RICHMOND — House and Senate budget negotiators announced on Monday that they have struck a deal that rejects the fee increases and Medicaid expansion sought by Gov. Terry McAuliffe, but embraces some of the governor’s other spending priorities for mental health and economic development.
Negotiators quickly struck the agreement after working over the weekend — a dramatic change from last year, when a months-long standoff over Medicaid delayed passage of a budget until the state was on the verge of a government shutdown.
With the House and Senate controlled by Republicans this year, and McAuliffe (D) making only a symbolic pitch to expand Medicaid under the Affordable Care Act, budget negotiators found fewer sticking points.
The compromise, which includes raises for state employees, teachers and college faculty, will come before the two chambers as early as Thursday.
“It is our hope that this agreement can gain broad, bipartisan support in both chambers,” House Appropriations Committee Chairman S. Chris Jones (R-Suffolk) and Senate Finance Co-Chairman Walter A. Stosch (R-Henrico) said in a joint statement.
McAuliffe praised Jones, Stosch and Sen. Charles Colgan (D-Prince William), the other co-chairman of the Senate Finance Committee, for a budget process “marked by bipartisan leadership and cooperation.”
“At the beginning of this session I asked the General Assembly to pass a budget that closes our revenue shortfall while enhancing economic development, investing in expanded health-care services, protecting education and giving state employees a raise,” McAuliffe said. “I am pleased to see that the announced compromise honors those priorities and I look forward to reviewing it fully with my team over the coming days.”
The plan also drew praise from leaders of the Republican-dominated House and the Senate, where the GOP holds a narrow 21-to-19 majority.
“They have produced a conservative, responsible spending blueprint that wisely includes a rainy-day fund pre-payment, eliminates unnecessary debt obligations and onerous fees proposed by the Governor and invests in our state police officers and teachers,” House Speaker William J. Howell (R-Stafford) said in a prepared statement.
The budget plan was expected to land on legislators’ desks and appear online by Tuesday morning. A vote in both chambers could come by Thursday, following a 48-hour review period that House and Senate leaders established as a goal earlier this session to eliminate last-minute budget sausage-making.
“This is a sound spending plan that includes no new taxes on hardworking families, invests in higher education and provides well-deserved pay raises to state employees, state police officers and our teachers,” said Senate Majority Leader Thomas K. Norment (R-James City).
The proposal would fund the state’s share of a 1.5 percent teacher pay raise, a 2 percent college faculty pay raise, and a 2 percent raise for state police and other state employees. It also includes an early, $129.5 million payment to the state’s rainy-day fund and plows $193 million into the teacher retirement fund.
It eliminates $11.7 million in fees, including an increase in restaurant inspection charges, proposed by McAuliffe. The plan restores $30 million in funding to local governments, cut last year, when revenue projections looked dim.
The General Assembly passed a two-year, $96 billion state budget last year. This year, the legislature and McAuliffe are proposing adjustments to that plan to cover the second year of the budget, which begins July 1.
Work on those adjustments began last summer, when revenue projections indicated that the state would have a $2.4 billion shortfall. Meeting in special session in September, the House and Senate made cuts and found other savings to plug most of that, including cutting $60 million in aid to localities, leaving $272 million to address this session.
Since then, revenue has picked up so that those extra savings did not have to be found, although some agencies still might feel the pain of earlier cuts. Budget negotiators recommend reversing $30 million of the cuts to localities, not the full $60 million.
The budget proposal includes $132 million for capital construction projects at James Madison, Virginia Tech, Longwood, Radford, Virginia Commonwealth University and Danville Community College.
It also includes $132.9 million to shore up the health-care safety net in a way more palatable to Republicans, who oppose McAuliffe’s top campaign promise to expand Medicaid under the Affordable Care Act. It provides health-care and prescription drug benefits to 22,000 severely mentally ill patients, nearly doubles funding for free clinics to $6 million, and increases funding for children’s psychiatry and crisis services.