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McDonnell includes transportation money in budget amendments


RICHMOND—Gov. Bob McDonnell would provide teacher pay raises, restore some local funding lost during the recession and increase the amount of state sales tax revenue going to transportation under budget amendments he announced Monday.

McDonnell’s amendments include about $93 million in agency savings, $432 million in spending cuts and $736 million in additional spending, leaving $215 million in net new spending.

His amendments include devoting an additional $128 million to the state’s rainy day reserve fund. Part of that, $78 million, is an additional deposit required by law for the 2014 fiscal year; the other $50 million is an “advance” deposit to the fund for fiscal year 2015.

Speaking to the General Assembly budget committees on Monday morning, McDonnell said he’s proposing that additional deposit because of uncertainty around the federal budget, as Congress and the president struggle to reach a compromise on tax increases and spending cuts.

One of the most-discussed amendments after his speech was his proposal to increase the percentage of state sales tax devoted to transportation, from 0.5 percent to 0.55 percent. That would generate another $48 million a year, part of McDonnell’s as-yet-unannounced transportation plan that he says will provide up to $500 million a year in new transportation money.

Democrats, particularly in the Senate, have long been adamantly opposed to using general fund money for transportation, and that’s what the sales tax proposal would do—the sales tax goes into the state’s general fund and is used to pay for programs like schools and social services.

McDonnell is pushing for new transportation money in the 2013 session, and said Democrats are going to have to give some on this issue.

“Let me say emphatically, I reject the contention that some have made that a small general fund amount cannot be used for transportation,” McDonnell said, listing other years in which lawmakers have approved use of general fund money for specific transportation initiatives.

“At a time when we are generating an average of $450 million in surpluses annually, even in a sluggish economy, it is just plain false to say that an additional $50 million per year for several years can’t be spent on transportation. It must and will be a part of a comprehensive transportation solution.”

McDonnell suggested to reporters later that his full transportation proposal might include using a slightly larger percentage of the sales tax, phased in over several years, for transportation. He has also hinted that he might support indexing the gas tax—to inflation or another measurement—to make it rise and fall with the economy.

Sen. Janet Howell, D-Fairfax, told reporters after the speech that the public should be educated on what programs might lose money if general fund dollars go to transportation.

“Do we want to deprive these general fund programs to pay for transportation, or do we want to act responsibly?” she said.

Last week, House Speaker Bill Howell, R-Stafford, said at a Chamber meeting in Fredericksburg that he’s not sure there is enough time in the upcoming session to reach a compromise on a large transportation funding package.

On Monday McDonnell said he’s not worried about winning over Howell.

“I don’t put too much credence in that,” McDonnell said. “The speaker and I are going to work together.”

Howell told reporters he’s not slamming the door shut on any transportation bills, but that he does think significant policy changes—like those suggested for transportation funding—require time to build support and agreement.

“For something as significant as transportation reform, you can’t just say, ‘We’re going to do it now,’” Howell said.

McDonnell’s budget also contains a previously announced 2 percent pay raise for teachers. He also proposes eliminating the cost of competing adjustment for support personnel—but not for instructional positions—for Northern Virginia schools. The cost of competing adjustment is additional funding given to school districts in high-cost, high-income Northern Virginia localities to help keep salaries competitive. That includes Stafford, Spotsylvania, Culpeper and Fredericksburg, although those jurisdictions get only a fraction of the cost adjustment that school districts closer to Washington  receive.

McDonnell proposed last year to eliminate the cost of competing adjustment for support staff; lawmakers partially restored it in the final budget.

McDonnell also proposed eliminating a budget provision—begun a few years ago—that reduces state aid to local governments. Localities have been pushing to restore their state funding, and his amendment would give them $45 million in additional state funding, eliminating the reduction that began in 2010.

Another amendment would cut about $42 million from comprehensive services for at-risk youth and families, which McDonnell said reflects a lower-than-expected caseload and program expenditures, not cuts in services.

McDonnell also proposes to increase TAG (tuition assistance grants) to $3,100 for undergraduate students in fiscal year 2014, up from the current $2,800.

One spending item McDonnell’s not proposing is money to expand Medicaid eligibility under the federal Affordable Care Act.

He announced on Friday that Virginia will neither set up a state-run health care exchange nor expand its Medicaid program.

Because Virginia writes budgets on a two-year cycle, and the two-year budget was written in the 2012 session, these are amendments to the existing budget, rather than a new budget. They are only proposals; lawmakers take the governor’s amendments and decide whether to include them or reject them in their own budget plans.

 Chelyen Davis:  540/368-5028