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Finance Forum sheds light on fiscal outlook for General Assembly Session

By Emily Branch | VACo Intern

On January 4, VACo and VML cosponsored the 2017 Finance Forum, which provided insight from speakers with diverse expertise on the fiscal issues pressing localities in light of Governor Terry McAuliffe’s budget proposal and the coming General Assembly Session.

Click on name to view video of speaker presentation

Betsey Daley | Staff Director, Senate Finance Committee | Overview of Governor McAuliffe’s Budget Proposal and Priorities | PowerPoint Presentation

Jim Regimbal | President, Fiscal Analytics | Impact of the Governor’s Budget Proposal on Local Budgets | PowerPoint Presentation

Ann Battle Macheras | Vice President of the Regional Economics Division, Federal Reserve Bank of Richmond | Economic and Job Growth in Virginia | PowerPoint Presentation

Business Incubators | Tim Ryan | Greater Williamsburg Business Incubator (Launchpad) | PowerPoint Presentation | Amanda Jarratt | Franklin-Southampton Economic Development, Inc. | Economic Development/Business Incubators | PowerPoint Presentation

Betsey Daley, Senate Finance Committee Staff Director, spoke first, providing an overview of the budget. She noted the Governor’s proposal reflected net revenue and spending reductions, highlighting the Rainy Day Fund as a source to cover $567 million of the two-year budgetary shortfall. Budgetary reductions to address the shortfall included removing the December 2016 pay increases, across-the-board agency savings, additional lottery proceeds for K-12, and higher education cuts. Major proposed spending covered the following areas: growth in the Medicaid forecast; growth in the Children’s Services Act; the state’s share of a 1.5 percent bonus for state employees, state-supported local employees, SOQ-recognized teaching and support positions; and mental health services. Daley pointed out potential areas where the General Assembly may make changes to the Governor’s budget, such as potentially replacing the proposed bonuses with salary increases and restoring targeted cuts, such as the reduction proposed for GO Virginia. Daley also noted other likely topics of discussion during the 2017 session, including the Commonwealth’s role in assessing local financial stress, possible legislation on short-term rentals (Airbnb), the potential for tax reform, and retirement and pension reform.

Jim Regimbal, President of Fiscal Analysis Ltd., presented on the new budget’s impact on localities. While Daley provided a general overview of the budget, Regimbal’s analysis focused on the aspects most relevant to localities. He noted the state’s underfunding of K-12 education—when adjusted for inflation and population, current per-pupil direct aid funding is approximately $600 less than in 2009. Regimbal highlighted the decreased state support for many locally-administered mandated programs, a situation due in part to growth in General Fund revenue increasingly failing to match rising Medicaid costs. He stated that the Commonwealth must take up more funding responsibility or provide localities with capacity to generate the revenue themselves. Here, Regimbal sees an opportunity, or rather the necessity, for a modernized tax code.

Ann Battle Macheras, Vice President of Regional Research and Economic Education at the Richmond Federal Reserve, gave an overview of economic growth in the United States and Virginia. On a national scale, Macheras demonstrated the economy’s moderate growth with historic and projected figures for real GDP and labor force statistics. In comparison, Virginia’s economy has maintained growth rates close to national levels, slowing down more recently; however, Macheras noted that the data could improve with revisions.

Other speakers included Tim Ryan, from the Greater Williamsburg Incubator, and Amanda Jarratt, from Franklin-Southampton Economic Development. Each highlighted their respective localities’ business incubators and centers to support local entrepreneurs. VACo’s Gage Harter and VML’s Nancy Chafin briefly included tips to stay up to date with legislation during the upcoming General Assembly Session.

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