Northam presents final budget, flush with cash, to lawmakers

Gov. Ralph Northam presented legislative budget writers Thursday with his final fiscal blueprint for Virginia government that proposes tax cuts, state employee pay raises, stoking the state’s reserve savings and strengthening the public retirement fund. 

Robust tax collections augmented by federal pandemic economic relief funds created unprecedented operational surpluses, even during the  social and financial upheavals from the coronavirus pandemic the past two years.

All totaled, the state would appropriate $7.7 billion more in the upcoming two-year, $158 billion operational budget than in the current budget and still have cash left over, according to several presentations to the General Assembly’s money committees.

A major share, $1.7 billion, would go into the state’s “rainy day” reserves, and $1 billion would go into the commonwealth’s public employee retirement system to reduce an unfunded liability. Public education gets nearly $2 billion extra over the next two years, including money to help localities rebuild or renovate school buildings. There are 10 percent raises for teachers, law-enforcement personnel and all state employees spread out over the next couple of years.

“Governor Northam’s budget announcement today highlights the record of success the commonwealth has experienced under Democratic leadership. Our state has the largest budget surplus in its history,” said House Speaker Eileen Filler-Corn, D-Fairfax, who will be relinquishing control of the chamber to Republicans in January after the GOP captured the majority in the November elections. “This budget responsibly sets aside funds for the future and provides tax relief for working Virginians while still making necessary investments in our schools, our teachers, our health care system and our infrastructure, including our transportation system, broadband access and the environment.

Historically, the end-of-term budgets that Virginia governors leave at the close of their single, non-successive, four-year terms get significantly revised beginning in January when the General Assembly’s budget-writing committees scrutinize them.

Along with the heady revenue forecasts and spending commitments, the outgoing Democratic governor also tossed out a challenge to his Republican successor, Republican Glenn Youngkin, to match his success.

In touting budgeted incentives to attract business expansion and jobs to Virginia, Northam referenced Virginia’s designation this year by CNBC as its Best State for Business and addressed Youngkin, who attended the presentation at Northam’s invitation.

“Being named Best State for Business is a testament to our talented workforce, our education system, our commitment to diversity, and our strong business climate, and it shows that when you treat people right, good things happen. Because of this investment, Gov.-elect Youngkin, you will one day, I am confident, find yourself in a rural community to cut the ribbon on a megasite during your term, and I will be cheering you on. And because of this, I also expect to see Virginia as the Best State for Business for the fourth year in a row,” Northam said, glancing at Youngkin.

“No pressure,” Northam added.

Among the budget priorities Youngkin heard from Northam were several that Youngkin had championed as a candidate this year, including dropping the state’s share of the sales tax on groceries, significant funding for historically Black colleges and universities and enhanced funding for law enforcement.

Senate Minority Leader Tommy Norment, R-James City, noted as much in a statement released after the presentation.

“By having the introduced budget emulate several of Governor-elect Youngkin’s key priorities, Gov. Northam has acknowledged the decisive outcome of the November elections and the impending change in Virginia’s government,” Norment said.

He was referring not only to the upcoming partisan change in the executive branch of state government but also the GOP taking control of the House when the new General Assembly convenes on Jan. 12. Youngkin is to be sworn in at noon on the State Capitol steps three days later.

“I am pleased that Gov. Northam’s final budget proposal seeks to fund a number of initiatives that were proposed by Republicans just a few months ago, including tax relief and helping localities repair crumbling schools,” Incoming House Speaker Todd Gilbert, R-Shenandoah said. “That being said, the final budget produced by the House of Delegates will contain tax relief for all Virginians, proposals to keep Virginians safe, ease the burden of higher costs due to federal government inaction, and additional priorities Republicans championed during the 2021 campaigns.”