Virginia legislators are divvying up $4.3B in federal aid. Here’s what’s in the plan.

‘The chance to change the course of the commonwealth’

By: - August 2, 2021 12:02 am

The Virginia Capitol at sunrise. (Ned Oliver/ Virginia Mercury)

Democrats are calling it a rare chance to make strategic spending moves that will shape Virginia’s future for years to come, an opportunity to devote big dollars to some of the state’s most pressing problems.

Republicans see an exercise in one-party rule, with only Democratic leaders deciding what the top issues are and what to do about them.

Either way, the special General Assembly session that starts today — just a few months before the gubernatorial and House of Delegates elections —  offers a platform for both parties to spotlight ideas for how Virginia can make the best possible recovery from the COVID-19 pandemic.

Working in advance with key Democratic legislators, Gov. Ralph Northam and his General Assembly allies have rolled out billions in spending proposals ranging from business relief to unemployment fixes, infrastructure, mental health, college affordability and public safety. 

We have the chance to change the course of the commonwealth once again with this upcoming budget,” Sen. Mamie Locke, D-Hampton, said in a news release last week. “Coming out of the pandemic, we are well-positioned to rebuild stronger and better.”

The full plan was revealed Friday with the release of an 18-page appropriations bill that includes a few extras, most notably language allowing college athletes to make money through advertising and sponsorship deals and a caveat to Virginia’s anti-mask law specifying no one can face charges for wearing a mask due to COVID-19.

The advance decision-making coupled with a rule preventing legislators from offering amendments in committees has drawn a blistering response from Republican leaders, who have accused the majority of abusing its power and flouting the usual process allowing legislators to at least have their ideas heard even if they have little chance of approval.

“It’s not a dictatorship,” said Sen. Ryan McDougle, R-Hanover, who said his caucus will propose amendments on the Senate floor. “It’s not an oligarchy where only Democrats make decisions for the entire commonwealth.”

Democrats have characterized the rules as a way to maintain focus and prevent the session from being sidetracked by political fights that have little to do with allocating pandemic relief funds. Democratic budget leaders have said they won’t be making decisions about what to do with the record $2.6 billion surplus the state certified for the budget year that ended in July, a windfall they say can be dealt with through the regular budget process in the 2022 session.

The session, which will also deal with judicial appointments to the expanded Virginia Court of Appeals, could take up to two weeks. It could be shorter if Democratic leaders stick to the plans worked out ahead of time, but Republicans have signaled they’ll be looking for ways to force debate.

At least $800 million of the funding could be left unallocated to give the state room to adapt to any unexpected developments or setbacks with the pandemic, but that still leaves policymakers with a big pot of money to draw from.

Here’s what Northam and Democratic leaders want to do with it:

$935.6M for the unemployment system

With more out-of-work Virginians relying on it, the state’s unemployment insurance trust fund was depleted during the pandemic. To avoid future tax hits on businesses that pay into that fund, Northam wants to replenish it with $862 million in federal dollars.

The Virginia chapter of the National Federation of Independent Business noted state officials have estimated it would take $1.3 billion to fully restore the fund and avoid tax ramifications for businesses.

We appreciate that the governor is advocating a large sum of money towards a deposit in the Unemployment Trust Fund,” NFIB Virginia director Nicole Riley said in a news release. “We’re encouraged by this news and look forward to seeing if this deposit will significantly blunt the anticipated quadruple increase in taxes small employers will have to pay in January.”

The inability of the Virginia Employment Commission to effectively adjudicate a surge in unemployment claims has been a major point of frustration during the crisis. To make the system work better going forward, the governor has proposed a total of $73.6 million to improve call center capacity, modernize technology and hire more staff.

The hamlet of Head Waters in Highland County is rated between “unserved” and “underserved” for high-speed internet access. (Ned Oliver/Virginia Mercury)

$700M for broadband

One of the governor’s more ambitious suggestions is devoting money to achieve universal broadband access by 2024, a priority heightened by the shift to remote work and virtual schooling.

Northam had already set a target date of 2028, but his administration says an infusion of funding now will accelerate efforts to bring high-speed internet service to underserved areas within the next year and a half.

It’s time to close the digital divide in our commonwealth and treat internet service like the 21st century necessity that it is — not just a luxury for some, but an essential utility for all,” Northam said in his announcement.

$485M for behavioral health

Severe staffing shortages recently forced more than half of Virginia’s state-run mental hospitals to halt new admissions. The governor’s plan calls for dedicating $247 million to address those challenges.

