McAuliffe letter on the General Assembly budget proposals

terry mcauliffeGovernor Terry McAuliffe has presented a letter to General Assembly money committee chairmen and the budget conferees thanking them for supporting many of his top budgetary priorities and identifying areas where he hopes to work with the General Assembly to pass a budget that fully supports a healthy and resilient Virginia economy.

The Governor also expressed the points below directly to conferees in a meeting earlier this week.


Dear Senator Hanger, Senator Norment, and Delegate Jones:

I want to express my sincere thanks to each of you for your efforts and dedication to the residents of the Commonwealth.  I commend you for your hard work and commitment to prudent and sound fiscal planning, which is reflected in both the House and Senate versions of the proposed budget.  I appreciate the priority that your amendments placed on keeping our fiscal house in order by maintaining a conservative revenue forecast and by ensuring structural balance.

Once again, I am proud that we continue to work together and find common ground on issues that are important to the citizens who elected us to solve problems and improve their lives.  I am especially pleased to see that we agree on the need to support my highest priority – public education.  While you have taken different approaches than I initially proposed, I applaud your commitment to the level of support I proposed for public education.  Quality public education is the backbone of a growing economy, and this budget will strengthen our Commonwealth’s support for students, teachers, and families while offering localities important flexibility in administering these funds.

There is one issue that I would like you to consider as you discuss public education in conference.  The new investments I proposed were geared toward support for the classroom and instructional needs, and I ask that you maintain an emphasis on directing any new state spending toward the classroom.  I also ask that you direct more of the flexible spending that you propose through a formula like the At-Risk Add-On rather than a simple per-pupil distribution because it provides funds to school divisions with higher concentrations of students at educational risk.

As I review the proposed budget amendments from each chamber, I also am pleased we have found common ground on other significant issues, including support for our veterans, public safety, and especially pay increases for our hard-working state employees, deputies, and teachers.  While there continue to be needs in these areas, your respective budgets go a long way toward addressing the most critical issues we currently face.  I applaud your support for my proposals and the additional resources you have committed to these areas.

On Tuesday, I met with you and the other budget conferees.  At that time, I indicated that while there is much about which we agree, there are still a few areas where I believe we can work together to further align this budget with the need to grow and diversify our Commonwealth’s economy.  The attached appendix outlines these issues and offers guidance on the actions I would like you to consider.

My primary area of concern, which I hope we can address together, is the restoration of the economic development proposals contained in my introduced budget.  One of the most significant contributions a governor can make to the Commonwealth is to grow the economy by attracting new industries and transforming our workforce to meet the demands of emerging business sectors.  I am particularly concerned with the need to advance Virginia’s position as a leader in the areas of bioscience research, cybersecurity, and renewable energy by restoring the smart investments my introduced budget made in programs that will grow these industries.

The budget I introduced contributes directly to the goal we share of building a new Virginia economy.  I have focused the majority of my work on that task, and the tools I need were contained in my budget recommendations.  I recognize that budgets are the product of collaboration and compromise.  Consequently, I am limiting my requests to those areas that I think are the most crucial at this time; however, I will review the results of all of your decisions when the final enrolled budget is presented to me.

As we approach the end of the session, I am confident that we can continue to operate in the best interest of the citizens of the Commonwealth and reach agreement on these issues.  I look forward to working with you as the process progresses.

Terence R. McAuliffe


Issues for Consideration by the Budget Conferees

Research, Technology, and Economic Development

Issue: Bioscience/Virginia Biosciences Health Research Corporation (VBHRC)

Governor’s introduced budget: Includes $12.5 million in additional funding over the biennium to support the bioscience industry in Virginia through the Virginia Biosciences Health Research Corporation (VBHRC).  With the additional funding, VBHRC would have received $17.5 million of funding over the biennium.

House: Eliminates $12.5 million in new funding over the biennium for the Virginia Biosciences Health Research Corporation.

Senate: Reduces new funding for the Virginia Biosciences Health Research Corporation by $10.0 million over the biennium.

Governor’s PositionThe proposed funding would allow the VBHRC to expand its existing and successful grant program as well as develop a portfolio of research tools to accelerate bioscience research and position Virginia as a leader in advanced research. I ask that you increase current funding for this entity.  It represents our principle effort to gain a foothold in an emerging industry.


