Northam said his two-year plan puts an emphasis on spending in the second fiscal year, which begins in July. "By then, we hope most Virginians will be vaccinated, and our society — and economy — will have begun returning to more normal activities," he said.
The newly proposed two-year budget contains $90 million for coronavirus vaccines as part of $230 million in spending directly related to the virus.
Northam said those funds are aimed at supporting a program to vaccinate all of Virginia's more than 8 million residents. "That money should come from the federal government, but we've all learned not to wait," he said, calling the pandemic "the greatest public health crisis we have faced in modern times."
Northam administration officials said they had hoped Congress and the White House would come through with more support to lessen the blow to state coffers, as the $3.1 billion in Cares Act money Virginia received earlier this year winds down and Washington dithers over a fresh round of stimulus.
The budget proposal includes an additional $500 million over the next two years to support local K-12 education as school systems grapple with remote learning, loss of students and other expenses related to the virus. Even temporary drops in enrollment could lead to a decline in revenue for school systems under state funding formulas, but Northam said he was committed to keeping districts whole.
Including those expenses, the proposed budget restores nearly half of the $2.7 billion in spending that Northam froze early this year when it was clear that the pandemic would wreak havoc with state and national economies.
That includes making a $650 million deposit into the state’s reserve of cash to bring rainy-day accounts up to about 8 percent of the overall budget, a historically high level aimed at safeguarding Virginia’s coveted AAA bond rating.
The increases are made possible by a state economy that is doing better than expected, with large employers boosting tax revenue even as small employers bear the brunt of the pandemic-related shutdown.
“We are an anomaly. Virginia is one of the few states that is showing increased revenue growth,” Finance Secretary Aubrey Layne said Tuesday evening in a briefing with reporters that was embargoed until Northam had presented the budget to General Assembly money committees Wednesday morning. Layne told lawmakers that the state’s economy has begun slowing again as the virus worsens but that he was cautiously optimistic that tax revenue could be about $685 million above earlier, more pessimistic forecasts.
Republican leaders criticized Northam’s budget proposal, saying it failed to deliver immediate aid to parents whose children are struggling with stay-at-home schools.
“The amount of failing grades in our K-12 schools have skyrocketed. Children trapped in endless Zoom meetings aren’t just failing to learn — they’re losing hope,” House Minority Leader Todd Gilbert (R-Shenandoah) said in an emailed statement. “Children and families need help now, not down the road.”
Sen. Ryan T. McDougle, the GOP caucus leader in the Senate, faulted Northam for a proposal to expand the state Court of Appeals as pandering “to his party’s extreme left wing.” In a statement, McDougle (Hanover) said that “while I applaud his commitment to placing funding into cash reserves to strengthen our fiscal position, his overall spending plan continues to prioritize government over citizens.”
Of course, the General Assembly just finished approving the state’s two-year, $135 billion spending plan when a special legislative session wrapped up last month. That session was called to address the pandemic’s impact on the budget, as well as to take up issues of equity in policing and criminal justice that were raised by the summer’s nationwide protests over police brutality against African Americans.
The effort took so long that it nearly overlapped with the regular process for next year’s updating of the budget, which moved forward Wednesday with the traditional presentation of the governor’s plan to the legislative committees that handle spending and taxing.
Northam’s latest proposal, based on recent economic forecasts that will be updated again next month, will be taken up when lawmakers return for their 2021 session on Jan. 13. The House of Delegates intends to meet online, while the Senate will convene in a space at the Science Museum of Virginia that allows for social distancing.
In teeing up the latest version of the budget, Northam made the case that it restores some of the focus on social equity that Democrats had hailed in the short-lived spending plan they passed in March — literally days before everything went off the rails with the pandemic.
Passed in a now-innocent-seeming moment of economic prosperity, that original budget was filled with “the most progressive spending commitments Virginia had ever seen while also protecting financial stability,” Northam’s communications director, Grant Neely, said Tuesday. The new proposal takes the “next steps in restoring that progressive agenda,” Neely said.
That includes spending $100 million to help close a shortfall in funding the pension plan for state employees; $97 million for one-time bonuses for state-supported local employees; $80 million to support a one-time bonus for public school teachers; and $50 million to help fund an expansion of railroad service into Southwest Virginia.
The plan restores $15 million in spending for expanding broadband service in underserved areas, boosting the state’s annual broadband fund to a record $50 million. Northam would put an additional $25 million into the state’s housing trust fund to keep it at $55 million at a time when the pandemic is aggravating the problems of homelessness and affordable housing. In addition, he proposed adding almost $16 million to the state’s rent and mortgage relief program.
Northam also is seeking to restore $36 million to his initiative to waive community college tuition for people seeking job training, and $26 million for hiring school guidance counselors.
He also has proposed about $25 million for historical justice projects, such as memorializing the slave trade in Richmond, rethinking the city’s Monument Avenue now that Confederate statues are gone or coming down, and commemorating a historic Black cemetery from D.C. that had its headstones dumped on property in Virginia.
The budget would add nearly $10 million to beef up customer support at the Virginia Employment Commission, which is struggling to handle an influx of claims from pandemic-related job losses.
Northam also seeks to set aside money for a years-long effort to legalize recreational marijuana that he has said he will support in the next legislative session. That includes setting up a line of credit for Virginia’s Alcoholic Beverage Control Authority to begin building a way to oversee a cannabis industry and $25 million over two years to cover the cost of an expected effort to expunge certain criminal convictions, particularly misdemeanor marijuana-related crimes.
The General Assembly will have a lot to handle during its upcoming session. Republicans, who are in the minority, have said they will insist that the session stick to a technical limit of 30 days, which is usually extended by more than two weeks with a procedural vote.
Northam doesn’t foresee a problem getting the budget finished, said Clark Mercer, his chief of staff.
The governor “has the ability to call a special session” to let the lawmakers keep working, Mercer said. “That’s one option of a few that the governor is considering.”