Governor Introduces Proposed Amendments to Biennium Budget

August 20, 2020

Governor Northam invoked his medical training in his presentation to the “money committees” on August 18, suggesting that revisions to the biennium budget should adhere to the physician’s oath to “first, do no harm,” given the considerable uncertainty remaining with regard to the future course of the COVID-19 pandemic. He outlined four key principles guiding his budget proposal: preserving liquidity, using one-time money for one-time expenses, making investments in the future with one-time money that is available, and preserving financial options for future budget revisions. In keeping with these principles, the Governor’s budget addresses the expected $2.7 billion biennial shortfall largely by converting most of the discretionary spending that was “unallotted” during the reconvened session into budget reductions, with a few exceptions – notably, restoration of funding for the Virginia Telecommunication Initiative.

Governor Northam expressed his desire to revisit in his next budget proposal priority spending items that were unallotted and not restored, including his top priorities – expanding access to early childhood education and providing community college tuition assistance for individuals entering high-need occupations — as well as compensation increases for teachers and state employees, investments in behavioral health, transportation, and access to health care. He noted that he expects the next revenue reforecast, which will be presented to the money committees in December, to show improvement, which would allow more flexibility in budget deliberations for the 2021 General Assembly session. The reforecasting process for December will begin in September.

Following are key elements of the Governor’s proposal of interest to local governments:

Broadband

  • Reallots $16 million General Funds (GF) per year in funding for the Virginia Telecommunication Initiative and provides an additional $15 million in FY 2021, for a total appropriation of $84.5 million over the biennium. VACo had encouraged additional investment in broadband in its communications with the Administration in advance of the special session.

Housing

  • Reallots $23 million GF in each year for the Housing Trust Fund, and provides an additional $25 million GF in FY 2021, for total appropriation of $55 million in FY 2021 and $30 million in FY 2022; reallots $3.3 million GF in FY 2021 for an eviction prevention and diversion program.

Education

  • Accounts for reductions of $95.2 million in FY 2021 and $93.6 million in FY 2022 in sales and use tax distributions to school divisions in accordance with revised revenue projections.

Early Childhood Care and Education

  • Frees up $16.6 million GF in FY 2021 (by transferring Temporary Assistance to Needy Families and Child Care Development Fund dollars among programs) to support contracts with local partners to provide child care for school-age children.
  • Reallots $3 million GF in FY 2021 to support recruitment and retention of early childhood educators.

Elections

  • Allocates $2 million GF in FY 2021 to reimburse localities for the costs of sending absentee ballots with prepaid postage.
  • Language amendment spells out a process for general registrars to afford voters an opportunity to correct certain errors that would otherwise invalidate an absentee ballot.
  • Language amendment requires local governing bodies to establish a drop-off location for completed absentee ballots at the general registrar’s office, at any satellite voting location, and at each polling place; authorizes additional drop-off locations to be established. Specifies procedures for establishment of drop-off locations and collection of ballots.

Health and Human Resources

  • Accounts for $331 million in GF savings in state Medicaid spending in FY 2021 associated with the enhanced federal Medicaid match included in the Families First Coronavirus Response Act; funds the continuous Medicaid coverage required in order for the state to benefit from the additional federal funding ($89.1 million GF and $245 million NGF in FY 2021).
  • Uses $3.6 million in TANF funds in FY 2021 for a one-time benefit payment to families with children enrolled in Head Start and directs $650,000 in TANF funds to food banks in FY 2021. Provides $211,253 in TANF funds in FY 2021 to support a 15 percent increase in monthly benefits for TANF-Unemployed Parents recipients for four months.

Natural Resources

  • Appropriates $30.4 million GF in required deposit to the Water Quality Improvement Fund; reallots $3.8 million GF in FY 2021 for a supplemental deposit to the Water Quality Improvement Fund.
  • Continues the water quality enhancement fee and directs the Department of Environmental Quality to convene stakeholders to produce recommendations by November 1, 2020, to improve the long-term sustainability of the fee and the Department’s oversight of nutrient credit use in the Commonwealth.
  • Reallots $15 million GF in FY 2021 for dam rehabilitation projects.
  • Reallots $5.5 million GF each year for the Virginia Land Conservation Fund.
  • Directs the Secretary of Natural Resources, in consultation with the Secretary of Agriculture and Forestry, to develop a plan to require landfill operators to pay a solid waste disposal fee, which would be imposed in addition to any fee imposed by a locality. The plan is to be submitted by November 1, 2020.

Public Safety

  • Includes $3.6 million over the biennium in funding for certain criminal justice reform legislation under consideration during the special session (decertification of law-enforcement officers, establishment of civilian review panels, development of a statewide law-enforcement officer database, and establishing mandatory minimum training standards for law-enforcement training academies).

Transportation

  • Authorizes the Commonwealth Transportation Board to reallocate certain Revenue Sharing Funds and funds for certain projects in the FY 2020-2025 Six-Year Improvement Program to mitigate the impact of reductions in transportation revenues.
  • Authorizes the Commissioner of the Department of Motor Vehicles to extend certain deadlines during and shortly after a declared state of emergency.
  • Directs the Department of Rail and Public Transportation to conduct necessary business functions assigned to the newly-created Virginia Passenger Rail Authority until the Authority is formally constituted.
  • Allows the Commonwealth Transportation Board to maintain funding for the Department of Rail and Public Transportation at levels at least equal to FY 2020 allocations.

General Provisions

  • Includes language barring utilities from disconnecting service for non-payment until at least 60 days after the end of a declared public health emergency related to a communicable disease, and requires utilities to offer customers experiencing hardship during the public health emergency the right to enter into a repayment plan for past-due accounts, which will amortize the repayment over at least 12 months.
  • Includes language extending the moratorium on evictions until April 30, 2021, and requires landlords to offer tenants experiencing hardship related to the emergency the right to participate in a payment plan, which will amortize the principal over at least 12 months.

VACo Contact: Katie Boyle

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