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February 6, 2015

Budget Sunday: What to expect, and what they won’t be telling you

Virginians can expect a mixed bag of investments and spending cuts when the House and Senate money committees release their proposed changes to the state’s two-year budget on Sunday. But the bottom line will be the same as it has been for months: Virginia doesn’t have nearly enough revenue to meet its needs.

Lawmakers have been dropping hints for the last couple weeks about what they plan to do. But it will still be important for all Virginians to keep their eyes peeled for what legislators actually propose – or don’t – on a number of key issues.

It will also be important not to get caught up in the platitudes about new money for important services without also looking at where lawmakers have cut funding and whether overall funding is enough to deliver the services and investments Virginia’s families, communities, and economy need.

We expect the proposals from the House and Senate to include some good things. One or both of the committees will include in their budgets most of the revenue from the Governor’s proposed reforms to some costly tax expenditures. This is a responsible step to retain badly-needed revenue to support investments in Virginia’s families and economy.

And with a little more money than previously expected flowing into state coffers due to recent job growth, legislators have some more room to invest in their priorities without making big cuts to other programs. One positive thing we expect them to do with this money is provide a small pay raise–1 or 2 percent–for the state’s hard-working employees, whose salaries have eroded in recent years and on average would need to be increased about 25 percent to match those of private-sector employees in similar occupations.

But we also expect proposals that will hurt some of Virginia’s most vulnerable residents. The House Appropriations and perhaps the Senate Finance committee proposals will reject closing the health insurance coverage gap, once again raising the possibility that Virginia will refuse available federal funds that would help low-income Virginians get the care they need. One thing to watch is how legislators propose changing the Governor’s Access Plan, which provides primary health care and prescription medicine for uninsured Virginians with serious mental illness. If press accounts are correct, the House Appropriations Committee will propose changes to that initiative, so it will be important to assess how they make changes in order to judge the impacts on those who remain eligible.

Legislators will almost certainly avoid large new cuts to public schools and colleges, but we also don’t expect to see significant steps to restore funding to needed levels. And those cuts have been deep in recent years. State per pupil funding for education is down 17 percent since 2009. Per student funding for our state’s community college system is down 22 percent. In addition, it will be important to watch out for any move by legislators to tinker further with school funding, like continuing their pattern of using growth in the Lottery and Literary funds to justify cutting general fund support for the state’s schools, rather than using that money to enhance students’ educations and ensure every school building is a safe, healthy place to learn.

And everyone who cares about our state’s children will need to remember that statements about “no new cuts to education” don’t mean that the state is holding up its end of the bargain to make sure all of Virginia’s children have access to a quality education. Years of state cuts to public schools have meant localities are left holding the bag. Yet the state also imposes strict limits on how our county and city governments can raise funds to meet those challenges, leaving localities with few options for finding the needed revenue to support an essential core service like education. As a result, in too many places around Virginia, school children are paying the price. For example, just this week we’ve heard that Prince William County is considering ending full-day kindergarten and Virginia Beach may be increasing class sizes.

The big picture is that we still don’t have nearly enough revenue to meet the state’s needs. Even with a little boost from the recovering economy, we expect that the proposed general fund for next fiscal year will have the lowest levels of investment in our communities since at least 2007, after adjusting for the growing cost of providing the same level of services to a growing state population. If state revenue as a share of personal income were at mid-2000 levels, we’d have over $3 billion more over the two-year budget to fund critical programs and invest in the economy. This is doing significant harm, no matter how much policymakers congratulate themselves for not cutting K-12 more. At the end of the day, we need our legislators to pass a budget that invests in our families, communities, and economy, not just a budget that’s a little tiny step better on some things and a step worse on other things than the last proposal.

–Laura Goren, Senior Policy Analyst

The Commonwealth Institute

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