Gov. Ralph Northam will propose to delay a ban on electronic skill games for a year, tax their profits and use the money for a COVID-19 response fund to help small businesses, protect people’s housing and support nursing homes and other health care providers.
Northam’s plan would tax the skill games at 35% of their revenues, after deducting prize money payouts, to generate more than $150 million a year for the new fund.
The governor also will propose to delay an increase in the state minimum wage that the legislature approved this year. The legislation would raise the minimum wage from $7.25 to $9 an hour on Jan. 1 and then to $11.25 in 2023, but Northam said Sunday that he would delay its enactment by four months until May 1, 2021.
Similarly, he proposed to delay enactment of legislation that would allow local governments to approve collective bargaining for schools and other public employees. The measure would take effect on May 1 instead of July 1.
Northam had endorsed legislation, proposed by Del. Lamont Bagby, D-Henrico, to regulate and tax the machines, which had proliferated in restaurants, convenience stores and truck stops across Virginia under the legal argument that they did not violate the state’s ban on games of chance because they require skill.
But the General Assembly decided instead to ban the games because of the threat they proposed to games operated in retail outlets by the Virginia Lottery, which uses the net profits to help fund K-12 public education. The assembly also rejected efforts by Sen. Bill Stanley, R-Franklin County, and Del. Israel O’Quinn, R-Washington County, to regulate the machines instead of banning the and use the money to pay for modernizing of deteriorated public school facilities across the state.
The ban sparked boisterous protests by small businesses – restaurants, convenience stores and truck stops – that say the skill games have greatly boosted their revenues and support thousands of jobs in the state. Many of those same businesses are being hurt by the restrictions imposed for public health because of the coronavirus pandemic.
Northam would delay the ban on the machines until mid-2021, which would allow the assembly to address the issue again next winter during an election year for governor, lieutenant governor and attorney general.
Northam already had signaled an approach to the pending two-year budget, as well as revisions to this fiscal year’s spending plan, that would suspend more than $2 billion in planned new spending, including compensation for state employees and teachers, until the state can effectively reforecast future revenues in response to an economy paralyzed by the coronavirus pandemic.
The plan would suspend about $900 million in new spending in the first year of the budget, which would take effect July 1, and $1.4 billion in the second. It also would divert about $600 million in planned deposits to the state’s cash reserve fund to preserve financial liquidity to response to the current economic threat.
Northam is awaiting guidance from Congress about the state’s flexibility in spending its share of a $150 billion relief fund for state and local governments as part of the $2.2 trillion CARES Act stimulus packaged adopted last month and signed by President Donald Trump.
Virginia’s estimated share of the relief fund is $3.3 billion – $1.8 billion for the state and $1.5 billion for local governments – but Congress restricted its use to make up for lost revenues in state and local budgets.
The National Governors Association, led by Maryland Gov. Larry Hogan and New York Gov. Andrew Cuomo, asked Congress on Saturday for an additional $500 billion to help states survive massive revenue shortfalls expected because of the economic shutdown in response to the pandemic.
Northam wants to push back the effective date on when localities could give public sector workers, including teachers, the right to collectively bargain.
Teachers, firefighters, police and other public sector employees are barred from collective bargaining, in which an employer negotiates with a group of workers. Virginia is one of three states with such a ban.
Legislation backed by the General Assembly and carried by Del. Elizabeth Guzman, D-Prince William, and Sen. Dick Saslaw, D-Fairfax, would let local governing bodies pass ordinances granting collective bargaining authority for public sector employees. It would have taken effect July 1, like most bills signed by the governor.
Instead, Northam wants to push the effective date to May 1, 2021.
“Virginia’s public service workers, many of whom are on the front lines of this pandemic, today realized the sting of empty campaign jargon from 2017," said Doris Crouse-Mays, the president of the Virginia AFL-CIO. "Virginia is ranked last in the nation for workers, and the governor’s decision to postpone the effective date of this legislation, along with the delay in the minimum wage increase, reinforces that record."
In a news release, Northam’s office said the delayed enactments on collective bargaining and other labor-related legislation would "ensure workers get the support they need while allowing greater economic certainty in the wake of the COVID-19 pandemic."
A coalition of labor unions, including the Virginia AFL-CIO and the Virginia Education Association, that pushed for the bill’s passage said in a statement that it’s "disappointed" by the proposed delay.
"Choosing May of 2021 as an effective date also leaves open the possibility that the governor will go back to the General Assembly next session and ask for yet another delay," the coalition, formally called “Stronger Communities. A Better Bargain”, said. "It is easier to postpone a freedom than it is to take one away."
The measure, which continues to forbid public employees from striking, was the biggest change related to education that the legislature backed this year and Northam’s amendment drew criticism Sunday from teacher organizations.
Norfolk Federation of Teachers President Thomas Calhoun called the delay "totally unnecessary."
“By making collective bargaining a local option, the legislature already built in substantial lead time before it could be implemented in any jurisdiction," Calhoun said.