Senate of Virginia Passes Biennial Budget

~ Two-year spending plan protects jobs and services; passes Democratic-led body with bipartisan support ~

 

RICHMOND—The Democratic-led Senate of Virginia today passed a two year budget that will help protect jobs and critical services in the Commonwealth. The Senate budget minimizes cuts in public education, higher education, public safety and health care services while investing in economic development initiatives that will create jobs and promote economic growth in the Commonwealth. The budget includes no general fund tax increases and rejects many of the most devastating and job-eliminating cuts proposed by Governor Bob McDonnell. The budget passed the Senate with a bipartisan margin of 30-10 with all Democrats voting for passage.

“I have observed a great deal over my 35 years in office, and while this economy presents huge challenges, we may be beginning to see the light at the end of the tunnel,” said Senate Finance Committee Chairman Charles Colgan (D-Manassas.) “This is certainly not the type of budget anyone would wish to pass, but it makes necessary reductions in a responsible way that minimizes impact on jobs and services while offering a foundation for future prosperity.”

            The budget bill, SB30, was crafted under the leadership of Sen. Colgan and seven Democratic sub-committee chairs. The budget prevents the reinstatement of Virginia’s car tax by fully funding the state’s share of the car tax reimbursement. It also includes modest increases in fees for specific services, with revenues dedicated to similar specific and related purposes.

            Education

Virginia’s high quality education system is the key to continued economic success, so the Senate rejected over $700 million in cuts to education proposed by Governor McDonnell. The Governor’s cuts would have resulted in tens of thousands of layoffs in schools across the Commonwealth. The Senate’s budget cuts about $37 million in the first year of the biennium and $95 million in the second for a total of approximately $133 million. By comparison, the House of Delegates’ proposed budget called for $620 million in cuts to public education over the biennium.

The budget also allows for the issuance of $57 million in bonds each year for school technology. These bonds were requested by school leadership and will more than offset the Senate’s cuts in 2011.

The normal two-year recalculation of the Local Composite Index will occur under the Senate budget, meaning that state aid to local school districts will be distributed more fairly and accurately based on population and property values. Under the recalculation many localities were going to see an increase in state funding, but 97 localities stood to lose state support. The Senate’s budget holds all localities harmless in the recalculation, meaning that no locality will receive less than was proposed by Governor Kaine. This will keep teachers in the classroom in every local school system in Virginia. The House of Delegates has proposed to restore 80% of funding to those localities, while Governor McDonnell proposed no assistance.

The Senate rejected Governor McDonnell’s recommendation to eliminate the state’s support for school breakfasts, and made a small increase in the state’s support for the program.  It is a modest investment that ensures children are prepared to learn.

In order to give local school divisions needed flexibility in allocating their limited resources, the budget temporarily eases some mandates such as testing requirements and class size ratios.

Localities will also realize savings of approximately $250 million statewide each year of the biennium through deferred contributions to retirement accounts. This deferred payment will be repaid to the system over several years.

Virginia’s colleges and universities will be critical to economic recovery, so no further reductions were recommended in the state’s higher education system. The Senate also preserved nearly $10 million in tuition assistance grants to help keep college affordable, preventing Governor McDonnell’s $19.9 million proposed cut to the program.  

The Senate preserved funding for the Virginia Commission for the Arts, a group that had been targeted for elimination by the House of Delegates. The Senate also held Virginia’s libraries harmless, while the House made a 15% cut.

Health and Human Resources

The current recession has forced many Virginians in need of healthcare services to the healthcare safety net. Virginia’s Community Health Centers say they saw nearly 79,000 new patients in 2009, and Virginia’s free clinics are projecting 9,000 new patients in 2010. Because of the historic demands placed on safety net providers, the Senate rejected many of Governor McDonnell’s proposed cuts and, in some cases, restored cuts made in the budget originally presented by Governor Timothy Kaine last December. The Senate’s budget also protects thousands of jobs that were put in danger by Governor McDonnell’s proposed cuts. Many of those proposals would have eliminated choices for consumers, reduced effectiveness of care, and eliminated jobs throughout the Commonwealth.

“This budget was crafted under certain constraints that forced us to make very painful decisions. We were fully aware of the consequences of each potential cut and did not make these decisions lightly,” said Senator Edd Houck (D-Spotsylvania), chairman of the Senate Finance Committee’s Health and Human Resources sub-committee. “We weighed all options and helped craft an austere budget that minimizes job losses and related service interruptions in one of the Commonwealth’s core service areas.”

Under the Senate’s budget, the Virginia Health Care Foundation will receive an additional $816,000, Virginia’s free clinics will receive an additional $639,000, and the community healthcare centers will receive an additional $481,000. Under Governor McDonnell’s proposed budget, the VHCF would have been  cut by $2.2 million, free clinics cut by $1.8 million, and community health centers cut by $1.3 million.

