The Virginia General Assembly passed a $135 billion biennial budget bill that provides increased funding for education, health care, worker equity and government-employee pay.
The spending is partially paid for with a series of tax increases. The budgets contains 16 different tax increases, including on cigarettes, plastic bags and hotels.
The budget, which passed both chambers Thursday, also paves the way for higher taxes in some localities. These tax increases will cost the average Virginian about $500 per year, according to the free-market Thomas Jefferson Institute.
“We made history today,” House Appropriations Committee Chairman Luke Torian, D-Prince William, said in a news release. “This session, the Appropriations Committee worked to create a budget that would reflect the values and the needs of all Virginians. We aimed to raise employee compensation, increase workforce equity, and make health care and higher education more accessible for all Virginians.”
The budget includes more funding for teacher salaries. If school district’s match the state funding, then teachers would see a 2 percent pay raise for both years of the biennium, making it a 4 percent raise overall. Many other state employees would see a 3 percent pay raise in the next fiscal year.
Also included in the budget is a historic increase on K-12 spending. A large portion of lottery funds will go toward the public school system to increase per-pupil funding, and additional funding will help reduce the school-counselor-to-student ratio. After being adjusted for inflation, public school funding will be above 2008 levels for the first time since the Great Recession.
The state also will allocate nearly $80 million to incentivize public colleges and universities to freeze tuition rates for in-state students for the second consecutive year.
Budget funding will create a State Health Benefit Exchange, which is designed to lower insurance costs and increase Medicaid provider reimbursement rates. It also will provide dental benefits for women on Medicaid 12 months postpartum.
This budget also will expand workers’ compensation benefits and boost the rainy day fund.
“The Senate Finance and Appropriations Committee worked tirelessly this Session to have a budget that prioritizes the people of Virginia while maintaining structural balance in order to protect Virginia’s AAA bond rating,” Senate Finance and Appropriations Chairwoman Janet Howell, D-Fairfax, said in a statement.
Although about half of Republican lawmakers voted for the budget, some expressed concern. The primary concern was the uncertainty about how the novel coronavirus could affect the economy and tax revenue.
“I am deeply concerned the budget approved today will not be operative in a very short period of time,” Senate Minority Leader Pro Tempore Stephen D. Newman, R-Bedford, said in a statement. “Considering the events of the last several weeks and the continued uncertainty due to the spread of the coronavirus, the revenue assumptions in this budget are nowhere near as certain as they were even a few days ago.”
Newman and Senate Minority Leader Tommy Norment, R-James City, both worked on the budget, but requested the Democrats postpone a vote for at least a week to see how the coronavirus is impacting the economy. Norment ultimately voted for the legislation, but Newman voted against it.
The series of tax increases to pay for the budget also received criticism from Republican leadership.
“Democrats voted to raise taxes on hard-working Virginia families by nearly $2 billion,” House Republican Chairwoman Kathy Byron, R-Bedford, said in a statement. “In addition to state tax increases, they gave local governments the authority to raise taxes by more than $500 million on meals, hotel stays, cigarettes and plastic bags. We saw the repeal of taxpayer relief coupled with a regressive tax increase on gas and a new tax on electric-car drivers, resulting in state spending being driven up by more than 20 percent.”
The Thomas Jefferson Institute criticized the budget because of its spending increases and the taxes it used to pay for them.
“On the day [Gov.] Ralph Northam was sworn in as Governor, Virginia’s biennium budget stood at $106 billion,” Christian Braunlich, the president of the institute, said in a news release. “Today, that budget rose to nearly $140 billion – an increase of 30 percent, within the term of a single governor. This is unprecedented in modern history and embeds future costs and spending on our children for years to come.”
Braunlich said the tax increases punish workers and businesses.
The budget passed the House, 70-20, and the Senate, 27-11. Northam is expected to sign the legislation, which funded a lot of his priorities, but the governor also has the power to enact line-item vetoes.
