Northam’s budget proposal includes big hike for broadband funding; Republicans pour cold water on slew of spending increases

Governor Ralph Northam included $50 million in his proposed budget for a program that offers incentives to internet service providers to extend fast service to underserved parts of the state.

The Virginia Telecommunications Initiative currently has an annual budget of $4 million. Municipalities or other governmental bodies — such as an economic development authority — team up with a private provider to apply for grant money to prepare for or build broadband internet infrastructure. If awarded state money, localities must match the funding.

“This investment provides critical financial assistance to supplement construction costs for private broadband providers to extend their services to connect unserved Virginians,” said Secretary of Commerce and Trade Brian Ball. “Creating strong, competitive communities in all regions of the state is critical to the commonwealth’s vibrant economy, and the additional investments in VATI will prepare communities to build, utilize and capitalize on telecommunications infrastructure.”

The $50 million is the first part of what Northam hopes will be a multi-year, $250 million commitment to provide faster connection speeds across the state.

In a 2017 report, it was estimated 96 percent of the state’s population has access to broadband internet and Virginia ranks within the top 10 nationally for average connection speeds and broadband adoption. That’s lagged in rural parts of the state, where about 13 percent of rural residents didn’t have any broadband access.

“Broadband internet is inarguably a necessity for participation in a 21st century economy, and many Virginians have been left without quality access for far too long,” Northam said in a release.

“By ending this disconnect, we can better attract and support business and entrepreneurship, educate all Virginia students, expand access to cost-saving telehealth services, and more. We have an opportunity to accelerate our progress on expanding access to quality broadband internet.

Northam has spent the week introducing parts of his budget, which will be presented in full to the joint money committee Tuesday. Many of his proposals have been called one-time investments, funded by a thriving economy thanks to tax changes and better-than-expected revenue collections.

Del. Chris Jones, R-Suffolk, chairman of the House Appropriations Committee, poured a little cold water on Northam’s spending proposals in a statement late Friday afternoon.

“Every year governors are eager to roll out their proposed spending priorities ahead of the General Assembly session, but the proposals we’ve seen from Gov. Northam so far this year are aggressive to say the least,” Jones said. “While my colleagues on the House Appropriations Committee and I are eager to work with the governor on areas of agreement, I am wary of the long-term and recurring nature of the commitments he is proposing.”

Jones said the governor’s announcements so far add up to $1.6 billion in long-term recurring spending, coming at time when “many economists foresee an economic slowdown in the not-too-distant future.”

Additionally, much of the spending hike appear to be predicated on “allowing over 600,000 middle-class taxpayers to pay higher taxes,” Jones said, a reference to the debate over how the state should respond to federal tax reform enacted last year. A new higher federal standard deduction will encourage many taxpayers to skip itemizing their federal returns.

But Virginia hasn’t altered its standard deduction, meaning many taxpayers might still want to itemize on state returns. However state law prevents taxpayers from doing that on their state taxes if they take the federal standard deduction, creating an expected windfall for state government coffers.

“Before we can contemplate new spending, the General Assembly will have to resolve the governor’s willingness to allow by inaction a tax increase and the elimination of key deductions on mortgage interest and property taxes,” Jones said.

UPDATE: This post has been edited to add comments from Del. Chris Jones, R-Suffolk, chairman of the House Appropriations Committee.