A Glance at the Governor’s Budget Proposals

[Ed Note: This article originally appeared in print in Bearing Drift's January 2011 issue. To subscribe, join our mailing list and get a first peek in print every month.]

While Virginia only writes budgets every two years, every General Assembly session offers the opportunity to amend the spending. This year is no different.

Governor Bob McDonnell has released a series of budget proposals, focusing on using state dollars for bringing jobs to the Commonwealth of Virginia – continuing to keep his campaign promise of focusing on job creation.

During a December speech to members of the Senate Finance, House Appropriations and House Finance Committees, McDonnell directed funds to areas that directly benefit job creation, including: Economic Development, Higher Education, Transportation, and Government Reform.

Some of the proposals include:

• Allocating $54 million for Job Creation and Economic Development. These initiatives include: Revitalizing economically distressed communities, expanding small businesses, and promoting tourism in the Commonwealth of Virginia
• Devoting $150 million to the Virginia Transportation Infrastructure Bank. This money will also be coupled with $250 million from the VDOT audit. This bank will have $400 million at the start with funding to rise to $1 billion by the end of the McDonnell administration. Another component includes issuing $1.1 Billion in Federal GARVEE bonds that does not add to the state debt.
• Adding $50 Million in Higher Education, which will increase college access and affordability.

McDonnell also mentioned that the federal health care reform laws will have an impact on Virginia’s budget. As Medicaid enrollments rise because of the new rules, this unfunded mandate will cost Virginia nearly $2 billion. McDonnell proposed an expansion on managed care and care coordination models to all beneficiaries of the Medicaid program. Additionally, McDonnell proposed cuts to all services not mandated by federal or state law, saving $5 million over time.

In the spirit of transparency and accountability, McDonnell allocated $191 million in budget cuts and savings that will provide more funding for core functions of the government solely focused on job creation and economic development – part of his government reform initiative.

McDonnell also proposed reforms to the Virginia Retirement System. The governor wants state employees to contribute 5 percent of their pre-tax earnings to the pension plan to improve its solvency. He also proposes that the additional contributions be slightly offset with a 3 percent pay raise and that the 2 percent shortfall be offset at the end of the year with a bonus, if the state has the ability to pay for it .

During his speech to the legislators, McDonnell stated that he wants to keep Virginia focused on job creation by adhering to free market principles. McDonnell mentioned:

“Government must set priorities, encourage cost-savings, and frugality, fund core functions well, set the right climate for job creation and economic growth, and then get out of the way.”

Now, it is up to the General Assembly to decide if and how to implement these proposals.

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About the author

Krystle Weeks

Growing up in Maryland typically does not yield a Republican. Fortunately, Krystle Weeks was one of the lucky few booted to the Commonwealth for her staunch conservative views. From an early age, she has been debating politics, and since 2006, she has been involved here in the Commonwealth helping Republican candidates to victory. Aside from politics, Krystle is a runner and a dynamite cook. You can email her here. Krystle also blogs at Crystal Clear Conservative and Charm Offensive Cooking.