Budgets Set Policy Directions

Budgets Set Policy Directions

If you are reading this column after 9 a.m. on Wednesday you may know that I am already in Richmond preparing to attend a Democratic Caucus meeting before the Special Session of the General Assembly that will convene at 10 a.m. Wednesday morning. Special sessions are just that: they are called by the Governor in this instance for the single purpose of receiving and acting on a budget bill from a Conference Committee that has been meeting off and on since the regular session adjourned in April. They met to resolve differences that would be acceptable to both houses of the legislature and the Governor to amend the budget already in place for the next fiscal year. As I have discussed several times in past columns, the challenges facing the legislature this year were different from those of the past. The General Assembly in 2022 passed a budget much as outgoing Governor Ralph Northam had proposed. It contained additional revenues much of which were coming to the state from federal COVID relief funds and an economy that remained healthier than had been projected by economists. Revisions of biennial budgets are routine in that projecting the economy over an 18-month period is not an exact science and can be influenced by factors beyond the control of a single state. Most political debates over budget revisions often accompany the amendments that are needed to match economic fluctuations. The political debate that went on during the campaign for governor had the winning candidate trying to convince voters that Virginia’s economy was in the tank while others tried to point out the realities that Virginia could finally respond to unmet needs.

The reality was that at the midpoint of the biennium Virginia was swimming in cash. Economic projections had been too conservative and had underestimated growth in Virginia’s economy. That revenue growth from the healthy economy and additional monies from federal sources had created an unappropriated balance of cash. The House and Senate had not been able to come to an agreement on its use. The compromise that will be voted on at this Special Session will in simplest form give taxpayers rebates for the year rather than a tax cut that may not be able to be sustained in future years. Most call that a victory for the House, and a recognition that the Governor seemed more interested in a tax cut to help his personal political fortunes rather than being for the best long-time interests of taxpayers.

The Conference Committee report cannot, by the rules of the legislature, be amended. It must be voted up or down. I predict it will be accepted as the best compromise that can be reached at this time. Whether it sets a precedent that will be followed in the future will be determined by the outcome of the elections held this November for members of the General Assembly. This budget and future ones are not simply about planning for how the monies of the Commonwealth will be spent but are about our expectations for our government in the future. What do we want to be as a state?