Virginia Democrats in the General Assembly cheerily observed last month that they were sending a budget to the governor that would finally restore K-12 education funding to pre-2008 recession levels.
It might have been a short-lived victory. With the country suddenly teetering on the edge of the next recession (or, depending on who you talk to, already mired in it), Gov. Ralph Northam’s administration says it’s putting on hold all new spending in the state budget lawmakers passed on March 12.
Calling a timeout is the only prudent option with COVID-19 still spreading and the long-term economic fallout still unclear, says Northam’s Secretary of Finance Aubrey Layne.
“Every bit of new spending is unallotted until we understand where revenues will be,” he said. “Many may need to be cut.”
That means that the state will enter the next fiscal year on July 1 with the same budget it’s currently operating under with the exception of some mandatory spending categories. When the state is able to develop a revenue forecast it considers reliable – and it could be months, Layne said— the administration plans to call lawmakers back to Richmond to decide what new spending to cut and what, if any, to keep.
“We just don’t have enough information to reforecast our revenue to make those decisions – it didn’t make sense to choose a number.”
That leaves many priorities pushed by newly-elected Democratic majorities up in the air, including:
• 2 percent raises for teachers next year, millions for more school counselors, more money for public pre-schools and millions in extra funding for the state’s poorest school districts.
• an expansion of the state’s Medicaid program to include dental coverage as well as raises for providers.
• Northam’s plan to offer free community college to low and moderate income students, money to freeze tuition at state colleges and $77 million in new need-based financial aid.
• Raises for many state employees, including law enforcement.
Advocates are hopeful that federal stimulus money combined with the state’s reserves will allow the state to preserve new school funding. “We recognize these are trying times, but there are resources that are available that we should be maximizing at this time,” said Chris Duncombe, policy director at The Commonwealth Institute, which is a member of the Fund Our Schools coalition.
Layne says those are exactly the kinds of things Northam and lawmakers need to work out before they can act.
Until then, lawmakers on both sides of the aisle said they support Northam’s approach, painful as it may be for Democrats who spent weeks in prolonged negotiations over the spending plan.
House Budget Chairman Luke Torian, D-Prince William, said in a statement it was just a first step in addressing anticipated shortfalls and that the “General Assembly will work with the governor to ensure appropriate steps are taken to align spending with revenues while ensuring critical needs are met.”
Torian’s vice chair on the budget committee, Del. Mark Sickles, D-Fairfax, said hard choices — and cuts — are ahead. “Let’s hope this doesn’t last that long,” he said.
On the Republican side, House Minority Leader Todd Gilbert, R-Shenandoah, said Northam made a good decision. “We can’t steer the ship of state financially if we can’t see where we’re going,” he said in a statement. “We are hopeful that the governor will take the same approach with new laws that could make it even more difficult for businesses to recover and put people back to work.”
In the Senate, Sen. Steve Newman, R-Lynchburg, called for Northam to bring the General Assembly into the discussions as early as possible. “The legislature needs to be involved as much as possible,” he told the Richmond Times-Dispatch, which first reported Northam’s plan to suspend new spending.
Northam’s administration says the governor hasn’t yet decided how to handle legislation passed by the General Assembly that carries a monetary impact. It’s a broad category that includes bills that would increase the minimum wage, legalize casino gambling and decriminalize marijuana.
Northam has until Saturday night to sign, veto or recommend amendments to legislation.