Amidst the whirl and rush of national events (i.e., more about Trump) and local events (Hanover County), the General Assembly conference committee hammered out a proposed budget. Barring the unforeseen, it will pass the legislature later today.
Some of the details, courtesy of the Richmond Times-Dispatch (quotes from same)…
Pension plan repaid…with a loan. The new budget would put in the money that was withheld from the state pension fund in 2010 to balance the budget (which should have been the first clue that Governor McDonnell was not the paragon to government efficiency that Candidate McDonnell was). The method to find the money was…interesting.
The budget plan in large part has depended on a strategy by the House Appropriations Committee to use bonds instead of cash to finance building maintenance reserves. The money instead would be used to pay off $190 million in deferred contributions for state employee pensions six years ahead of schedule, saving the state about $44 million a year that the budget would use to improve employee compensation.
In other words, the GA is paying off one loan by taking out another. The numbers make sense, but the optics are terrible.
Meanwhile…
The early payoff of retirement contributions — deferred in 2010 to balance the state budget during the recession — would save colleges and universities almost 1 percent of their operating costs, which lawmakers hope will help hold down tuition increases, along with $114 million in additional aid to higher education in the spending plan.
A reduction in operating cost will certainly help, but I would rather have seen Richmond take the time to examine and to address the higher education bubble in detail, instead of choosing to throw $114 million at the problem, hoping it will go away.
As for K-12 education, the legislators won the bidding war with Governor McAuliffe, topping his request by $73 million. One would hope that such a bounty would prevent local school boards (like, say, Suffolk) from demanding more money from the city (read: the city’s taxpayers). Experience tells me not to be that “one”.
Speaking of taxes, the Governor’s proposed slice of the corporate tax (from 6% to 5.75%) is still not included. Instead of finding a mere $64 million in efficiencies, the Republicans in Richmond effectively handed T-Mac and his friend the future presidential nominee a cudgel to whack the GOP for the next 20 months.
Yes, yes, I know the Governor tied the tax cut to Medicaid expansion, which is still a terrible idea, but there was no need for the General Assembly to agree with that assumption. They could have cut $64 million from the budget (that’s less than one-sixth of one percent of the general fund, mind you), and provided the Commonwealth’s first statewide tax cut in this century. Instead, they have told every corporation in the state that Medicaid expansion equals lower taxes for them, while possibly giving more political cover for the Governor to demand a Medicaid-expansion-with-tax-cut amendment, or to veto the budget altogether.
Whether T-Mac will take either option remains to be seen.
