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McDonnell announcing proposed budget amendments today

Gov. Bob McDonnell today is announcing budget amendment proposals that, all told, spend an additional $215 million over the next year and a half.

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 new spending as the net figure.

He is unveiling those amendments to the General Assembly budget committees this morning. 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.

According to a briefing from Secretary of Finance Ric Brown and other administration officials, McDonnell’s proposals focus on making the budget as flexible and liquid as possible, in the event of federal budget cuts.

His amendments include devoting an additional $122 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 2014.

McDonnell 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, 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 D.C. receive.

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

McDonnell’s budget increases the percentage of state sales tax devoted to transportation, from 0.5 percent to 0.55 percent. That will 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.

Among the agency savings, one of the biggest dollar items is a $21.7 million reduction in the “disproportionate share” hospital payments. That is a term for federal dollars given to hospitals that treat a disproportionate number of Medicaid patients. For the first time, administration staff said, the state expects to hit a cap on those dollars, and so the $21.7 million is a reduction from the projected cost of those payments.

McDonnell also proposes 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.

McDonnell’s spending proposals also include a previously-announced $59 million to give public school teachers a two percent raise, and $70 million in additional funding for the state employee health insurance program.

He proposes to cut about $42 million from comprehensive services for at-risk youth and families, which staff said reflects a lower-than-expected caseload and program expenditures.

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.