Issue: Higher Education Cyber Security Training

Governor’s introduced budget: $14.3 million to increase Virginia’s higher education institutions’ capability to educate and train more individuals in cybersecurity.  This includes funding for a cyber-range, apprenticeship/intern programs, scholarships for service, and supporting efforts to have more higher education institutions designated as centers of excellence.

House:  Removes all funding to support this initiative.

Senate:  Reduces a little over $2.0 million of the $6.6 million provided for the following cybersecurity initiatives: 1) funding to increase the number of centers of excellence; 2) scholarship funding for cybersecurity students willing to work in state government.

Governor’s PositionI ask that you provide funding for this significant initiative in an emerging industry that could bring many new high paying jobs to Virginia.


Issue: Competitive Research Pool

Governor’s introduced budget: $40.0 million in general fund support and $100.0 million in state-supported debt to create a new competitive research pool to commercialize research and attract top talent to Virginia.  Establishes a governance structure that has expert review and General Assembly input, with final decision by Governor.

House: Maintains $40.0 million in general fund support, but repurposes the funding under the provisions of House Bill 1343 (which is similar to the Governor’s proposal).  Reduces the $100.0 million in state-supported debt for the pool to $50.0 million contingent on passage of House Bill 1343.  Governance structure includes expert review, but leaves final decision-making authority in a board dominated by the legislature.

Senate: Reduces general fund support to $30.5 million and directs the funding to support one-time incentive packages for high-performing researchers in relation to the commercialization of research and provides $65.0 million, instead of $100.0 million, in state-supported debt.  Governance structure includes expert review, General Assembly/Executive Branch staff representation, and final decision by Governor.

Governor’s Position: Both houses provide funding for this endeavor and I thank you for that.  However, I am concerned about the governance structure.  The proposed governance structures contain multiple reviews which could slow down progress in releasing the authorized funds.  Also, this is essentially an Executive function and it needs to remain so.


Issue: Governor-led trade missions

Governor’s introduced budget: Provides $1.0 million per year in additional funding to support trade and marketing missions approved by the Governor.

House: Reduces funding by $500,000 in each year for Governor approved trade and marketing missions.

Senate: Eliminates the $1.0 million in each year for Governor approved trade and marketing missions.

Governor’s PositionThe funding provides for additional opportunities to market Virginia as a world-class destination for businesses and opportunities to expand the markets for Virginia’s exports.  I believe in marketing efforts that involve face to face contact and handshakes to close deals.  The international market represents our most untapped opportunity.  We need funding to make an impact here.


Issue: Solar

Governor’s introduced budget: Provides $1.0 million per year to expand the solar industry in the Commonwealth.

House: Eliminates $1.0 million per year to expand solar energy development in the Commonwealth.

Senate: Eliminates $1.0 million per year to expand solar energy development in the Commonwealth.

Governor’s PositionThis funding will support an expanding clean energy industry as well as assist in achieving Virginia’s goal to generate 15 megawatts of energy from solar on state and local facilities by 2017.  Solar energy is instrumental in attracting new industries such as Amazon, Apple, etc.  We need to have a presence here.


Issue: Funding to support Recommendations of the Commission on Military Installations and Defense Activities

Governor’s introduced budget: Included $250,000 in SB29/HB29, and $600,000 each year over the biennium (HB30/SB30) to support the implementation of various recommendations of the Military Installations and Defense Activities.

House: House concurred with the Introduced Budget.

Senate: The Senate reduced SB29 by $50,000; and SB30 by $350,000 each year over the biennium.

Governor’s Position: The funding is provided to grow, sustain, and align the Commonwealth’s existing military installation, industries, academic institutions, economic infrastructure, and communities in a critical and self-evaluative. This funding will ensure that Virginia continues to serve as a strong strategic partner to our military services, and to prepare the Commonwealth for BRAC and increase the overall DOD investment in Virginia. I ask that you provide the funding needed here so that we can do our homework and protect our valuable military asset over the long haul.


Other Issues

Issue: Earmarks from the Commonwealth’s Development Opportunity Fund

Governor’s introduced budget: The introduced budget eliminates all earmarks from the Commonwealth’s Development Opportunity Fund (COF) and provides general fund support to initiatives funded previously through earmarks.  The introduced budget provides general fund support through discrete appropriations for the Ion Collider project and the Port Infrastructure Development Zone Grant Fund.

