VACo Analysis of House and Senate Budget Proposals

February 23, 2024

The fourth bullet in the Tax Policy section was revised on March 2, 2024.

On Thursday, February 22, the full House and Senate passed their respective budgets, marking another milestone in the process of adopting a new biennium budget and revisions to the FY 2024 budget. The House voted to approve its version of the budget 75-24, while the Senate’s version cleared the chamber 38-2. By February 28, both budgets, as well as any bills affecting state revenues, must be placed in conference.

Both budgets largely reject the tax policy proposals embedded in the introduced budget, with one significant exception. Both the House and Senate budgets adopted the introduced budget’s proposed expansion of the sales tax base to incorporate digital personal property and services, with both House Appropriations Committee Chair Luke Torian and Senate Finance and Appropriations Chair Louise Lucas characterizing this action as a matter of fairness and modernization of the state’s sales tax structure to address shifting patterns of consumption. The Senate’s budget modifies the sales tax base expansion to capture business-to-business transactions of digital property and services as well.

Both budgets invest heavily in K-12 education and employee compensation. Chairman Torian explained in his “Budget Sunday” remarks that the House budget focuses on six priorities outlined earlier in the session: employee compensation, college affordability, reaching the national average for teacher pay and advancing equity in school funding, addressing mental health and substance use disorder and the needs of the DD waiver population, environmental protection, and addressing the capital maintenance backlog and construction needs. In her remarks on Sunday, Chair Lucas underscored her commitment to K-12 education and public safety.

Following is an overview of key elements of the two budgets of importance to local governments. VACo appreciates members’ advocacy for budget requests submitted by VACo and partner organizations and will continue to advocate for local government priorities as the budget process continues.

K-12 Education: Restoration of Hold-Harmless for Elimination of State Portion of Grocery Tax

Senate: 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. (Item 125 #3s)

K-12 Education: Support Cap

Senate: 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. (Item 125 #1s)

K-12 Education: Teacher Retirement

House and Senate: Eliminate proposed $350 million deposit to the teacher retirement plan ($115 million GF and $235 million from the Literary Fund). House redirects the one-time VRS payment in FY 2025 to offset teacher retirement contributions by $117.5 million GF each year. (Item 125 #7h, Item 125 #8h, Item 125 #19s)
Senate: Provides $150 million GF in each year to reverse the proposed use of the Literary Fund for teacher retirement. (Item 125 #7s)

K-12 Education: School Capital

Senate: Authorizes the Board of Education to make up to $200 million per year in school construction loans from the Literary Fund. (Item 125 #22s)

K-12 Education: At-Risk Add-On

House: Provides $196.4 million in FY 2025 and $188.2 million in FY 2026 to consolidate the SOQ Prevention, Intervention, and Remediation and At-Risk Add-On incentive funding into a single SOQ At-Risk Add-On program; use federal Identified Student Percentage rates to estimate the number of at-risk students rather than free lunch rates; provide a base 6 percent add-on to basic aid funding per at-risk student; and provide an additional add-on ranging from 0 to 42.5 percent, based on the relative concentration of at-risk students in the school division. (Item 125 #12h)
Senate: Provides $88 million GF and $25 million from Lottery proceeds in FY 2025 and $112.6 million GF in FY 2026 to increase the maximum percentage for the At-Risk Add-On from 36 to 45.2 percent. (Item 125 #5s)
Senate: Makes additional state payments of $67.5 million in FY 2025 and $102.3 million in FY 2026 in additional support for at-risk students (to be disbursed to support the state share of $232.47 in FY 2025 and $353.46 in FY 2026, based on estimated unadjusted enrollment of the average of the Identified Student Percentage and the free lunch rate, plus the number of students enrolled in the Virginia Preschool Initiative). (Item 125 #6s)

K-12 Education: English Learners

House: Provides $51.3 million in FY 2025 and $43.7 million in FY 2026 for the state’s share of positions to meet staffing ratios based on student proficiency level, in accordance with legislation under consideration this session. (Item 125 #13h)
Senate: Funds the state share of positions needed to increase the staffing ratio from 20 to 22 instructors per 1000 students ($12.8 million in FY 2025 and $13.9 million in FY 2026). (Item 125 #4s)

K-12 Education: School-Based Mental Health

House: Directs the Department of Education to work with the Department of Behavioral Health and Developmental Services (DBHDS) and the Department of Medical Assistance Services (DMAS) on a plan for a new program to deliver flexible mental health funds to school divisions. (Item 117 #1h)
House and Senate: Eliminate proposed $7.4 million per year in the introduced budget for a statewide contract for mental health services to be provided via telehealth for students in grades six to 12 and a proposed chief school mental health officer position. House budget directs the Superintendent of Public Instruction to enter into a statewide contract with one or more telehealth providers for mental health services and authorizes school divisions to purchase services through this contract. (Item 117 #5h, Item 117 #1s, Item 117 #2s)
House: Specifies that the $15 million per year in the introduced budget for technical assistance to school divisions for the implementation and expansion of school-based mental health services is to be used to provide grants to contract with federally qualified health centers or other health care organizations to establish school-based health clinics that would provide mental health services and primary medical care to students and their families, as well as school staff. (Item 295 #7h)