Many healthcare services that were cut or eliminated by other budget proposals were saved by the Senate. Governor McDonnell recommended eliminating dental services to 24,000 Virginians, state support for domestic violence victims, and pre-natal and early childhood care for 29,000 children and pregnant women. All these proposals were rejected by the Senate. A proposal from Governor McDonnell to cut the Early Childhood Foundation by an additional $1.8 million was also rejected.

Governor McDonnell proposed reducing the state’s capacity for mental health treatment by 16% and closing the Commonwealth Center for Children and Adolescents, a facility in Staunton for children with acute mental health needs. These proposals were also rejected by the Senate, protecting 500 jobs and the associated mental health services.

The Senate budget saves 14,000 jobs by rejecting Governor McDonnell’s elimination of consumer-directed care. This will protect the jobs of personal care assistants and the services they provide to elderly and disabled Virginians.

Virginia will also invest an additional $97,000 in grants for the treatment of sickle cell anemia under the Senate plan, instead of the $40,500 cut proposed by the Governor.

The majority of savings and reductions in healthcare under the Senate budget would be achieved through reduced rates to Medicaid providers. If a proposed increase in Medicaid funding comes from the federal government, the budget contains language that would roll back many of those reductions.

Economic Development

Job creation and economic development remains the top priority of Senate Democrats, which is why they have passed 14 economic development bills, sponsored by both Republicans and Democrats. The budget includes approximately $72 million in economic development incentives to attract business and create jobs. Approximately $67.1 million is incentive payments to companies that are currently producing jobs in Virginia.

“Our budget makes smart investments that will help stimulate Virginia’s economy and encourage job growth,” said Economic Development and Natural Resources sub-committee chair Sen. Mary Margaret Whipple (D-Arlington). “This budget honors the Commonwealth’s commitment to our business partners in a fiscally responsible way, while still recognizing current fiscal constraints.”

The Senate also included many tools that Governor McDonnell requested to help produce jobs. The Senate budget increases the Governor’s Opportunity Fund by $5 million over the previous biennium, contains $5 million dollars to create a “mega-site” where a major employer could easily locate, and creates a Motion Picture Film Production Incentive fund to attract film and television projects.

The natural beauty of Virginia is both a treasure and a powerful economic asset. The Senate budget includes $24.2 million for agricultural best management to clean up the Chesapeake Bay. It also keeps open five state parks that faced closure under Governor McDonnell’s proposed budget, including the historic Twin Lakes State Park.

Public Safety

The budget introduced in December would have been devastating to Virginia’s public safety operations. It would have put thousands of Virginians out of work and compromised the state’s ability to maintain safety and order. There would not have been enough cops to make arrests, and not enough prosecutors to seek convictions. The budget passed today by the Senate will keep cops on the street and provide adequate resources to maintain safety and order

“We are no longer conducting business as usual in the Commonwealth. Public safety agencies are straining at the limits of their resources, but they are absolutely committed to doing the very best job possible,” said Public Safety sub-committee chair Sen. Janet Howell (D-Fairfax). “This budget will minimize job losses and allow our public safety agencies to effectively manage their caseloads in a time of limited resources.”

The Senate’s budget puts $81 million dollars back into local sheriff’s departments, saving the jobs of deputies who serve as the primary law enforcement in many communities. Commonwealth’s Attorneys will also have $20 million restored to their budgets, helping them to hold criminals accountable.

The Senate budget makes a serious investment to protect our children against online predators and exploitation. Approximately $10 million will be raised from a fee on all misdemeanor and felony convictions and placed in the Internet Crimes Against Children fund. This fund will support centers in northern and central Virginia that track down individuals who prey on children over the internet.

Virginia will also provide support to its veterans by fully funding tuition assistance programs for National Guardsmen. The budget holds harmless the state’s Wounded Warrior program to support veterans with stress-related or traumatic brain injuries. The budget also increases funding to the “$4 for life” fund which provides equipment and training for local and volunteer rescue squads.

Finally, the Senate’s budget includes language to encourage appropriate alternatives to incarceration for low-risk offenders. Programs such as electronic monitoring will give the Department of Corrections flexibility to manage their case load and hold criminals accountable while utilizing their limited resources in the most effective manner.

            Employee Compensation

            The Senate budget realizes approximately $508 million in savings by partially deferring payments to the Virginia Retirement System for public employees. This one-time action will not affect the benefits of current retirees and will not endanger the long term health of the system or the state’s AAA bond rating. The deferred payment will be repaid into the VRS system in payments of $74 million annually for ten years beginning in 2013.

            State employees will take three furlough days annually, compared to the five days that had been recommended by Governor McDonnell. To offset this unpaid leave, state employees will receive a 3% bonus in December 2011.

            Conclusion

            The budget passed today reflects the priorities of the Democratic-led Senate of Virginia. It protects jobs and services in education, public safety, the healthcare safety net and economic development programs. It includes many cuts that will create challenges and hardships for many Virginians, but it is a plan that will position Virginia for future success as the economy continues to recover.

 

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