House Republicans release state budget blueprint

virginia general assemblyThe Virginia House of Delegates Committee on Appropriations proposed a two-year state budget Sunday that includes no tax or fee increases, takes steps to eliminate future liabilities, and makes strategic investments in K-12 and higher education.

The proposed budget deposits $605 million in the state’s rainy day fund, fully funds the annual contributions to the Virginia Retirement System at 100% of the Board certified rates, re-pays the funds deferred from VRS in 2010 six years ahead of schedule, and sets aside excess revenues to further reduce the size of an already reduced bond package.  The House prioritizes spending on economic development and re-directs savings to K-12 and higher education.

“The House budget is a conservative, responsible, and structurally-balanced budget. When it comes to budgeting, the House of Delegates has long practiced fiscal responsibility, charting a prudent and cautious course.  We also look to make wise investments in the core functions of state government,” said Appropriations Committee Chairman S. Chris Jones (R-Suffolk).  “The steps we call for this biennium will eliminate future liabilities, provide local education leaders with much-needed flexibility, hold down the cost of higher education and strengthen our healthcare safety net. This budget incorporates input and feedback from all members of the House and reflects the priorities of the more than eight million Virginians we collectively represent.”

“While Washington continues to demonstrate its penchant for crisis budgeting, the House of Delegates is responsibly charting Virginia’s fiscal future.  The budget proposal released today builds on the House’s longstanding commitment to conservative budgeting,” said House Speaker William J. Howell (R-Stafford). “The efforts to fully fund the Virginia Retirement System and fulfill the payments deferred in 2010 will keep Virginia on sound financial footing and protect our prestigious Triple-A bond rating.  The investments in education, health care and public safety will improve the lives of our citizens and make Virginia a better place to live, work and raise a family. I want to thank Chairman Jones, Vice-Chairman Landes, and the entire Appropriations Committee for their hard work in preparing this budget.”

The House budget includes $110 million in new money for economic development, $59 million less than originally requested by Governor McAuliffe. The House instead emphasizes transparency, accountability and oversight by directing funds through GO Virginia and the Virginia Research, Development and Commercialization Fund.

“There is nothing more important to the House than growing Virginia’s economy.  This budget maintains that commitment, but increases accountability to protect taxpayers,” saidMajority Leader M. Kirk Cox (R-Colonial Heights). “Our goal in every area of state government is to ensure that taxpayer dollars are being used effectively and economic development is no different. The steps we are taking this year to bring more transparency and oversight to the process will yield positive results for the Commonwealth.”

The budget does not include Obamacare’s Medicaid expansion or Governor McAuliffe’s proposed hospital tax. Instead, the House continues to strengthen the health care safety net. The House will invest $28.9 million for substance abuse treatment, to expand eligibility for the GAP program, and create new waiver slots to address the critical waiting list.

“As other states struggle to address the costs associated with Obamacare’s Medicaid expansion, it is becoming more evident that Virginia is making the right choice. Instead of expanding a broken and costly Medicaid system, the House is taking real steps to meet the needs of Virginia’s most vulnerable citizens,” said House Appropriations Committee Vice-Chairman R. Steven Landes (R-Augusta).

In addition to the investments in the state retirement system, the House budget also invests in Virginia’s hard working state employees.

“The budget we unveiled today significantly invests in our state employees,” said Delegate John O’Bannon (R-Henrico).  “We are proposing a three percent pay raise in the first year of the budget for state employees, college faculty, and state-supported local employees.  We also set aside funding to implement the findings and recommendations of Speaker Howell’s Commission on State Employee Retirement Security and Pension Reform.  Our state employees work hard to serve their fellow citizens.  This investment will make it easier to attract and retain these dedicated public servants.”

The House calls for nearly $900 million in new funding for K-12 education, exceeding Governor McAuliffe’s proposal by nearly $70 million.  The House budget also provides added flexibility by restoring over $270 million in lottery proceeds.  These funds are sent back to local school divisions with fewer strings attached than other funding. The budget also includes a pay raise for teachers in the second year, which will be the third pay raise for teachers in a five year period. The House budget also includes $237.1 million to hold tuition increases at no more than three percent per year.

“An investment in education is an investment in Virginia’s future,” said Delegate Tag Greason (R-Loudoun). “But dollars alone are not the solution. Our budget proposal seeks to ensure that money is spent in the classroom and that local leaders have the flexibility to meet the unique needs of their schools.”

“Virginia has one of the finest systems of higher education in the country,” said Delegate Jimmie Massie (R-Henrico). “The House of Delegates has taken specific steps in recent years to address the rising cost of college, increasing funding for financial aid and prioritizing in-state students. The $237 million investment we are making this biennium will help mitigate tuition increases, leaving more money in the pockets of hard working Virginia families.”