K-12: Additional Items

House: Provides an additional $5.7 million in FY 2025 and $3.7 million in FY 2026 for initiatives related to the Virginia Literacy Act (such as development of a literacy screening system, literacy coaching, technical assistance, and professional development). (Item 117 #4h)
House: Provides $2.2 million per year for professional development for the provision of specially-designed instruction in inclusive settings, as well as the establishment of special education family support centers in eight distinct regions of the Commonwealth. (Item 117 #9h)
House and Senate: House provides $5 million per year for the Community Schools Development and Implementation Planning Grant program; Senate provides $1 million in FY 2025 for grants to school divisions to support community schools initiatives. (Item 124 #2h and Item 124 #9s)
House and Senate: Eliminate the proposed new funding for College Partnership Laboratory Schools ($30 million per year). (Item 125 #1h and Item 125 #20s) In the caboose bill, the House captures $80 million from the College Partnership Laboratory School Fund, maintaining $20 million in the Fund; the Senate transfers $89 million in unobligated balances to the general fund. (Item 137 #1h and Item 3-1.01 #1s)
House and Senate: Capture approximately $1.8 million per year by retaining the cap on supplemental basic aid payments. (Item 125 #2h and Item 125 #14s)
House and Senate: Eliminate proposed Diploma Plus program and capture $20 million per year. (Item 125 #6h and Item 125 #11s)
House: Provides an additional $950,00 per year in additional supplemental support for Accomack County and Northampton County. Senate: Eliminates proposed $880,000 per year in supplemental support. (Item 125 #11h and Item 125 #13s)
House: Advances the deadline for school divisions to obligate ARPA-SLRF ventilation improvement grants from December 31, 2024, to July 1, 2024, and directs any remaining unobligated amounts to be used for the Child Care Subsidy Program. (Item 472 #1h)
Senate: Reflects $62.2 million in FY 2025 and $155.8 million in FY 2026 from the Senate’s proposed expansion of the sales and use tax base to digital goods and services in business-to-business transactions. (Item 125 #15s)

Compensation: Instructional and Support Positions

House: Eliminates proposed 1 percent bonus in FY 2025 and instead proposes the state’s share of a 3.375 percent salary increase in each year. 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.) (Item 125 #3h and Item 125 #10h)
Senate: Eliminates proposed bonus and instead 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. ($142.7 million in FY 2025 and $259.2 million in FY 2026) (Item 125 #2s and Item 125 #21s)
Senate: Modifies proposed language in introduced budget regarding workgroup on teacher compensation to direct a review of a 2023 report and the development of implementation options that include best practices of teacher compensation models, strategies used in other states, and funding methods to improve teacher compensation (Item 116 #1s)

Compensation: State and State-Supported Local Employees

House: Provides salary increases of 3 percent per year for state employees and state-supported local employees, 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.) (Item 469 #2h)
Senate: Provides a 2.5 percent salary increase in each year of the biennium, effective October 1, 2024, and July 1, 2025, instead of the compensation actions proposed in the introduced budget, subject to revenue contingency language that allows the funding to be used if a revenue re-forecast is not required after the close of FY 2024. (Item 469 #1s and Item 469 #2s)

Judiciary/Public Safety: Compensation for Court-Appointed Counsel

House: Provides $8.5 million in FY 2025 and $17 million in FY 2026 to increase statutory caps on court-appointed attorney compensation in accordance with House legislation. (Item 33 #2h)
Senate: Provides $3 million in FY 2025 and $2.9 million in FY 2026 to increase statutory caps on court-appointed attorney compensation in accordance with Senate legislation. (Item 33 #1s)

Judiciary/Public Safety: Aid to Localities with Police Departments

Senate: Provides $10 million per year to localities with police departments if the locality meets certain criteria for rates of violent crime. (Item 396 #1s)

Judiciary/Public Safety – Fire and EMS Funding

House: Includes $250,000 in FY 2025 for the Secretary of Public Safety and Homeland Security to assess the sufficiency of fire and emergency medical services funding in the Commonwealth. (Item 377 #1h)

Judiciary/Public Safety – Other Items

House and Senate: Removes proposed $500,000 per year in payments to Sussex County to offset the costs of providing emergency medical transports for state-responsible inmates at the state prison. (Item 390 #2h and Item 390 #9s)
House: Reduces funding for School Resource Officer Incentive Grants by $4.1 million in FY 2025 and $6.8 million in FY 2026 to align with FY 2024 spending levels. (Item 394 #9h)
House and Senate: Eliminate or reduce proposed law enforcement recruitment and wellness initiative. The House redirects the entire $18 million. The Senate redirects $8 million and includes language directing prioritization of grants to localities with high crime rates and limiting state administrative costs. (Item 396 #1h; Item 396 #2s)
House and Senate: House reduces support for capital funding for state correctional facilities by $5 million, leaving $10 million for this purpose, and directs a report detailing the intended disposition or alternate use of facilities slated for closure. The Senate directs the Department of Corrections to provide an assessment of its use of staffing posts and facility space in light of lower inmate populations. (Item C-32 #1h and Item 390 #8s)
Senate: Removes a proposed increase of $750,000 in FY 2026 for specialty dockets, maintaining an increase of $750,000 per year. Includes language directing the Office of the Executive Secretary to direct funding to specialty dockets that do not currently receive state funding and that have demonstrated high demand. (Item 31 #3s)
Senate: Directs the Secretary of Public Safety and Homeland Security to evaluate establishing authority for local civilian-led units to handle calls for services related to minor traffic accidents and other duties as assigned. (Item 377 #1s)
Senate: Directs the Department of Criminal Justice Services to convene a workgroup to make recommendations on requiring a local court-appointed special advocate program to be available in every judicial district. (Item 394 #11s)
Senate: Directs the Department of Juvenile Justice to evaluate its rehabilitative programs for youth in direct care to ensure they align with national evidence-based practices, in accordance with JLARC’s 2021 study. (Item 414 #1s)

