Sunday, June 16, 2024

After 2024 Legislative Session’s End, Legislature Releases Two-Year State Budget

The Virginia Capitol (Graham Moomaw/Virginia Mercury)

RICHMOND — Much of the attention on the two-year budget crafted this year by Democratic majorities in Virginia’s House of Delegates and Senate has been on what’s not in the spending plan: the arena project backed by Gov. Glenn Youngkin to bring the Washington Wizards and Capitals to Alexandria.

But there’s no shortage of other things to find in what is always the year’s biggest piece of legislation. The 417-page rundown of amendments to Youngkin’s December proposal reflects a host of Democratic wishes, many of which the governor is certain to axe ahead of the legislature’s April veto session. Those include money for the legalization of cannabis sales, minimum wage increases, the creation of a state-run paid family and medical leave program and the setting up of a Prescription Drug Affordability Board. Others, like the earmarking of extra money to over a dozen health departments facing rising rents for their facilities, are more humdrum and will have a better chance of surviving the governor’s pen.

Here’s a sampling of the many projects, priorities and policy changes Democrats are seeking through this year’s budget.

Taxes

The General Assembly budget rejects two of Youngkin’s three major tax proposals — a 12% across-the-board income tax cut and an increase in the state’s sales and use tax from 4.3% to 5.2% — but embraces his idea of expanding the state sales tax to digital goods and services to close what Youngkin in December called the “Big Tech tax loophole.”

The new tax would affect goods such as software packages, digital downloads and streaming services.

However, Youngkin warned the General Assembly in January that he saw his tax proposals as “a package deal” and was “only interested in a plan that reduces taxes for Virginians.” Since the legislature released its plans Thursday, he has been sharply critical of its tax provisions, accusing the General Assembly of raising taxes by $2 billion by adopting the digital goods tax and arguing the provision will impact low- and moderate-income Virginians more than higher-income ones. While his plan would have instituted a digital tax, Youngkin has said its impacts would have been balanced by the income tax cuts and proposed increases in the earned income tax credit.

Republicans have also found fault with the General Assembly’s elimination of a provision that would have exempted businesses from the digital tax.

More teacher pay increases and education spending

The General Assembly budget would put an additional $2.5 billion toward education to increase salaries for teachers and support positions and put extra funding toward schools with large low-income and disadvantaged populations.

“We were able to pump hundreds of millions of dollars extra to fully fund our promise to try to bring teachers to the national average,” said House Education Committee Chair Sam Rasoul, D-Roanoke. “We are modernizing the way we approach educating English language learners; we are pumping large investments into at-risk students, who need us the most — their schools, their teachers are going to be getting a nice bump to ensure that we’re pushing education equity.”

The budget calls for public school teachers and support professionals to receive a 3% salary increase in each of the next two years. School divisions would be required to provide a local match.

Youngkin’s budget had called for a 1% bonus for teachers in fiscal year 2025 and a 2% raise in fiscal year 2026. His office said teacher pay remains a “key priority” and the administration is working on recommendations for “innovative solutions for teacher recruitment and retention” to be shared in the fall.

The General Assembly is accepting Youngkin’s proposal to have the Superintendent of Public Instruction provide a detailed annual report on teacher salaries, including average salaries by school division and school, comparisons with other states, and starting salaries by school division; however, it rejected a study the administration wanted on teacher compensation and its impact on student achievement. Legislation to bring salaries for teachers and non-instructional support positions to the national average or higher is awaiting review by Youngkin

Lawmakers also proposed an additional $371.3 million over the biennium to implement several recommendations from a state study that found Virginia was underfunding school divisions. The changes would combine several existing programs with the aim of routing more money to divisions with large numbers of low-income or otherwise disadvantaged students.

Another big-ticket item would provide about $546 million to K-12 education from the general fund over the biennium to make up for funding losses divisions incurred when the General Assembly got rid of part of the state grocery tax in January 2023.

