RICHMOND — The release of competing state budgets Sunday by the House and Senate shows that just because Republicans control the Virginia General Assembly does not mean they agree on everything. Not even close.
Budget writers in the two chambers disagree on taxes and fees, pension reform and education, setting up a showdown in the final weeks of the legislative session.
Both the House and Senate want Virginia to send millions more dollars over the next two years than what Gov. Robert F. McDonnell (R) recommended to public schools, local governments and health care providers, including hospitals, nursing homes and free clinics.
But the House stripped out a trio of fee increases proposed by McDonnell, while the Senate left them in and relied on a plan that would raise the gas tax to reflect inflation and pay for transportation maintenance. Meanwhile, the Senate restored a $500,000 cut to public broadcasting, but the House did not.
And the Senate would require retailers with a physical presence in the state, including online retailer Amazon, to collect and pay the state sales tax. The House did not include that language.
The House Appropriations and Senate Finance committees passed their versions of the budget, which goes into effect in July. The full chambers will get a chance to amend them before budget negotiators hash out their differences in time for the legislature’s March 10 departure.
After years of cuts due to the worst recession since the Great Depression, the two-year, $85 billion budget introduced by McDonnell in December would be the largest spending plan in Virginia history.
All Democrats on the Senate committee voted against the Senate budget plan Sunday, even though the proposal was more amenable to Democrats than McDonnell’s plan. But even without their support, the plan easily passed the heavily stacked committee in a 9-6 party line vote.
It it will be another story in the full Senate, which is evenly divided between Republicans and Democrats. Republicans have pushed through an aggressive legislative agenda with help from Lt. Gov. Bill Bolling (R), who presides over the Senate and can break some tie votes. But he cannot vote on the budget.
Sen. Janet D. Howell (D-Fairfax) said she objected in part because the budget only restores $42 million of a proposed $65 million cut to woo school employees in the competitive, expensive Northern Virginia market. (The House did not restore any of the funds.) “I don’t feel like my priorities are being met,” she said.
Senate Finance Committee Chairman Walter A. Stosch (R-Henrico) said he was disappointed that Democrats did not back the plan. “We’ve done everything we can do to make sure it’s a totally inclusive, bipartisan, nonpartisan process,” he said.
In the House, the committee voted unanimously for the House budget, as is customary. But Democrats vowed to fight against diverting $150 million from education and health care to transportation but said they were pleased Republicans took into account many of their concerns.
“They have been listening to what we have been arguing for the last three weeks and that is to focus on education, to focus on restoring the cuts to the health safety net,’’ Minority Leader David J. Toscano (D-Charlottesville) said.
McDonnell had proposed an increase of $438 million for K-12 education. Of that, $342 million would go to replenish the teacher retirement system.
The Senate agreed to add $165 million and the House $136 million, though the state’s aid to education would remain below 2007 levels.
Both chambers support McDonnell’s proposal to spend about $200 million on colleges and universities, pursuing his goal of creating 100,000 college degrees.
The Senate increased the amount slightly while the House proposed shuffling the money to provide 1,700 additional in-state undergraduate slots at four state universities — a long-standing priority for delegates.
McDonnell recommended spending $30 million to meet the requirements of a massive, 10-year settlement with the Department of Justice that would move the developmentally disabled from institutions into homes. The House wants to pay for an additional 250 new community care slots for the intellectually or developmentally disabled.
The Senate wants to spend nearly $80 million to cover inflation expenses at nursing homes and hospitals and to restore money to “safety net programs,” including $4.8 million for free health clinics; $3.6 million for prescription drugs for the mentally ill; and $1.9 million for dental care. The House recommended spending an additional $66.7 million for Medicaid payments to hospitals and nursing homes and proposed restoring $6.2 million to free clinics, community health centers, dental services and other safety net services.
The House agreed to restore $70 million of a $120 million cut over two years in aid to localities, $45 million more than McDonnell recommended.
Both chambers proposed a 2 percent raise in the second year of the budget for state employees, higher education staff and constitutional officers. The House made the raise contingent on the state meeting revenue targets, but the Senate did not. The Senate also proposed giving state employees a 3 percent bonus in December, contingent on a revenue surplus. McDonnell had proposed spending $77 million on a 3 percent bonus for state employees, but only if the employees can come up with ideas that would save $160 million.
McDonnell has proposed pumping a record $2.2 billion into the state retirement system for state and local employees over the next two years. House and Senate leaders support that but object to some changes he has made for retiree benefits.
Adopting the advice of state auditors, McDonnell also proposed capping cost-of-living increases to retirees at 3 percent, deferring cost-of-living benefits for early retirees and basing compensation on the past five years’ salary instead of the past three.
The House adopted all of those changes but rejected another, to increase employee contributions to the pension system to 6 percent from 5 percent. The Senate rejected all of them, seeking instead to save with more sweeping changes to retirement benefits plan than McDonnell has proposed.
The Senate wants to spend $45 million to help local governments pay for their share of big increases in contributions to the teacher retirement plan, while the House increased that by $15 million.