House: Restores earmarks from the Commonwealth’s Development Opportunity Fund.  This includes $2.4 million over the biennium for the Jefferson Labs Ion Collider project, and $4.0 million over the biennium is directed to the Port of Virginia Infrastructure Development Zone Grant Fund.

Senate: Restores earmarks from the Commonwealth’s Development Opportunity Fund.  This includes $2.4 million over the biennium for the Jefferson Labs Ion Collider project, and $4.0 million over the biennium is directed to the Port of Virginia Infrastructure Development Zone Grant Fund.

Governor’s PositionThe COF is a critical economic development tool to assist companies in locating or expanding in Virginia.  Reductions to the COF, in the form of earmarks, constrict the Commonwealth’s ability to attract and retain companies in the face of intense competition from other states. I ask that you refrain from making these earmarks and provide separate appropriations for these programs.


Issue: Transportation Earmarks/Encroachment on Executive Powers

Governor’s introduced budget: The Governor did not earmark transportation funds for particular road/bridge-related projects or remove authority from the Commonwealth Transportation Board (CTB).

House:  Mostly concurs with Governor.

Senate:  Provides a number of road or bridge earmarks and removes some of the authority of the CTB.

Governor’s PositionEarmarks are contrary to the new system we have for objectively ranking transportation projects.  We should do projects based on merit and avoid these earmarks and diminution of Commonwealth Transportation Board authority.


Issue: Funding to support firearm legislation

Governor’s introduced budget: Included $200,000 and one (1) position over the biennium to support background checks for the purchase or transfer of firearms at firearms shows.

House: HB 1386 (Lingamfelter) passed both Houses and signed by the Governor on February 26, 2015 (Chapter 45)

Senate: SB715 (Edwards) passed both Houses and signed by the Governor on February 26, 2016 (Chapter 44)

Governor’s PositionAs part the historic bipartisan gun agreement, these two bills passed and I have signed them into law.  While my introduced budget provided funding for one (1) position, additional resources will be needed by the Virginia State Police.  I strongly encourage you to provide additional funding to support a total of three positions to allow State Police to fully implement the functions outlined in the bills.


Issue: Mental Health Funding for Local and Regional Jails

Governor’s introduced budget: Included $5.0 million over the biennium to establish pilot programs in local and regional jails to provide assistance to offenders needing mental health services.

House: The House eliminated all the funding proposed by the Governor and added language requiring the Department of Criminal Justice Services to solicit proposals for jails to establish pilot programs, evaluate the proposals, and report a list of up to three recommended pilot sites to the Secretary of Public Safety and Homeland Security, and the chairmen of the money committees by August 15, 2016.

Senate: The Senate concurred with the Governor’s proposal.

Governor’s Position:  Adopt the budget bill as introduced which provides resources to our law enforcement communities.  In Virginia, we can do more for those who have mental health issues and confined in local and regional jails.


Issue: Funding to support Restoration of Rights Process

Governor’s introduced budget: Included $378,038 over the biennium to support three (3) positions at the Virginia State Police. In addition, $530,000 and five positions were provided in the Office of the Secretary of the Commonwealth for workload increases, including restoration of rights.

House: The House removes the funding.

Senate: The Senate removes the funding

Governor’s PositionOur communities are safer when those returning from prisons and jails are provided second chances of becoming productive members. We should provide funding to assist in this effort.


Issue: Advertise Constitutional Amendments

Governor’s introduced budget: No action.

House: No action.

Senate: No action.

Governor’s PositionProvide $196,737 in fiscal year 2017 for the Department of Elections to advertise two proposed amendments to the Constitution of Virginia that will appear on the ballot this November pursuant to Chapter 12 and Chapter 17 of the Acts of Assembly of 2016.  Section 30-19.9, Code of Virginia, requires the State Board of Elections to advertise constitutional amendments prior to the election.  This one-time expense cannot be absorbed within the agency’s general fund operating budget.  The cost to advertise one constitutional amendment is $131,158; however, due to the economies of scale, the cost to advertise two constitutional amendments is $196,737.


Issue: Fund Call Center

Governor’s introduced budget: Provided $169,042 in fiscal year 2017 for a call center to address questions received by the Department of Elections regarding the 2016 presidential election.  Historically, the department has received over 100,000 calls immediately preceding a general election; of which, 30,000 calls were received on Election Day.  The funding will allow the Department of General Services to operate the call center from September through November; the timeframe during which the department receives an increase in calls regarding the presidential election.