Administration: Compensation Board – Constitutional Officers

Senate: Directs the Compensation Board to report on the allocation and effectiveness of funds from 2022 to increase compensation for sworn officers in sheriffs’ offices, as well as on retention for deputies with law enforcement duties compared to deputies without law enforcement duties, including information on local salary supplements. (Item 60 #3s)
Senate: Provides $2.2 million in FY 2025 and $2.4 million in FY 2026 for additional assistant Commonwealth’s Attorney and paralegal positions in Commonwealth’s Attorneys’ offices. (Item 64 #1s)
Senate: Directs a study of staffing standards for Circuit Court Clerks and provides $400,000 in FY 2025 for a contract with the National Center for State Courts for a time study as to Clerks’ duties. (Item 67 #1s)

Administration: Compensation Board – Jails

House and Senate: Transfer proposed $500,000 in FY 2025 from opioid settlement funding for jail-based substance use treatment from the Compensation Board into the Jail-Based Substance Use Disorder Treatment and Transition Fund, which is administered by the Department of Criminal Justice Services. The House increases the funding level to $2 million; the Senate increases to $1.5 million. VACo supported the creation of this Fund in 2023 and supports the provision of resources for this purpose. (Item 60 #2h and Item 394 #4h; Item 60 #2s and Item 394 #6s)
Senate: While neither budget included the request of VACo and partner organizations for the state to pursue a Medicaid waiver to cover certain substance use disorder and behavioral health services in jails, the Senate proposes to direct DMAS to establish a stakeholder workgroup to study the use of Medicaid for health care services provided in jails. (Item 292 #11s)

Administration: Elections

House: Provides three additional days for local electoral boards to certify election results after the November 2024 election and provides that a risk-limiting audit for the Presidential election will not be conducted. (Item 77 #2h)
House: Provides $200,000 in FY 2025 to support Virginia rejoining the Electronic Registration Information Center. (Item 77 #3h)
Senate: Reallocates unspent ARPA funding for Medicaid eligibility redeterminations to the Department of Elections to distribute to localities to replace paper pollbooks with electronic pollbooks and to implement ballot-on-demand systems. (Item 486 #2s in the caboose)
Senate: Provides $130,000 per year and one position to implement legislation from the 2024 session. (Item 77 #2s)

Agriculture and Forestry

House and Senate: Transfer the Office of Farmland Preservation to the Department of Forestry from the Virginia Department of Agriculture and Consumer Services. (Item 86 #1h, Item 96 #4h and Item 86 #1s and Item 96 #4s)
House and Senate: House provides $250,000 in FY 2025 and $500,000 in FY 2026 for the Blue Catfish Processing, Flash Freezing, and Infrastructure Grant Program. Senate provides $250,000 in FY 2026 and includes language directing VDACS to take into consideration geographic distribution for the awards from the Fund. (Item 87 #1h and Item 87 #3s)
House: Reduces proposed increase to the Agriculture and Forestry Industries Development Fund by $1 million in FY 2025 (leaving an increase of $1 million). (Item 87 #2h)
House and Senate: Eliminate the $2 million proposed in the introduced budget for agricultural technology projects. (Item 87 #3h and Item 87 #1s)
House: Includes a series of amendments providing funding for invasive species management, including $485,000 per year for VDACS; $940,000 per year for the Department of Forestry; $250,000 per year for the Department of Conservation and Recreation; and $775,000 per year for the Department of Wildlife Resources. (Item 88 #1h, Item 96 #2h, Item 360 #1h, Item 367 #1h)
House: Provides $292,525 per year for the Wildlife Damage Cooperative Program to help landowners with wildlife depredation from coyotes, black vultures and other wildlife. (Item 88 #2h)
Senate: Provides $5 million in FY 2025 for the Forest Sustainability Fund. (Item 96 #1s)

Economic Development: Business Sites

House: Reduces funding for the Virginia Business Ready Sites Program by $130 million in FY 2025 and $30 million in FY 2026, leaving funding levels of $20 million per year; adjusts language to allow sites of at least 50 acres to qualify, in alignment with legislation passed by the House; allows sites bisected by a roadway or utility infrastructure to qualify for the Program. (Item 101 #1h, Item 101 #2h, Item 101 #10h)
Senate: Reduces funding for the Virginia Business Ready Sites Program by $95.5 million in FY 2025, leaving a $50 million base budget in each year; reduces proposed administrative funding by $250,000 per year; allows a site bisected by a roadway to qualify for the Program. (Item 101 #1s, Item 101 #3s, Item 113 #3s)
Senate: Captures $24 million in FY 2025 proposed for the Virginia Business Ready Sites Acquisition Fund (leaving $1 million). (Item 101 #2s)

Economic Development: Inland Port

House: Eliminates proposed $10 million increase in FY 2025 for the development of an inland port in Southwest Virginia (Item 101 #3h).
Senate: Retains funding level in introduced budget.

