games to fill a $95.3 million shortfall in sales tax revenues for K-12 education in the first year of the budget. Northam proposed the tax in return for a one-year reprieve on a ban of skill games the assembly adopted earlier this year. The money is going into a new COVID-19 Relief Fund, but, unlike federal CARES Act money, can be used to replace lost revenue.
The House plan would increase net new spending by $251 million, not including an additional $207 million in contingency spending that would depend on revenues not declining by more than $100 million when Northam presents a new forecast and budget in December. The additional spending includes $80 million in state funds to help hard-hit higher education institutions, in addition to $119 million in CARES Act aid.
The Senate budget would increase spending by $222.2 million, not including $373.5 million in contingent spending priorities identified but not appropriated in the plan. The biggest portion, $169.5 million, would provide a 2% bonus for state and state-supported local employees, as well as, for the first time, teachers.
The House plan includes $82 million for a bonus of $1,500 for each state employee and $15.5 million for a 1.5% bonus for state supported local employees, including $750 each for adjunct college and university faculty. The bonuses would be paid in August if the state meets its revenue forecast for the fiscal year that ends June 30.
Both plans include $11.2 million to extend a $20 per day Medicaid stipend to skilled nursing homes to maintain their staffing in the face of the COVID-19 pandemic that has been deadly to residents of long-term-care facilities.
Neither plan would touch the state’s $1.1 billion in combined reserves, although the House proposed to defer a proposed payment to the constitutionally mandated Rainy Day Fund and instead deposit $150 million into a cash reserve that could be tapped more easily if revenues fall further than expected.
House Speaker Eileen Filler-Corn, D-Fairfax, said she is counting on revenues to bounce back when the assembly returns in January for a 46-day session that is likely to focus on changes to the budget.
“Unfortunately, the economic crisis requires us to defer many of the initiatives we adopted last March,” Filler-Corn said in a statement. “We will be back in session in January with a formal forecast and the opportunity to make further strides toward achieving this majority’s priorities.”