It appears that the three month budget stalemate has come to an end. Late last night the State Senate and House of Delegates came together to put the people of Virginia ahead of politics. We passed a responsible, fiscally sound, and conservative budget that addresses our state’s $1.5 billion revenue shortfall while protecting our key investments in K-12, mental health, and the Virginia Retirement System. This budget does not include Medicaid Expansion.
Earlier this week, negotiations surrounding the budget took a shocking turn. The unexpected resignation of Democratic Senator Phillip Puckett allowed Republicans to regain the majority in the Virginia Senate. Joined by one of their Democratic colleagues, all twenty Republicans immediately called the Senate back into session.
The House and Senate returned to Richmond yesterday to finish work on the biennial budget. The Senate passed House Bill 5002 on a vote of 21-19, and the House passed a budget with a vote of 69-31.
This budget tackles the $1.5 billion shortfall for the next biennium by eliminating spending increases compared to the original budget, and tapping into the state’s rainy day fund.
Though I wish that we didn’t have to use the rainy day fund, we had little choice given the revenue numbers and our looming deadline. Revenues were down by $394 million (almost 20 percent) in May. We expect revenues to be down by about $550 million each of the next two years. While we obviously won’t know the final numbers until July, we have built a budget that anticipates a big shortfall.
Like families in Virginia, we simply can’t spend money that we don’t have. For this reason, we unfortunately had to eliminate most new spending increases. This includes teacher and state employee pay raises, new higher education funding, new economic development funding, and new hospital and nursing home funding.
We were, however, able to protect over $300 million in new classroom funding for K-12 education, about $50 million in new funding for mental health reforms and investments in our state employee retirement system.
For a more detailed look at what the budget does and does not include, I encourage you to view a presentation by House Appropriations Committee staff that outlines the changes.
The budget passed last night does not include the expansion of Medicaid. In fact, it specifically includes language added by Senator Bill Stanley that states that the Governor cannot expand without the approval of the legislature.
Though the original budget language did not expressly allow the Governor to expand Medicaid without the approval of the Medicaid Innovation and Reform Commission, there was concern among many that Governor McAuliffe may try to do so. Therefore, the General Assembly has added an additional, clarifying section that unequivocally prohibits the expansion of Medicaid without the approval of the legislature.
I strongly encourage Governor McAuliffe to sign the budget without substantial amendments and without inserting Medicaid expansion. Virginia needs a budget now. If he includes Medicaid expansion, the House will reject that amendment, causing even further delays in adopting the budget.
Once the budget is signed, we can and should return to Richmond to debate Medicaid expansion on its own merit.
I have continually expressed my concerns about Medicaid expansion, and I still believe that Virginia cannot afford the long-term costs and we cannot trust the federal government to pay for Medicaid expansion forever. I am, however, more than willing to have a full and fair debate on this issue. The Governor and General Assembly members can make any proposal they want and I will debate it and consider it on its own merit.
Throughout the past three months, elected officials from many of Virginia’s localities have repeatedly called on the General Assembly and the Governor to pass a timely budget. As the deadline approached, localities and the Commonwealth became increasingly concerned about the possibility of losing our AAA bond rating. Although Senator Puckett's sudden resignation allowed for the restart of negotiations, a number of factors were already beginning to indicate impending action.
While I am disappointed that it took us 96 days to get here, I am pleased that we are one step closer to avoiding a Government shutdown. I hope that the Governor will act quickly on the budget, so that our localities, school divisions, and state agencies can gain the certainty that they need to complete their own budgets.
You can also reach us by mail at Post Office Box 239, Staunton, Virginia 24402.
Thank you for allowing me to serve as your delegate.