In higher education, lawmakers are proposing an additional $205.4 million over the biennium to increase access, affordability and the ability for students to earn a degree. The proposal helps prevent increased costs for in-state students and includes $40 million in support for historically black colleges and universities.

Child care and early childhood education 

Youngkin’s budget included major investments in child care and early childhood education ahead of the wind-down of significant federal child care subsidies and supports that were put in place during the pandemic. The General Assembly budget increases those investments by another $74 million.

The new budget would also put $25 million toward the creation of a child care center for state employees in Richmond, using space on the campus of Reynolds Community College. The Department of Housing and Community Development would be charged with issuing recommendations by 2025 on how to retrofit spaces on other community college campuses to provide child care for community college students and the broader public.

Rejoining RGGI

Language in the budget would mandate that Virginia rejoin the Regional Greenhouse Gas Initiative, a multistate carbon market that requires power plants to purchase allowances for every ton of carbon they emit in regular auctions. The proceeds of the auctions are then returned to the states; in Virginia, they are used for flood resilience and energy efficiency efforts.

Democrats passed a law directing the state to participate in RGGI in 2020. Youngkin pulled the state out of the market at the end of last year through the regulatory process, arguing it represented a “hidden tax” because Virginia lets utilities pass allowance costs on to customers. Environmental groups are challenging the withdrawal in court.

To replace RGGI revenues in the near term, the General Assembly budget includes a proposal from Youngkin to put $100 million toward the Community Flood Preparedness Fund.

More money for Medicaid

If Medicaid enrollment is higher than expected, the General Assembly budget authorizes an extra $150 million in fiscal year 2025 for the program. Medicaid enrollment was expected to decline significantly this year as pandemic-era prohibitions on kicking people off the rolls if they didn’t meet criteria expired. However, as The Richmond Times-Dispatch has reported, enrollment has been higher than projected, particularly for children, meaning Virginia will likely have to chip in more to keep the state-run program afloat.

Other spending would include more than $22 million over the next two years for the state to contract with a third party to help ensure state coverage decisions are “timely and accurate,” $1 million to hire a consultant to review Virginia’s eligibility determination system and about $20 million to go toward streamlining call center and mail processing for the Department of Social Services.

Behavioral health funding

The General Assembly has left largely intact Youngkin’s proposals to ramp up spending under his “Right Help, Right Now” initiative to expand Virginians’ access to behavioral health resources and relieve pressure on the state’s strained mental health hospitals. Plans backed by both the governor and the legislature include a major expansion of developmental disability waivers, which fund services for people with long-term care needs, and significant spending on crisis stabilization services and other efforts to increase investment in more local behavioral health resources like community services boards.

Metro

The General Assembly wants to send an extra $149.5 million over the next two years to the Washington Metropolitan Area Transit Authority, which operates Metro. Metro, which serves roughly 1.5 million passengers each week in Northern Virginia, is facing a $750 million shortfall and has asked Virginia, Maryland and Washington, D.C. for more funding.

State code currently caps annual increases on Virginia’s funding for Metro at 3%. The General Assembly would let the state exceed that cap.

Youngkin’s budget proposal did not include additional funding over what the state provides Metro, but it would’ve allowed Virginia to go above its cap if the transit agency provided a corrective action plan by Nov. 30.

Lawmakers removed the governor’s language about the corrective action plan but ordered WMATA to conduct “a comparison of its total costs and overhead costs” with those of other transit systems in Boston, Chicago, New York City, Philadelphia and San Francisco, and submit its findings to the Joint Subcommittee on Northern Virginia Public Transit.

That subcommittee would be created under a resolution adopted by the General Assembly aimed at studying “long-term, sustainable, dedicated funding and cost-containment controls and strategies” for public transit in the region.

Restoring Democrats’ earned sentence credit system for inmates

Reviving a long-running dispute over how much time certain inmates should be able to earn for good behavior, the General Assembly budget would get rid of restrictions imposed by Youngkin on people incarcerated for both nonviolent and violent offenses.

