How Much Have We Lost?

Tuesday, December 1, 2015

Weekly Column: General Assembly Must Address Many Needs

The following is my column that will appear in the Mt. Vernon Gazette, The Mt. Vernon Voice and The Potomac-Stafford Local in the week of December 2, 2015.
General Assembly Must Address Many Needs
 
At the State Senate annual Finance Retreat two weeks ago, staff updated the State Senate on Virginia's economy, projected revenues and significant budget issues expected during the 2016 session to begin on January 13.  The news is a mixed bag.
 
First, Virginia’s economy is still struggling.  Thanks to the “Sequester,” large, across-the-board, federal budget cuts, federal spending in Virginia is down by 33 percent over just last year.  That’s $24 billion fewer dollars coming into the Virginia economy.  Not surprisingly, economic growth has been flat statewide.  Twelve percent of homes are still short sales due to stagnant home prices and our predicted economic growth for 2016 is about one-third less than the national rate.
 
Notwithstanding this disappointing news, the state took in about $550 million more than we budgeted in FY 2015.  These revenues were mostly generated by income taxes paid by business owners, not employees' paycheck withholding. 
 
We expect to see a 4.1 percent revenue growth in 2016 driven by employment gains in Northern Virginia and housing construction.  Between revenue growth and the funds carried forward from FY 2015, the staff anticipates that there will be about $1.6 billion above the state’s “base budget” to allocate to various needs.  This is the first year since I was elected in 2009, that there will be any meaningful money to allocate.  
 
Given Virginia’s budget difficulties over the last six years, many unmet needs should be addressed.  First, Virginia’s secondary education funding on an inflation-adjusted, per pupil basis is less than what the state spent in 2007.  Most teachers have seen one raise in six years and for many, that raise was consumed by new retirement contribution rules.  Fairfax County, and especially Prince William and Stafford Counties, are desperate for additional funds to raise teacher salaries, lower class sizes and upgrade technology. 
 
Second, Virginia’s colleges are struggling.  Last year, the legislature appropriated $110 million less to our 14 four-year colleges and 23 community colleges than we did in 2008.  These institutions serve 399,000 students.  Average tuition and fees have risen from around $4,000 per semester to nearly $8,000 and the state is barely covering half the cost of an in-state student’s education.  The state's contribution was over 62 percent when I attended James Madison University from 1989-1993.  Average student debt is up by 35 percent since 2008. 
 
Third, Virginia continues to leave about $2 billion of federal Medicaid dollars on the table.  Expanding Medicaid to low-income working adults would free up $180 million of Virginia tax dollars which we could re-appropriate, generate 30,000 new jobs and close Virginia’s coverage gap.  This debate nearly caused a state government shutdown two years ago until Senator Phil Puckett resigned. 
 
Fourth, Virginia still has 6,000 families on the waiting list for services to severely disabled children and adults.  Virginia’s waiting list is one of the worst in the United States.
 
The Virginia Port Authority has requested $350 million for capital investments so it can remain competitive with other ports.  Three dozen judgeships are vacant and unfunded, including five in the 36th District.  
 
The Republican leadership in the House of Delegates has expressed a preference to “pre-pay” the funds that were not paid into the Virginia Retirement System in FY 2010-2011 to balance our budget.  This move was a gimmick when adopted and paying it off is a prudent thing to do, but we have other worthy priorities.  Many see this proposal as an opening bargaining step in an anticipated four-month negotiation with Governor Terry McAuliffe. 
 
We also have about $100 billion in needed transportation projects than funds in the pipeline over the next 20 years, including multiple projects in the 36th District along U.S. 1 and I-95.  Transportation revenue is especially problematic due to lower gas prices since Virginia changed its tax from a per-gallon tax to a percentage-based tax in 2013. 
 
The bottom line is that our budget situation is the best it has been since 2009, but Virginia continues to lag behind the country and has a lengthy list of very worthy needs.  I am tackling these problems and will continue when I join my colleagues in Richmond in January and February for the 2016 General Assembly session.

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