House: The House concurred with the Governor’s proposal.

Senate: Eliminates funding for the call center.

Governor’s PositionAdopt the Governor’s and the House’s position.


Issue: Develop a plan to transfer responsibility of Virginia’s federal food programs to Agriculture and Consumer Services

Governor’s introduced budget: Requires the Virginia Departments of Education, Health, and Agriculture and Consumer Services to develop a plan to transfer the Summer Food Services Program and the Child and Adult Care Feeding Program from the Virginia Department of Health, and the Fresh Fruit and Vegetable Program, National School Lunch Program, School Breakfast Program, and Special Milk Program from the Virginia Department of Education to the Department of Agriculture and Consumer Services in an effort to house feeding services under one agency.  Authorizes the Director of the Department of Planning and Budget to transfer funds and positions between these agencies to effectuate the transfer of the programs, upon approval of the plan by the Governor.

House:  Amends the language in the introduced budget bill to require that the Department of Agriculture and Consumer Services present a report on the planned transition to the General Assembly and the Governor by November 15, 2016. The language prohibits the transfer of funding or positions prior to approval of the 2017 Session of the General Assembly.

Senate:  Amends the language in the introduced budget bill to require that the Department of Agriculture and Consumer Services present a report on the planned transition to the General Assembly and the Governor by December 1, 2016. Removes the authority of the director of Planning and Budget to move funds and positions to execute the transfer of the programs.

Governor’s PositionWhile greater analysis is needed, as demonstrated by the requirement for a plan in the introduced budget, there are inefficiencies in the current structure of the programs.  Once we have a plan that addresses the best way of maximizing efficiencies in these programs, the plan should be allowed to move forward.  I ask that you refrain from prohibiting the timely implementation of the recommendations.


Issue: Implementation of the Clean Power Plan

Governor’s introduced budget: No action.

House: Prohibits the Department of Environmental Quality from expending any funds provided for air protection to develop or implement Environmental Protection Agency’s Clean Power Plan until the Supreme Court’s stay of such Plan is released.

Senate: Provides $350,000 the first year from the general fund for any contractual costs incurred in the assessment of potential financial and economic impacts on the Commonwealth from implementation of the Environmental Protection Agency’s Clean Power Plan pursuant to SB 21 of the 2016 General Assembly. SB 21, which passed both houses, requires the Department of Environmental Quality to receive approval from the General Assembly for a state implementation plan to regulate carbon dioxide emissions from existing power plants prior to submitting the plan to the U.S. Environmental Protection Agency for approval.

Governor’s Position:  I ask that you reject the amendments adopted by both the House and the Senate.  I strongly believe that Virginia needs to proceed with implementation of the regulations while a stay is in place.


Issue: Restrictive language concerning women’s reproductive health services

Governor’s introduced budget: Removed language found in Chapter 665 that prohibited the expenditure of general or nongeneral funds for abortion services, unless mandated by state statute or federal law.

House:  Reinstates the language

Senate: Reinstates the language with specific citations of state statutes.

Governor’s Position: Do not include any restrictive language.  This action not only limits access to women’s reproductive health services, it also interferes with medical decisions between a woman and her doctor.  This action disproportionately impacts economically disadvantaged women in the Commonwealth.  Reconsider this position in light of its impact on those who most depend on the state to help them when they unexpectedly find themselves in need of these services.


Issue: Capital funding

Governor’s introduced budget: The Governor provided over $90 million in bond funding to construct two new juvenile correctional centers, $140 million to support the parks system, $350 million to enhance the port facilities at Norfolk International Terminal, and over $100 million for a new Sexually Violent Predator facility.

House:  Removes all funding for the parks and provides only planning funding in the second year for one new juvenile correctional center in Chesapeake.

Senate:  Removes the funding for the Sexually Violent Predator facility, reduces state parks funding by at least two-thirds, provides only planning funding in the second year for one new juvenile correctional center, and uses $135 million in transportation funds in lieu of debt for the Norfolk International Terminal improvements.

Governor’s PositionI ask that you provide sufficient funding for our parks system, the necessary amount of debt funding for Norfolk International Terminal, and funding for the new Sexually Violent Predator facility.  I also ask you to fund the construction of the first new juvenile correctional center, as the locality where the first center is to be constructed is ready to move forward with this project.

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