Under a 2020 law backed by Democrats, Virginia began allowing inmates who demonstrated good behavior or participated in rehabilitation programs to reduce their sentences by more than the existing limit of 4.5 days for every 30 days served. The new system let certain incarcerated people earn up to 15 days of credit every 30 days that could be applied to sentences for nonviolent offenses.

But while the law prohibited sentences linked to certain violent crimes like murder from being reduced through the credit program, debate emerged over whether inmates with mixed sentences — those imposed for both violent and nonviolent crimes — should be allowed to earn the enhanced credits in any capacity.

At Youngkin’s request, the General Assembly in 2022 at the last minute passed budget language prohibiting inmates with mixed sentences from earning the enhanced credits to reduce any sentence they had received. Hundreds of inmates who had been notified they would be released within weeks under the new system were suddenly told they would instead have to serve the remainder of their terms.

The General Assembly budget would reimpose the original system, in which those inmates could reduce the sentences they received for nonviolent offenses through the enhanced credits but would have to serve the full sentences attached to their violent crimes.

Incentivizing farmers to adopt pollution reduction practices

Virginia has devoted record amounts of funding in recent years to help farmers install best management practices to reduce pollution from entering the Chesapeake Bay. This year’s budget also includes hundreds of millions for this aim, while devoting $20 million in new funding to a new pilot program to pay agricultural producers that achieve actual pollution reductions.

Moving up the schedule for a polystyrene ban

Legislators aren’t done wrangling over when Virginia should prohibit restaurants from using  takeout containers made of polystyrene, a type of plastic foam that takes hundreds to thousands of years to biodegrade.

In 2021, as part of what was dubbed “The Great Polystyrene Compromise,” the General Assembly decided that large food service establishments — defined as those with 20 or more locations — would have to stop using polystyrene containers by July 1, 2023, while smaller establishments would have until July 1, 2025. But budgets passed by both the Republican-controlled House and Democratic-controlled Senate in 2022 pushed back those deadlines until July 2028 and July 2030.

This year’s budget calls for the new deadlines to be set as 2025 for large establishments and 2026 for small ones.

Moving various state bodies out of executive branch control

Numerous amendments in the General Assembly budget would move the Department of General Services, Virginia Alcoholic Beverage Control Authority and Cannabis Control Authority out from under executive branch control to a new status as independent agencies without ties to a particular secretariat.

The DGS provisions appear to be part of a fight that’s unfolded between the General Assembly and Youngkin over who gets to decide where and how state employees are housed. Employees in agencies including the Department of Education who have been working at the Monroe Building in downtown Richmond have been caught in the crosshairs of the dispute.

“No executive branch agency shall be relocated permanently from the Monroe Building unless otherwise authorized by the General Assembly,” the budget reads.

Toll relief

Fulfilling a wish of Senate Finance and Appropriations Chair Louise Lucas, D-Portsmouth, the General Assembly budget would expand toll relief for Virginians in the Hampton Roads area by providing an additional $101 million over the next two years to support eligible drivers who earn less than $50,000 per year.

According to the budget, when combined with the state’s existing Toll Relief program, eligible drivers could get a 100% toll rebate for up to 14 trips per week through the Elizabeth River Tunnels until 2036.

No Richmond CSO assistance

Not included in the budget is additional state funding for the city of Richmond to upgrade its combined sewer overflow system, which routes wastewater and stormwater through the same pipes. The legislature has required the city to upgrade its system by 2035 to prevent waste from getting discharged into the James River when heavy rainfall overwhelms the system.

Earlier versions of last year’s budget amendments included $100 million for the project, but it was cut from the final version. Youngkin had proposed $50 million for the project in this year’s budget plan.

Virginia Mercury is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Virginia Mercury maintains editorial independence. Contact Editor Sarah Vogelsong for questions: info@virginiamercury.com. Follow Virginia Mercury on Facebook and Twitter.

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