The House Appropriations Committee and Senate Finance and Appropriations Committee advanced their respective versions of the caboose and biennial budgets on February 18. In keeping with “Budget Sunday” tradition, subcommittee chairs presented key elements of each committee’s proposal prior to the full committee voting to report its budget revisions to the full House or Senate. As announced on Sunday, both budgets retain the Governor’s proposed expansion of the sales tax base to encompass digital services and products, with both Committee chairs describing the proposal as a matter of modernization and fairness in the sales tax structure; Senate Finance and Appropriations Chair Lucas indicated that her Committee’s budget would also capture business-to-business transactions for these services and products.
Both budgets focus resources on compensation actions and K-12 investments. More detailed information, including the text of proposed amendments to the introduced budgets, is scheduled to be released this afternoon, and VACo will be providing a more thorough review of the budget proposals later this week. The full House and Senate will be voting on their respective proposals on Thursday; this action begins the process of placing the two budgets in conference.
As presented on Sunday, key elements of the two proposals include:
Compensation
House Appropriations
- For state employees and state-supported local employees, provides 3 percent salary increases in each year of the biennium (effective July 1, 2024, and July 1, 2025). (The Governor had proposed a 1 percent bonus payment on December 1, 2024, a 1 percent salary increase on July 1, 2025, and another 1 percent bonus payment on December 1, 2025.)
- For SOQ-recognized instructional and support positions, provides the state share of a 3.375 salary increase in each year of the biennium (effective July 1, 2024, and July 1, 2025). The state share is pro-rated for divisions providing smaller increases; however, to draw down the funds in FY 2025, a school division must provide at least an average 2 percent salary increase, and to draw down the funds in FY 2026, a school division must have provided at least an average 2 percent increase in FY 2025, as well as an additional average 2 percent increase in FY 2026. (The Governor had proposed the state’s share of a 1 percent bonus payment, effective July 1, 2024, and the state’s share of a 2 percent salary increase, effective July 1, 2025.)
Senate Finance and Appropriations
- For state employees and state-supported local employees, provides a 2.5 percent increase, effective September 30, 2024, and an additional 2.5 percent increase, effective July 1, 2025.
- For SOQ-recognized instructional and support positions, provides the state share of a 3 percent increase, effective October 1, 2024, as well as the state share of an additional 3 percent increase, effective July 1, 2025. The state share will be pro-rated for school divisions providing smaller increases; however, a school division must provide at least an average salary increase of 1.5 percent in order to access the funds.
K-12
House Appropriations
- Addresses several JLARC recommendations by providing $196.3 million the first year and $188.2 million the second year to consolidate SOQ Prevention, Intervention, and Remediation and At-Risk Add-On incentive funding into a single SOQ At-Risk Add-On funding program and to make several enhancements to the program.
Senate Finance and Appropriations
- Provides $121.3 million in FY 2025 and $121.8 million in FY 2026 to restore the hold-harmless payments provided in lieu of the distribution to K-12 from the state portion of the sales and use tax on groceries. When the state portion of the “grocery tax” was eliminated in 2022, statutory language required these payments to be made to compensate school divisions for the lost revenue, but the Governor’s introduced budget failed to include this funding.
- Includes $198.6 million in FY 2025 and $202 million in FY 2026 to eliminate the cap on recognition of support positions in the Standards of Quality.
Transportation
House Appropriations
- Provides $65 million in FY 2025 and $84.5 million in FY 2026 in General Fund support for the Washington Metropolitan Area Transit Authority (WMATA), as well as a two-year suspension of the requirement that limits the annual Virginia operating assistance for WMATA to no more than three percent over the prior year’s approved budget.
- Directs WMATA to complete a comparison of its total costs and overhead costs against the cost of similar transit systems.
Senate Finance and Appropriations
- VACo is awaiting further details in the text of budget amendments. Subcommittee Chairman McPike explained on Sunday that the Capital Outlay and Transportation Subcommittee recommended “continuing the conversations around the financing of the Washington Metropolitan Transportation Authority in accordance with post-pandemic commuting patterns” as well as “enhanced reporting and consultation requirements while temporarily lifting the cap on the allowed budget growth for the Metro system.”
Medicaid
House Appropriations
- Places $100 million in FY 2025 in a reserve for use in meeting unanticipated expenditures in the Medicaid program after the official Medicaid forecast was completed in November 2023.
Senate Finance and Appropriations
- Sets aside $150 million over the biennium as contingency funding to address a slower decline in Medicaid enrollment.
Sports/Entertainment Arena
House Appropriations
- Embeds legislation establishing the Virginia Sports and Entertainment Authority.
VACo Contact: VACo Legislative Team