Competing proposals for FY 2015-2016 budget released, FY 2014 budget settled

March 25, 2014

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Tuesday, March 25, 2014

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By Erik Johnston

Governor Terry McAuliffe and House Appropriations Chairman Chris Jones introduced competing proposals for the Biennial Budget in advance of the March 24 start of the General Assembly special session.

Chairman Jones’ proposal, HB 5002, builds on the House’s budget from the 2014 regular session (HB 30) by updating spending and saving actions adopted in the caboose bill for FY 2014, revising revenue forecasts and factoring in passage of stand alone legislation impacting revenues from the 2014 session. The proposal also includes a series of preliminary conference agreements and new offers.

The Governor’s proposal, HB/SB 5003, is contained in 104 amendments to former Governor Bob McDonnell’s introduced budget, which totals $460 million in new spending for the biennium. The centerpiece of the proposal is expanding Medicaid through a two-year pilot and then using the $225 million in projected savings for new spending.

Both sides remain at an impasse over Medicaid expansion. The House Appropriations Committee already voted down McAuliffe’s proposal by a 16-5 vote and approved the House proposal by a 16-5 vote. The Senate adjourned Monday until April 7 with the Senate Finance committee scheduled to hold a public hearing April 2 to review its current version of the budget and consider the Governor’s proposed amendments. The competing budget proposals can be viewed as a menu of proposals for whenever both sides are ready to hammer out a final budget.

The House and Senate did come to agreement on updates to funding for FY 2014 in the caboose bill (HB 29), which covers spending through June 30. HB 5001 represents the conference agreement reached between the House and Senate Conferees and passed both chambers on Monday. VACo is pleased that the final bill includes the additional $4.8 million in jail per diem funding required to meet the state’s commitment to county and regional jails.

Below are additional highlights about the budget proposals. Keep in mind the House highlights are updates that build upon the previously introduced House budget (HB 30) and the McAuliffe proposal is a series of amendments built on Governor McDonnell’s original introduced budget.

FY 2014 – (HB 5001)

Jail per diems – Includes the additional $4.8 million in jail per diem funding required to meet the state’s commitment to county and regional jails. The introduced budget created a deficit for the state share of funding for inmates in local and regional jails. The Senate budget provided $4.8 million to address this deficit in FY 2014 and VACo advocated for inclusion of this funding. Click here to view a chart with a breakdown of the funding to be provided for your county jail or county supported regional jail to meet the previous shortfall.

House proposal for FY 2015 – 2016 (HB 5002) 

Salary Increases – Provides $40.4 million in FY 2016 to pay for the state’s share of a 1 percent pay increase for funded SOQ teacher and support positions, effective July 1, 2015. State employees and state supported local employees (excluding those eligible for targeted salary increases) receive a 1 percent bonus on January 1, 2015 and 1 percent salary increase in FY 2016 if revenue estimates are met.

Non-Supplanting Language – Removes “non-supplanting” language found in the introduced budget that applied to a targeted 2 percent salary increase for two entry-level deputy sheriffs positions, a 4 percent salary increase for the entry level deputy court clerk position, and a 2 percent increase for the next level position. VACo worked to remove this language because it mandates that cities and counties have to give the salary increases for these positions even if the locally-funded salary is above what the state will recognize, or forgo the state reimbursement.

Unfunded Teacher Pension Liability – Does not include priority VACo supported amendment that would have required the state to accept its proportional share of the $13 billion in unfunded liabilities in the teacher retirement plan.

Line of Duty Act – The House budget does not include funding in FY 2016 to return LODA to a state program unlike Governor McAuliffe’s proposal. However, the General Assembly passed HJR 103 (Jones), which directs the Joint Legislative Audit and Review Commission (JLARC) to examine the Line of Duty Act (LODA) in a similar manner to the Governor’s proposed review task force. The study will examine current and projected future costs of benefits; the appeals process; claims administration; a review of other programs that provide similar benefits and how those benefits can be coordinated; and a look at other programs in Virginia to see if certain aspects of them could be implemented under LODA. The study will be completed over two years with initial findings reported before next year’s General Assembly session.

State Assistance for Police Departments (HB 599) – Maintains the $7.1 million in additional funding for FY 2015 (total $179.5 million) but strips the increase in the second year so that the first and second years are level funded at $179.5 million. However, the House budget is amended to ensure that no localities receive a reduction in funding.

Cost of Competing Adjustment (COCA) for support positions – Provides $5.4 million for eligible school divisions in both FY 2015 and FY 2016. The previous House proposal only included the funding in FY 2015.

Click here for HB 5001 and 5002 Summary Handout from House Appropriations.

Click here for HB 5002 list of proposed amendments.

Governor’s proposal for FY 2015 – 2016 (HB/SB 5003) 

Medicaid – Designates that any Medicaid expansion is a pilot program set to expire on June 30, 2016, that must be reauthorized by the General Assembly to continue. This expansion proposal is in contrast to the Senate’s Marketplace Virginia, which would extend private health insurance without directly expanding Medicaid. The bill projects $225 million in net savings and proposes using the majority of the savings for $100 million to fund the Virginia Health Reform and Innovation Fund for future healthcare costs, $76 million for revenue reserve to increase contributions to state retiree health plans, 2 percent pay raise described below and $17 million for Line of Duty Act assistance for localities.

Salary Increases – Provides $36.4 million in the first year, effective spring of 2015 and $163.1 million in the second year for a 2 percent base salary increase for all state employees, K-12 teachers and support personnel, college and university faculty, constitutional officers and state-supported local employees.

Non-Supplanting Language – Maintains the “non-supplanting” language found in the introduced budget that applies to a targeted 2 percent salary increase for two entry-level deputy sheriffs positions, a 4 percent salary increase for the entry level deputy court clerk position, and a 2 percent increase for the next level position. VACo opposes this language because it mandates that cities and counties have to give the salary increases for these positions even if the locally-funded salary is above what the state will recognize, or forgo the state reimbursement.

Unfunded Teacher Pension Liability – Does not include priority VACo supported amendment that would have required the state to accept its proportional share of the $13 billion in unfunded liabilities in the teacher retirement plan.

Line of Duty Act – Reconvenes the Line of Duty Act work group in order to review the current administration and funding for the program, and sets aside $17 million in the second year to implement the work group’s recommendations. VACo appreciates the state providing sufficient funding in FY 2016 to return LODA to a state responsibility, but by not including funding in FY 2015; this policy change remains vulnerable to other uses by the General Assembly.

State Assistance for Police Departments (HB 599) – The Governor maintains all of the increases found in the introduced budget for HB 599 aid to localities. The increase is $7.1 million in the first year (total $179.5 million) and $14.24 million in the second year (total $186.7 million).

Cost of Competing Adjustment (COCA) for support positions – Provides $5.4 million in FY 2015 for eligible support positions.

Click here for an overview presentation of the proposal delivered by Daniel Timberlake, Director, Department of Planning and Budget.

Click here for a description of the Governor’s 104 proposed budget amendments.

VACo Contact: Dean Lynch, CAE and Erik Johnston

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