Broadband

House: Includes $30,000 per year and directs the Department of Housing and Community Development (DHCD) to add layers to the state’s broadband map to reflect broadband availability on Virginia prime farmland and in rural areas. (Item 103 #3h)
House: Includes language requiring DHCD to provide a reason for a project’s delay when reporting on Virginia Telecommunications Initiative (VATI) projects at risk for incompletion or underperformance. (Item 103 #5h)
House: Specifies use of Broadband Equity, Access, and Deployment (BEAD) funding as follows: DHCD must first ensure that funds are allocated to ensure deployment to all unserved and underserved locations. Of the remaining funding, DHCD is to allocate: (i) up to twenty percent to workforce development efforts in addition to those funded with deployment related resources, (ii) up to twenty percent to broadband resiliency effort to include utility pole replacements, mid-span pole installations, and undergrounding, (iii) up to fifteen percent to digital equity programs, and (iv) up to fifteen percent for broadband sign-up assistance programs. Prior to making awards for broadband resiliency projects, DHCD must receive a letter from the National Telecommunications Information Administration (NTIA) validating its eligibility under the BEAD program. (Item 103 #6h)
House: Reduces VATI funding by $10 million in FY 2025 and provides $10 million in FY 2026 to provide a $10 million per year base appropriation. (Item 103 #8h)
House: Provides $30 million in FY 2025 for the Virginia Make Ready Initiative to supplement certain deployment projects by increasing the proportion of underground construction and/or investing in more utility pole replacement than contemplated in the initial fiscal year 2022 Virginia Telecommunication Initiative award. (Item 103 #9h)
Senate: Specifies use of BEAD funding as follows: DHCD must first ensure that funds are allocated to ensure deployment to all unserved and underserved locations. Of the remaining funding, DHCD is to allocate: no less than 40 percent to broadband resiliency efforts to include utility pole replacements, mid-span pole installations, and undergrounding, and up to 60 percent to other non-deployment uses, including remote learning or telehealth services and facilities, digital divide affordability and adoption programs, and programs that provide technology support, digital literacy, job skills, and other digital equity programs. (Item 103 #9s)
Senate: Provides an additional $10 million GF the first year and $19.7 million GF the second year to VATI and directs DHCD to develop and implement guidance for the use of VATI funding for “make ready” costs, including pole replacements, in areas served by not-for-profit public utilities. Funding is restricted to units of government that previously received VATI funding with a private sector internet provider as co-awardee. (Item 103 #1s)

Housing

House: Provides an additional $12.5 million in FY 2025 and $25 million in FY 2026 for the Virginia Housing Trust Fund. (Item 102 #1h)
House: Directs $5 million in Regional Greenhouse Gas Initiative (RGGI) balances to a pilot DHCD program to assist residents of manufactured home parks or nonprofits to acquire the manufactured home parks. (Item 102 #2h)
House: Directs $5 million from RGGI balances for a pilot program providing grants to localities to adopt changes to zoning policies to allow for by-right development that is expected to further the goal of creating and maintaining mixed-income communities, affordable housing, and moderately priced housing. (Item 102 #3h)
House: Directs $5 million from RGGI balances for a pilot program to provide down payment assistance. (Item 102 #4h)
House: Provides $700,000 per year for the Virginia Eviction Reduction Program, which provides funding to local and regional eviction prevention programs through a competitive grant process. (Item 102 #5h)
Senate: Provides $2.7 million per year to Continuum of Care lead agencies to expand their organizational capacity to serve Virginians at risk of or experiencing homelessness. (Item 102 #1s)

Community Development

House: Provides $40 million in FY 2025 for the state’s share of an infrastructure investment by the United States Navy to build housing for sailors residing in Newport News when a ship is in dock. (Item 101 #8h)
House: Provides $1.6 million per year to increase funding for each Planning District Commission by $75,000 per year. (Item 103 #11h)
House: Directs DHCD to prioritize Enterprise Zone grants for real property improvements that include either rooftop solar or solar canopies for parking lots. (Item 104 #1h)
House: Capitalizes the Electric Vehicle Rural Infrastructure Fund with $2 million in FY 2025. (Item 109 #1h)
House and Senate: Remove proposed $6 million in additional funding for the Virginia Power Innovation Fund in FY 2025. (Item 110 #1h and Item 110 #1s)
Senate: Restores $1 million per year for Enterprise Zones of the $1.5 million proposed to be reduced in the introduced budget. (Item 104 #1s)
Senate: Deposits $4 million in FY 2025 in the Community Development Financial Institutions Fund. (Item 103 #3s)
Senate: Provides $125,000 per year for the Virginia Coalfield Economic Development Authority for telehealth and telemedicine needs throughout Southwest Virginia. (Item 103 #4s)
Senate: Increases funding for the Center for Rural Virginia by $50,000 per year. (Item 103 #5s)

