Virginia Gov. Terry McAuliffe in 2014. (Steve Helber/AP)

House and Senate finance committees on Sunday unveiled dueling two-year budget proposals that reject Gov. Terry McAuliffe’s vision for Medicaid expansion but pour big money into his top priorities: education and economic development.

The spending plans take different approaches to giving schools greater flexibility in how they spend tax dollars and give lawmakers and businesspeople more authority to shape the state’s approach to diversifying and growing the economy.

McAuliffe (D) and the legislature both propose 2 percent pay raises for public school teachers. The House also wants to give state employees a 3 percent pay raise in the year starting July 1 and a 1 percent raise the following year as long as revenue meets projections, while the Senate plan calls for a 2 percent raise in the first year.

Both chambers eliminated the expansion of Medicaid — and what the administration said would be the resulting savings — as well as a 3 percent tax on hospital revenue that McAuliffe had proposed to fund the state’s share of the federal health-care program. It is the governor’s third attempt to extend Medicaid to an additional 400,000 uninsured Virginians.

“I am pleased that these proposals include historic funding for Virginia’s education system and build on the well-deserved pay raise for our hard working state employees that I included in my introduced budget,” McAuliffe said in a statement. “My staff and I will review these proposals in detail over the coming days, but I am optimistic that we will reach a bipartisan consensus that will expand on the great success we are having growing and diversifying Virginia’s economy.”

In December, McAuliffe trumpeted his $109 billion budget, but on Sunday the House and Senate offered plans that shave the total spending somewhat while still prioritizing K-12 education and incentives to grow and diversify a state economy damaged by cuts in federal defense spending.

“The steps we call for this biennium will eliminate future liabilities, provide local education leaders with much-needed flexibility, hold down the cost of higher education and strengthen our healthcare safety net,” Del. S. Chris Jones (R-Suffolk), chairman of the House Appropriations Committee, said in a statement.

Senate Majority Leader Thomas K. Norment Jr. (R-James City) and Sen. Emmett W. Hanger Jr. (R-Augusta) jointly lead the Senate Finance Committee, whose budget varies significantly from the House spending plan.

“Ultimately I don’t think it will be a big deal to come together because we’re dealing with the same pot of money,” Hanger said.

The proposals come at about the halfway point of 60-day legislative session marked by surprising compromise on gun laws but partisan bickering over gay rights and climate change — as well as an ongoing battle over a state Supreme Court vacancy.

In back-to-back meetings Sunday, lawmakers advanced their budgets to the full chambers, which are scheduled to vote on the plans Thursday. They’ll spend the next few weeks reconciling the spending plans into one budget that they will submit to McAuliffe for review.


The House and Senate each would increase K-12 funding by about $900 million more than the current budget.

Under the Senate plan, teachers would get a 2 percent pay raise effective in December; under the budgets advanced by McAuliffe and the House, that pay raise would start in July 2017.

Like McAuliffe, the legislature would increase across-the-board funding for schools by about $400 million to keep up with statewide enrollment growth. The state distributes education dollars based on each local district’s “ability to pay,” sending smaller payments to more affluent counties.

Northern Virginia schools would receive an additional $40.6 million under the House plan, and $32 million in the Senate proposal.

McAuliffe’s plan would increase funds for struggling schools and hire 2,500 teachers — one additional teacher for every public school in Virginia. The House budget would send $270 million in lottery revenue to schools with “fewer strings attached,” lawmakers said.

In higher education, the House would limit tuition increases at state universities to 3 percent, which matches a proposal from the University of Virginia on Friday. The Senate calls for a 2 percent faculty pay raise.

Bond package

McAuliffe wants the state to borrow $2.4 billion to fund higher-education research and development, operations at the port, state parks and local wastewater treatment systems.

The House would slash that figure by about 40 percent to $1.5 billion and replace what they called the governor’s handpicked projects with dozens that have completed the planning process.

The governor set aside $90 million from the bond package to remake the state’s juvenile justice system, as part of a national move away from housing young offenders in prison-style facilities. He would replace two large Richmond-area lockups with smaller facilities in Richmond and Hampton Roads. Although House lawmakers support that concept, they budgeted money for planning only. The Senate goes a step further with funding to close one facility and plan for the construction of a new one in Chesapeake.

Economic development

The General Assembly also took aim at a central theme of McAuliffe’s term — economic development — with plans to shift decision-making away from the administration and toward boards led by businesspeople and lawmakers.

The House and Senate plans include more money for economic development than in the current budget but less than the amount sought by the governor.

This session, the House and Senate easily passed bills that would devote about $39 million to Go Virginia, a regional grant program. The Senate budget would fully fund the program, but the House plan trims it to $32 million and creates a new program devised by Jones “to promote research, development and commercialization.” One beneficiary of that program would be the Inova Center for Personalized Health, the newest campus of Northern Virginia’s largest hospital system, as long as there is a local match.

“I truly believe that this will be a game changer in the way that Virginia invests in research and development,” Jones said.