October 17, 2016 Newsletter

Governor McAuliffe outlined plans Thursday to close an expected fiscal 2017 budget shortfall, which was caused by slower-than-expected growth in income tax collections.

State police were among the losers in budget cuts announced to close an $861.4 million shortfall in this fiscal year alone. The Governor’s plan will cancel scheduled pay raises that the legislature had tied to revenue projections, tap the “rainy day” fund for almost $400 million, and cut executive agency budgets by $73 million, requiring up to 26 layoffs, including 15 at the Library of Virginia.

In addition to the state library positions, the jobs to be cut are: four layoffs at the Department of Conservation and Recreation; two each at the Department of Health, the Department of Aging and Rehabilitative Services, and the Department of Forensic Science; and one research position at the Department of Behavioral Health and Developmental Services.

State employees had high hopes for the two-year budget the General Assembly adopted in March, but seven months later, those hopes have been dashed against a projected $1.48 billion revenue shortfall that has claimed the pay raises they were promised, left hundreds of new positions unfunded, and could cost 26 of them their jobs.

The biggest blow to state employees came when the state fell short by $279.3 million in revenues for the fiscal year that ended June 30. That triggered provisions in the budget that suspended and then canceled $346 million in pay raises and other compensation that were scheduled to take effect December 1. The package included $125.1 million in the current fiscal year.

The lost raises included money for state police to deal with salary compression — in which pay for new hires exceeds that for veterans — and sent morale plummeting at the department.  The department has 237 vacancies in sworn law enforcement positions.

A bigger challenge will come in closing another expected shortfall for fiscal 2018, which the Governor said he would announce December 16.

The Governor already has said the state should use reserves from its rainy day fund and delay employee raises to help balance the budget. In August, he asked all executive branch agencies to propose a 5 percent cut, with some exceptions such as K-12 and higher education. He also renewed his call for Medicaid expansion under the federal Affordable Care Act. McAuliffe said Virginia is losing $211 million annually in federal tax revenue available under the expansion that its citizens have already paid, totaling $7.8 billion.

States that have already expanded Medicaid have seen enrollment surge, and expanding the already fastest-growing part of the budget would not be financially sustainable. The problem is the sheer cost of Medicaid, presented earlier this year by the annual report of Virginia’s Joint Legislative Audit and Review Commission. The largest growing portion of the state budget isn’t education and it’s not economic incentives. It’s Medicaid.

If you have any questions, comments or concerns that I or my Aide, Jenna, can help assist with in any way, please do not hesitate to call me (434) 821-5929 or email at Delmfariss@house.virginia.gov. You can also keep up with me on my Facebook page at www.facebook.com/DelegateMattFariss.

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