Child Care/Early Childhood

House: Reduces proposed child care capital program by $15 million in FY 2025; directs prioritization of applications that utilize space available on community college campuses; include a public funded provider; target areas of high need; limit grant costs to repurposing and/or retrofitting space; include a financing plan for sustaining center operations; and offer early child education training opportunities to Virginia higher education students. (Item 103 #7h)
House and Senate: Eliminate proposed $1 million in FY 2025 for an early childhood digital wallet initiative. (Item 117 #6h and Item 117 #7s)
House: Consolidates early childhood programs into the new Early Childhood Care and Education Fund and provides an additional $8.9 million in FY 2025 and $40.9 million in FY 2026 in general funds and $25 million from unobligated ARPA school ventilation grants to fund additional child care subsidy slots, reverse action in the introduced budget to eliminate the cap on the Local Composite Index for the Virginia Preschool Initiative, maintain current co-pay rates, and fund the Employee Child Care Assistance Pilot Program in accordance with legislation passed by the House. (Item 125.10 #1h)
Senate: Eliminates $25 million for proposed early learning capital incentives grant program. (Item 103 #6s)
Senate: Reduces child care subsidy funding by $17.2 million in FY 2026 to maintain child care slots at FY 2024 levels. Caps copayments at 7 percent of family income. (Item 117 #8s)
Senate: Strikes language in the introduced budget directing that the required report on the efficacy of the Mixed-Delivery program must propose a conclusion to the Mixed-Delivery program and a mechanism to transition children sustainably into other child care offerings, as well as proposing policy recommendations to the Virginia Preschool Initiative and the Child Care Subsidy Program. (Item 124 #12s)
Senate: Provides $42.9 million GF in FY 2025 and $43.7 million in FY 2026 to restore the LCI cap placed on VPI for localities above the 0.5000 local composite index, restore VPI expansion funding and the 20 percent nonparticipation rate, and maintain the unused portion of funds to support VPI-related activities. (Item 125 #8s)

Aid to Local Public Libraries

House and Senate: Provide $2.5 million per year for state aid to local public libraries. (Item 227 #1h and Item 227 #1s)

Finance – Bank Franchise Tax Electronic Filing System

House and Senate: Provide $546,530 in FY 2024, $488,494 in FY 2025 and $76,348 in FY 2026 for administrative costs to implement electronic filing for bank franchise tax returns as required by 2023 legislation. (Item 274 #1h and Item 274 #1s (caboose) and Item 258 #1h and Item 257 #1s (biennium))

Finance: Local Audits

House and Senate: Direct annual audits of local expenditures to include a review of the use of any opioid settlement funds. (Item 2 #1h and Item 2 #1s in the caboose; Item 2 #2h, Item 2 #1s)
House: Removes the requirement that localities establishing a utility or enacting a system of service charges to support a local stormwater management program provide a report to the Auditor of Public Accounts as to each program funded by these fees and the expected nutrient and sediment reductions for each of these programs. (Item 2 #3h)

HHR: Health

House and Senate: House provides $1.3 million per year to the Virginia Health Workforce Development Authority for health workforce responsibilities of the agency and as state match for federal funding from the Health Resources and Services Administration to support the Area Health Education Center Programs. Senate provides $500,000 per year for this purpose. (Item 276 #1h and Item 276 #1s)
House and Senate: House provides $3.2 million per year for Community Health Worker positions at local health districts and directs the Virginia Department of Health (VDH) to prioritize positions serving localities with the highest rates of maternal mortality. Senate provides $125,000 GF and matching NGF in FY 2025 for DMAS to convene a workgroup to design a community health worker services benefit for Medicaid- and CHIP-enrolled beneficiaries. (Item 278 #1h and Item 292 #3s)
House and Senate: House provides $648,000 per year for the Prescription Drug Affordability Board; Senate provides $303,650 in FY 2025 and $745,300 in FY 2026 to fund the Board. (Item 283.10 #1h; Item 283 #1s)
Senate: Provides $171,120 per year for rent cost increases for local health departments. (Item 278 #1s)
Senate: Provides $500,000 in FY 2025 for VDH to conduct a cost analysis of implementing pending federal Per- and Polyfluorinated Substances (PFAS) regulations for Virginia local water systems and to implement pending federal Environmental Protection Agency Copper Rules for water system lead service lines. (Item 280 #2s)
Senate: Directs VDH to review the financial and operational status of each program area within the agency, which must include an assessment of budget, fiscal, procurement, human resources, and grant management functions and identify all measures that have been put in place to ensure adequate central oversight and internal controls. Also directs VDH to inventory all fees collected by the agency and report on whether the fee is sufficient to cover the costs of the activity for which it is collected and to include a recommendation on the fee amount that is appropriate. (Item 283 #2s and Item 283 #3s)