2016-2018 House Budget Proposal

Key Takeaways

  • The House budget is a conservative, responsible, and structurally-balanced budget; general fund spending has decreased by 5% over 10 years when adjusted for population and inflation
  • Exceeds the Governor’s investment in K-12 education by nearly $70 million while increasing flexibility for local schools and reducing tax burden on local government; includes a teacher pay raise
  • Invests in higher education to limit tuition increases to no more than 3 percent each year
  • Makes strategic and targeted investments in economic development while emphasizing accountability and oversight
  • Funds a comprehensive package to combat domestic violence, including additional funding for prevention, treatment and counseling services
  • Builds on previous efforts to strengthen the health care safety net, creating new PACT teams and additional waiver slots
  • Invests in Virginia’s hardworking state employees by providing a 3% pay raise in the first year
Structurally Balanced Budget
  • The House budget proposal does not include any tax or fee increases.
  • Deposits $605 million in the state’s rainy day fund, restoring the fund to 90% of its previous balance. By the end of the biennium, the fund will be at $845 million.
  • Funds the annual contribution to the Virginia Retirement System at 100% of the Board certified rate, fulfilling our requirement two years ahead of schedule. The House of Delegates first proposed fully funding VRS in November, before the Governor’s budget proposal was released.
  • Accelerates the $189.5 million repayment to the VRS for the contribution rate deferral in 2010. This is six years ahead of schedule.  This saves $44 million per year moving forward.
  • Eliminates the Accelerated Sales Tax on over 90% of businesses by the end of FY 2018.
  • Proposes a bond package of $1.5 billion, which is nearly 40% smaller than the $2.4 billion package originally proposed by the Governor.
  • Allocates excess revenues to reduce the amount of money borrowed for the bond package. Under the House proposal, if revenues exceed the modified forecast that money will be used to pay down the balance of the bond package.
Flexibility in K-12 Education
  • The House budget proposal exceeds the Governor’s investment in K-12 education by nearly $70 million, but gives localities much needed flexibility by re-establishing the lottery proceeds distribution.
  • Invests $15.2 billion for direct aid to public education, an increase of $897.1 million from the previous biennium.
  • Includes $83.3 million for a 2% teacher pay raise in the second year of the budget.
  • Re-establishes the lottery proceeds distribution, sending $272 million back to localities with almost no strings attached.  This sends 31% of lottery proceeds back to local schools by FY18.  The House goal is to fully restore the 40% distribution, which was the policy prior to 2010.
Making College More Affordable
  • The House budget proposal builds on our continued effort to make college more affordable for Virginia families and includes $66 million more than Governor McAuliffe proposed for higher education funding.
  • Includes $237.1 million to hold tuition increases at no more than 3% per year by providing increasing support for in-state students by $687 in FY17 and $864 in FY18 at four year schools.
  • The budget also increases state support for community college students by $264 per year in FY17 and $317 per year in FY18.
Economic Development
  • The House budget funds strategic and targeted investments in economic development, while promoting increased accountability and oversight in coordination with our legislative priorities.
  • Includes $110 million in new money for economic development, $59 million less than Governor McAuliffe originally proposed. The $59 million was re-directed to K-12 and higher education.
  • Increases accountability by directing funds to GO Virginia and the Virginia Research, Development and Commercialization Fund. Provides nearly $75 million in funding for these initiatives.
Combatting Domestic Violence
  • The House budget complements the House’s legislative efforts to prevent and combat domestic violence.
  • Includes $3.2 million to fully fund the House legislative proposals on domestic violence.
  • Includes $2 million to expand domestic violence prevention, treatment and counseling programs and services for women and children.
  • Includes $5 million for rapid rehousing efforts. Rapid rehousing funding is used to provide safe shelter for veterans and victims of domestic violence.
Stronger Healthcare Safety Net
  • The House budget does not include Obamacare’s Medicaid expansion or the Medicaid provider tax that both Republicans and Democrats in Congress have called a “gimmick.”
  • The House budget invests $28.9 million in new funding to build a stronger healthcare safety net, including funding for substance abuse treatment, to create two new PACT teams, and increase eligibility for the GAP program to 80% of FPL.
  • Creates new DD waiver slots.
Investing in Our State Employees
  • Includes $197.9 million for a 3% pay raise in the first year of the budget for state employees, college faculty and state-supported local employees. The Governor’s budget proposal provided a pay raise in the second year.
  • The budget also sets aside $28.2 million in FY18 to implement the findings and recommendations of Speaker Howell’s Commission on State Employee Retirement Security and Pension Reform.
The full committee reports can be found on the House Appropriations Committee website.
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