Federal funding could provide immediate relief to Virginia’s state-run mental hospitals

Another $128 million is earmarked for community-based mental health and substance abuse services. Other behavioral health proposals include $50 million for infrastructure at state-run facilities, $30 million for crisis services and mobile emergency response teams, $30 million for substance abuse prevention and $3.3 million to expand a dementia pilot program.

$411.5M for water and sewer infrastructure

The plan includes $125 million for combined sewer overflow projects in Richmond, Alexandria and Lynchburg, and another $186.5 million for wastewater treatment and nutrient removal.

“With this funding, we have a tremendous opportunity to rebuild our aging water systems and ensure every Virginia family has reliable access to safe, clean drinking water,” Northam said in a recent news release.

Lynchburg leaders held a news conference last week to highlight their request for funding to complete the long work of fixing their antiquated combined sewer system, which can lead to raw sewage and stormwater flowing into the James River during heavy rain.

$353M for small business relief

The first of the governor’s budget rollouts focused on aid to small businesses, including $250 million to beef up the Rebuild VA grant program that allows applicants to recoup up to $100,000 in pandemic-era expenses.

Since its launch in the summer of 2020, the program has distributed roughly $120 million to more than 3,000 small businesses and nonprofits, according to the governor’s office, but some applications were turned away due to a lack of funds.

Northam is also calling for $50 million in funding to promote Virginia tourism and attempt to bring in more business for the struggling hospitality industry, and $53 million for a pair of programs meant to spur redevelopment of industrial sites and the revitalization of small towns.

Students at Watkins Elementary in Chesterfield County attend class wearing masks. Chesterfield returned to all virtual learning after Thanksgiving. (Chesterfield County Public Schools)

$250M for school air quality

The governor has proposed allocating $250 million to HVAC improvements to improve air quality in K-12 schools, while requiring localities to use their own rescue funds to match the state dollars.

The proposal has gotten mixed reviews from some advocates, who say it advantages larger, wealthier school systems as opposed to impoverished communities with less ability to pay.

Northam’s $250 million HVAC investment leaves education advocates underwhelmed

The funding for ventilation improvements also comes amid a yearslong debate over how to fund construction of entirely new school buildings, and some have questioned the logic of putting costly new systems in old buildings. The governor’s office has said HVAC improvements fit more squarely within the parameters of how the federal aid money can be used.

$114M for public safety

With Republicans accusing Democrats of taking an increasingly anti-police stance after last year’s Black Lives Matter protests, Democratic leaders want to put millions toward boosting pay for public safety personnel.

Their proposal calls for $20 million to fund $5,000 bonuses for sworn Virginia State Police officers and address salary compression in the department. Another $21 million would go toward hazard pay bonuses for staff in prisons, jails and sheriff’s departments.

To address the threat of COVID-19 in prisons, the proposal allocates roughly $31 million for testing supplies and protective equipment.

The plan also includes $12.2 million to enhance services for crime victims and $2.5 million for gun violence prevention programs run through the attorney general’s office.

The Rotunda at the University of Virginia. (Style Weekly)

$111M for college affordability

The proposal devotes $100 million for need-based financial aid at public colleges and universities, with $11 million for private institutions.

The State Council of Higher Education for Virginia would decide the details of how that money would be distributed.

The Democratic budget bill includes other provisions dealing with ongoing pandemic issues like eviction relief and assistance with utility bills.

Republicans complained that they hadn’t seen the full text of the bill until late last week, but GOP legislative leaders haven’t rolled out specific proposals of their own.

Republican gubernatorial nominee Glenn Youngkin, running against Democratic former Gov. Terry McAuliffe, offered up his ideas for the money at a news conference last week in Richmond, saying he’d look to return $1.5 billion of the state surplus to Virginians as tax relief.

“It’s time Virginians catch a break. Under my plan, Virginians will actually get one,” Youngkin said.

He also proposed giving $500 “refunds” for each student in public schools, money he said families could use for things like tutoring and mental health services to “to help make up for last year’s terrible outcomes.”

“There has been so much learning loss because our children spent a year trapped at home,” Youngkin said.

Though the next governor will have some say over any funds left unallocated, Democratic leaders have indicated they don’t intend to deviate far from the plan they’ve rolled out over the last few weeks.

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Graham Moomaw
Graham Moomaw

A veteran Virginia politics reporter, Graham grew up in Hillsville and Lynchburg, graduating from James Madison University and earning a master's degree in journalism from the University of Maryland. Before joining the Mercury in 2019, he spent six years at the Richmond Times-Dispatch, most of that time covering the governor's office, the General Assembly and state politics. He also covered city hall and politics at The Daily Progress in Charlottesville.