HHR: Behavioral Health – CSB Oversight and Compensation

House: Directs DBHDS to report annually on CSBs’ performance in improving consumers’ functioning levels. Directs DBHDS to identify documentation/reporting requirements and eliminate duplicative/conflicting ones. Directs DBHDS to review performance measures in performance contracts with CSBs and ensure they are designed to measure outcomes for each service. Stipulates that performance contracts shall also require that any funding appropriated by the General Assembly to CSBs for staff compensation shall only be used for staff compensation, and that CSBs report annually to DBHDS on any staff compensation actions taken during the prior fiscal year. Directs DMAS to review the extent to which CSBs are billing for Medicaid-eligible services and determine if technical assistance is needed. Directs DBHDS to report annually on salaries and vacancy rates across CSBs. (Item 295 #6h)
Senate: Directs the Secretary of Health and Human Resources to report on plans to implement the Certified Community Behavioral Health Clinic (CCBHC) model in the Commonwealth. (Item 267 #3s)
Senate: Directs DMAS to work with the managed care organizations on standardizing policies, procedures, and requirements that CSBs must follow for Medicaid billing. (Item 292 #1s)
Senate: Directs DBHDS to report on alternative placements for youth who would otherwise be placed at the Commonwealth Center for Children and Adolescents. (Item 295 #1s)
Senate: Provides $7.5 million per year for CSB workforce initiatives, including paid internships, clinical supervision hours, loan repayment, and scholarships. (Item 295 #3s)
Senate: Directs DBHDS to report annually on salaries and vacancy rates across CSBs. (Item 295 #6s)
Senate: Directs DBHDS to report to the Behavioral Health Commission by December 1, 2024, on the changes to STEP-VA performance measures and benchmarks that are anticipated to be included in CSB performance contracts. (Item 295 #7s)
Senate: Directs DBHDS to review the performance contracts with community services boards and revise all performance measures in the base performance contract and addendums to ensure that: (i) performance measures are designed to measure outcomes for each service; (ii) performance measures include a relevant benchmark for each measure; and (iii) DBHDS has given clear direction on how it will monitor performance and enforce compliance with performance requirements. (Item 295 #8s)

HHR – Behavioral Health – Crisis Services, Temporary Detention Orders, and State Hospitals

House: Reallocates proposed $10 million in FY 2025 for comprehensive psychiatric emergency programs. (Item 295 #1h)
House: Reallocates $8 million in FY 2025 proposed for additional crisis services (retains an additional investment of $25 million). (Item 296 #1h)
House: Provides $6 million per year in discharge assistance planning funding to increase community capacity to serve individuals on the Extraordinary Barriers List. (Item 296 #2h)
Senate: Directs the Secretary of Health and Human Resources to report on how funds appropriated during the 2023 and 2024 Sessions of the General Assembly will be expended to expand and modernize the comprehensive crisis services system, to include how funding for new crisis stabilization units and crisis receiving centers is being strategically deployed. (Item 267 #2s)
Senate: Provides $2.5 million per year for CSBs to hire staff for crisis stabilization units whose bed capacity is not fully utilized due to lack of staff. (Item 297 #3s)

HHR – Additional Behavioral Health Items

Senate: Directs DBHDS to conduct a needs assessment to determine the unmet need for each component of STEP-VA and develop an estimate of the cost of satisfying the unmet needs. (Item 295 #9s)
House and Senate: House provides $4.5 million per year as an inflation adjustment for STEP-VA services. Senate provides $3.3 million per year. (Item 297 #3h and Item 297 #4s)
House: Provides $5 million per year for permanent supportive housing. (Item 297 #1h)
House and Senate: House provides an additional $2.4 million per year for children’s mental health services and includes language allowing more flexibility in the use of these funds. Senate includes language allowing flexible use of funds. (Item 297 #4h, Item 297 #1s)
Senate: Includes $50,000 in FY 2025 for the Office of the Executive Secretary, in collaboration with DBHDS, to examine existing jail diversion programs for individuals with a serious mental illness and the feasibility of implementing an expedited diversion to court-ordered treatment process. (Item 31 #1s)

HHR – Medicaid

House and Senate: House sets aside $100 million in FY 2025 for a reserve for unexpected GF costs for Medicaid. Senate sets aside $125 million in FY 2025 and $25 million in FY 2026 as contingency funding for higher than expected Medicaid enrollment. (Item 288 #4h and Item 471 #6s)
House and Senate: Both House and Senate phase in additional DD waiver slots on a quarterly basis. House also provides a 3 percent rate increase each year for DD waiver services ($3.3 million GF in FY 2025 and $38 million GF in FY 2026). (Item 288 #5h and Item 288 #1s)
House: Provides $3.7 million per year to allow five local government-owned nursing facilities to receive supplemental payments to cover unreimbursed Medicaid costs. (Item 288 #8h)
House and Senate: House directs DMAS to revise procedures to provide inflation adjustments for Psychiatric Residential Treatment Facility rates each year. Senate language is similar but directs the adjustments to begin July 1, 2026. (Item 288 #9h and Item 288 #14s)
House: Provides $206,889 GF in FY 2025 and $3.1 million GF in FY 2026 for DMAS to contract with a vendor to assist in Medicaid eligibility determinations and redeterminations. (Item 292 #2h)
House: Provides $2.1 million GF in FY 2025 and $4.1 million GF in FY 2026 for DMAS to contract with a vendor to handle all incoming mail currently directed to local Departments of Social Services, including Medicaid benefit applications and renewal notices. (Item 292 #3h)
Senate: Stipulates that the state’s managed care contract, which is in the process of reprocurement, will not take effect before July 1, 2025; bars DMAS from adding any new services to managed care without explicit authorization by the General Assembly; and provides that dental services, DD waiver services, and other services currently excluded from managed care remain excluded. (Item 304 #1s (caboose) and Item 288 #11s)
Senate: Provides $12.4 million in FY 2026 to fund legislation that would create a state-funded comprehensive health care coverage program for individuals in Virginia who are under 19 years of age, are not covered under a group health plan or health insurance coverage, and, but for their immigration status, would be eligible for Virginia’s Medicaid or FAMIS program. (Item 289 #1s)
Senate: Provides $500,000 GF in FY 2025 for DMAS to hire a consultant to review the eligibility determination process. (Item 292 #5s)

