RICHMOND, Va. (WRIC) — Gov. Ralph Northam laid out his plans to update the 2018-20 budget to lawmakers on Tuesday.
The series of budget amendments total about $2.2 billion, Gov. Northam called the plan an “opportunity of a lifetime” because of surging state revenues.
Many of the ideas on how to use this money focused on preparing youth to be the workforce of the future.
“Our children, our business and our community should have the same chance to thrive from Lee County to Loudoun County,” Gov. Northam said.
Among the education-related amendments, Northam is proposing to increase teachers salaries by 2 percent which would cost about $88 million. If approved by the General Assembly, it would bump up pay to a total of 5 percent by July 1, 2019. In the 2018 session, lawmakers already signed off on a 3 percent raise.
Other initiatives impacting the classroom include hiring more school counselors to help address growing mental health concerns among youth as well as more training for school resource officers to handle school safety issues. There’s also a proposal to use $80 million from the Literary Fund to update the infrastructure at schools.
In terms of higher education, the governor is proposing $15 million for need-based tuition assistance for students at public schools as well as more grant money for Virginia students at private institutions.
A push that’s been going on for some time is to expand broadband access across rural areas of the Commonwealth.
The Eastern Shore Democrat says these investments will help the next generation of Virginia’s workforce and will also attract more companies.
“We need to make a sustained investment in education if we want to be competitive in the 21st-century economy,” Gov. Northam said. “We know that we were able to land Amazon because of the quality of our workforce because of the quality of our workforce. Companies are looking to locate where the best-trained workers are.”
An additional $20 million investment to develop “pad-ready business sites,” or commercial business locations, is also on the table. The governor says the money will help Virginia compete for large manufacturing companies.
The money to pay for all of this is coming from higher than anticipated state revenues, which has grown by 4.5 percent since the beginning of this fiscal year The budget estimated that it would only increase by 1.5 percent. Once Virginia also fully conforms to federal tax changes, the administration believes more tax dollars will be brought in. Also, they’re expecting additional funds from taxes for online sales. That legislation still needs to be approved by lawmakers.
Republican leaders are skeptical of these plans because the money hasn’t been collected by the Commonwealth. They say the middle class would front the bill.
“What you’ve got is the illusion that we’ve got all of this money,” House Appropriations Chairman Del. Chris Jones (R-76th District) said. “We’ve got this money because we’re going to assume that we’re going to collect $1.2 billion more in taxes.”
Besides this point, another major criticism members of the GOP brought up was Gov. Northam’s proposal to make the earned-income tax credit refundable.
Here’s how it works. If a family owes $800 in taxes and they have a $1,000 credit, they’d get $200 back in their pocket. Right now, the state keeps that money. About 20 other states make these credits refundable. The governor says this is geared towards people making less than $55,000 a year.
Republican leaders say a change in the tax code like this would impact middle-class taxpayers, whose joint income is $100,000 and above. A common sentiment between House Speaker Kirk Cox, Del. Chris Jones and Sen. Tommy Norment was that the state should be taking care of people who are paying their taxes, like the middle class, not the ones who aren’t.
On the other hand, the Governor thinks putting money back in the pockets of families will help them save as well as boost the economy.
According to the Annual Report for the 2017 Fiscal Year from the Dept. of Taxation, in 2015 there were a little more than 600,000 joint or married taxpayers who, together, made $100,000 and above. There were about 890,000 couples who made less than that. About 465,000 of those couples, together, made $49,999 or less.
There’s also a move to set aside $1.1 billion in reserve funds, including last year’s surplus. The governor hopes this would set the Commonwealth on the path to having 8 percent of the budget expenses set aside in reserves before he proposes his outgoing budget.
These proposals still have to make it through the General Assembly next year to update the budget.