HHR – Social Services

House and Senate: Ensures that local administrative costs for the Percentage of Income Payment Program (PIPP) are funded by the PIPP Fund and not by localities. This amendment was requested by VACo in partnership with VML and the Virginia League of Social Services Executives. (Item 340 #1h (caboose) and Item 324 #5h (biennium); Item 340 #1s (caboose) and Item 324 #1s (biennium))
House and Senate: House provides $844,524 in FY 2025 and $5 million in FY 2026 from the General Fund for a centralized training academy model for local departments of social services. Senate provides $844,524 per year from the General Fund for this purpose. (Item 324 #2h and Item 324 #3s)
House and Senate: House provides $4.4 million in FY 2025 and $12.5 million in FY 2026 for the development of an integrated benefits system to replace CommonHelp and VaCMS, the state’s benefits eligibility IT system. Senate directs the Department of Social Services to develop a plan for improving the CommonHelp portal and to determine whether it is most cost-effective to upgrade or replace the CommonHelp portal and bars the Department of Social Services from proceeding with replacement of VACMS until improvements to the CommonHelp portal have been fully implemented and the General Assembly has specifically authorized a VaCMS replacement. (Item 334 #2h and Item 334 #2s)
House: Provides $1 million per year for additional relative maintenance payments; allows payments to be made upon passage of the accompanying legislation and before completion of the regulatory process. (Item 329 #1h)
House: Provides $310,000 per year to support foster youth in securing drivers’ licenses. (Item 329 #2h)

Labor – Virginia Employment Commission (VEC)

House and Senate: Revise language in the introduced budget directing the VEC to promulgate regulations to establish an administrative fee to instead set an administrative fee of .05 percent of taxable wages and reduce employer tax rates accordingly. (Item 356 #3h and Item 356 #3s)
House: Directs the VEC to update its study of paid family and medical leave to include the budgetary impacts of the program for state employees, state-supported local employees, and local school divisions. (Item 356 #4h)
Senate: Authorizes a Treasury loan for the VEC for the start-up costs associated with the implementation of a paid family and medical leave program as contemplated in legislation that has passed the Senate. (Item 356 #2s)

Labor – Workers Compensation

House: Directs the Department of Human Resource Management to gather data from localities concerning Workers Compensation claims regarding post-traumatic stress disorder, anxiety disorder, or depressive disorder incurred by law-enforcement officers and firefighters. (Item 74 #1h)

Natural and Historic Resources – Water Quality

House and Senate: Remove language from the introduced budget that would have eliminated the requirement for 15 percent of mandatory Water Quality Improvement Fund deposits be directed to the WQIF Reserve, if the Reserve exceeded $100 million. House language would require the deposit to be made unless otherwise specified. (Item 358 #1h and Item 358 #1s)
House and Senate: Restore the $1 million per year from taxes on watercraft fuels sales that would be deposited to the WQIF reserve, but was reduced in the introduced budget. (Item 359 #11h and Item 359 #1s)
House: Removes additional $25 million proposed for the Resilient Virginia Revolving Loan Fund in FY 2025. (Item 359 #12h)
House: Provides $20 million in FY 2025 for the establishment of a pay-for-outcomes pilot program in the Chesapeake Bay watershed for nonpoint source pollution reduction. (Item 365 #1h)
House: Provides $200 million in FY 2025 in bond proceeds and $200 million GF in FY 2026 for expenses related to wastewater projects for Chesapeake Bay nutrient reduction. (Item C-53.50#1h)
House and Senate: Allow flexibility in the use of ARPA funding for wastewater projects so that funds provided to individual facilities listed in the Enhanced Nutrient Removal Certainty Program may be used to reimburse such facilities for costs incurred for nutrient removal and other wastewater treatment facility improvements approved by the Department of Environmental Quality as within the allowed scope of wastewater infrastructure projects. (Item 486 #2h (caboose) and Item 486 #1s (caboose))

Natural and Historic Resources – Other Items

House: Requires participation in RGGI as a condition on all appropriations in the budget. (Item 4-5.12 #1h (caboose) and Item 4-5.12 #1h (biennium))
Senate: Reduces funding for the Coastal Storm Risk Management Project in the City of Norfolk by $48.8 million (leaving a balance of $25 million to support the project). Captures $17 million in FY 2025 from the proposed Bristol landfill remediation project (leaving $18 million). (Item 359 #2s and Item 365 #4s)
Senate: Eliminates proposed $35 million in FY 2025 for a competitive grant program to support improvements at historic sites in advance of the Semiquincentennial. (Item 371 #1s)
Senate: Provides $20 million GF in FY 2025 to create and fund the Virginia Clean Energy Innovation Bank to help finance climate initiatives. (Item 471 #3s)

Transportation – Washington Metropolitan Area Transit Authority (WMATA)

House: Establishes a joint subcommittee to study long-term, sustainable, dedicated funding and cost-containment controls and strategies for WMATA and other Northern Virginia transit systems. Provides $65 million in FY 2025 and $84.5 million in FY 2026 for WMATA; suspends the statutory cap on growth in the annual Virginia operating assistance for WMATA; directs WMATA to complete a comparison of its total costs and overhead costs against the cost of similar transit systems. (Item 1 #6h, Item 433 #1h)
Senate: Provides $525,000 in FY 2025 and $25,000 in FY 2026 for the associated costs of a joint subcommittee to study long-term, sustainable, dedicated funding and cost-containment controls and strategies for WMATA and other Northern Virginia transit systems. Includes language suspending the statutory cap on growth in the annual Virginia operating assistance for WMATA, provided that planning and reporting requirements are met. Directs the Department of Rail and Public Transportation to require WMATA to prepare and submit a corrective action plan with certain cost controls. (Item 1 #2s, Item 433 #1s)

Transportation – I-81

House: Modifies language in the introduced budget related to the $70 million GF proposed for the I-81 Corridor Improvement program to allow for the widening of both the south bound lanes to happen concurrently. Allows projects in the I-81 Corridor Improvement Program to move forward even if all of the funding is not included for the completion of the project in the six-year improvement plan. (Item 438 #2h and Item 438 #6h)
Senate: Modifies language in the introduced budget to provide the proposed $70 million GF to projects in the I-81 Corridor Improvement Program in accordance with the program plan as approved by the I-81 Advisory Committee. (Item 438 #3s)

Transportation – Other Items

House: Provides $1 million in FY 2025 to support the development of an Advanced Air Aviation Test Site. (Item 422 #1h)
House: Eliminates the proposed $20 million GF deposit to the Transportation Partnership Opportunity Fund (TPOF) in FY 2025 and requires any proposed direction of funds by the Governor for transportation projects under TPOF in excess of $20 million for any one project, and any cumulative direction of funds in excess of $50 million during a biennium, to be subject to approval by the MEI Project Approval Commission. (Item 438 #3h and Item 438 #4h)
Senate: Eliminates the proposed $20 million GF deposit to TPOF in FY 2025, and eliminates proposed language requiring the Commonwealth Transportation Board to provide at least $200 million to the fund annually from Commonwealth Transportation Fund revenue. (Item 438 #2s)
Senate: Provides $77 million in FY 2025 and $15 million in FY 2026 from the general fund for additional toll relief to eligible drivers in certain localities who earn less than $50,000 per year. (Item 441 #1s)

Arena

House: Redirects $500,000 GF provided in FY 2025 for the Secretary of Finance to study economic development incentives to recruit sports teams and their facilities. Authorizes the Governor to use up to $500,000 from the Commonwealth Development Opportunity Fund for this purpose. Embeds the House version of legislation creating the Virginia Sports and Entertainment Authority. (Item 471 #5h (biennium) and Item 4-14 #1h (caboose))
Senate: Captures the proposed $500,000 in FY 2025 for the Secretary of Finance to study economic development incentives to recruit sports teams and their facilities. Removes language from the introduced version creating the Virginia Sports and Entertainment Authority. (Item 471 #4s and Item 4-14 #1s (caboose))

Tax policy

House and Senate: Eliminate proposal to double the dealer discount for merchants collecting and remitting sales and use taxes. (Item 3-5.06 #1h and Item 3-5.06 #1s)
House: Increases the individual taxpayer cap for the Historic Preservation Tax Credit program from $5 million to $10 million and imposes an aggregate cap of $75 million on the program. (Item 3-5.17 #1h)
House and Senate: Restore individual taxpayer cap on the Land Preservation Tax Credit. (Item 3-5.22 #1h and Item 3-5.22 #1s)
House and Senate: Eliminate proposals in the introduced budget to (i) increase the cap on Education Improvement Scholarships Tax Credits from $25 to $30 million for FY 2025 and beyond; (ii) reduce income tax rates in each bracket; (iii) increase the state sales tax rate from 4.3 to 5.2 percent; and (iv) increase the Earned Income Tax Credit to 25 percent of the federal amount. The House revises the proposal to extend provisions of 2019 legislation increasing Education Improvement Scholarship amounts for certain students and broadening the definition of disability from 2028 (as in the introduced budget) to 2030; the Senate retains the language in the introduced budget for this item. (Item 4-14 #1h; Item 4-14 #1s)
House: Retains proposal in introduced budget to impose sales and use taxes on digital personal property and certain taxable services, but strikes language earmarking the additional sales tax revenue that would be generated for transportation purposes from this base-broadening action for the Transportation Partnership Opportunity Fund and the I-81 Corridor Improvement Fund. (Item 4-14 #1h)
Senate: Expands proposal to impose sales and use taxes on digital personal property and certain taxable services to include business-to-business transactions as well. (Item 4-14 #1s)
Senate: Increases the tax on liquid nicotine from $0.066 per milliliter to $0.15 per milliliter, effective July 1, 2024. (Item 3-5.19 #1s)

Reserves

Senate: Directs the transfer of $314.4 million the first year and $408.5 million the second year from the Revenue Reserve Fund to the general fund and increases the combined balance limit from 15 percent (as currently established in the Code of Virginia) to 16.5 percent in FY 2025 and 15.5 percent in FY 2026. The introduced budget proposes to transfer $712.2 million in FY 2025 and $92.8 million in FY 2026. (Item 3-1.01 #4s)

Budget, County Connections, Dean Lynch, General Assembly, James Hutzler, Jeremy Bennett, Joe Lerch, Katie Boyle, Phyllis Errico