RICHMOND – When lawmakers adjourned after a short work day at the state Capitol that rang in the special session Monday, they went home to their districts without doing what they came to do – vote on the state’s biennial budget. But House GOP leadership gave members of its caucus some advice on the way. “We have been asked not to make any long-term travel plans from now through July 1,” said Del. Will Morefield, R-Tazewell County, referring to the date set in the Virginia Constitution on which a new budget must go into effect. The unusual request is a sign that despite claims from lawmakers that they are close to coming to an agreement, they are preparing for a budget battle that could take weeks, if not months.
Nobody is more dismayed at the General Assembly’s lack of action than newly elected Gov. Glenn Youngkin, who had pinned his hopes on having a budget on his desk earlier this week after previously having summoned lawmakers back to Richmond to work out their differences and get the job done. For Youngkin, the budget is a crucial component of his ability to make good on his campaign promise to provide Virginians with tax relief, among a slew of other things. But without a budget, his hands are tied.
“I’m really disappointed they didn’t do more work during the break, and particularly last week,” Youngkin told Cardinal News during a visit at a recycling plant in Chesterfield County on Thursday. “I am hopeful that they are working this week.”
Despite his sense of urgency, Youngin said that he would continue to refrain from interfering with the negotiations. “I respect the legislative process, it is a budget that needs to come from legislators. But it’s time to pass one, Virginians have been waiting long enough,” he said, reiterating his push for tax relief, salary increases for teachers and law enforcement, and investments in the state’s health and mental health system.
“All of that can be done right now, and Virginians deserve it. So I’m frustrated, I want them to move faster, I want them to send me a budget so that Virginians can get on with things. The time is now.”
But Virginia’s budget process wasn’t designed to accommodate the wishes of the governor and the immediate needs of those living and working in the commonwealth. It’s often a slow-moving, at times excruciating process that, unless all three branches of the state government are controlled by one party, requires the ability of all stakeholders, elected or not, to work together and compromise.
“If you have one party rule, you can push things through, but I believe it is a better process when there is a series of give-and-takes and compromises that lead to a better product,” said Sen. Emmett Hanger, R-Augusta County, who as one of the 14 budget conferees is familiar with the ongoing closed-door negotiations. “Quite often it’s hard to get to a final product, because the process seems convoluted and sometimes you can’t meet your deadlines, but if people work in good faith and for the benefit of Virginians, that’s a great thing,” Hanger said in a phone interview on Wednesday.
Virginia’s legislature adopts a two-year budget every other year, and unlike the federal government, the commonwealth must remain funded to avert a detrimental impact not only on the state government but localities relying on cash from the state. The biennial budget is enacted into law in even-numbered years, and amendments to it are enacted in odd-numbered years.
Developing the budget usually takes several months and involves many stakeholders, from state agencies to the legislature, and the public. During the development phase – usually in September – the governor and his cabinet work together with the Department of Planning and Budget to prepare a budget proposal based on several factors, particularly the administration’s priorities and a revenue forecast.
In December, then-Gov. Ralph Northam rolled out his final $158 billion budget for fiscal 2022-24. A strong economic recovery and federal aid during the pandemic allowed the administration to set aside $1.7 billion to the commonwealth’s revenue reserves, including a $564 million voluntary deposit, bringing the total reserves amount to more than $3.8 billion, or 16.8% of state revenues, and more than double the 8% that the administration set as a goal four years ago. A record surplus of $2.6 billion allowed Northam to push some ambitious ideas that would have been unthinkable just two years ago, including a $500-million investment to address Virginia’s dire school construction needs.
Northam then submitted his proposed budget to the General Assembly, which recovened for its 2022 session on Jan. 12, in the form of a budget bill that was referred to the Appropriations Committee of the House of Delegates and the Finance Committee of the Senate. Since Youngkin was sworn in as Virginia’s 74th governor on Jan. 15, and GOP candidates had regained the majority in the House, Republicans amended the House budget with the new governor’s priorities in mind.
“We developed the Senate budget based on amendments, and the House did the same thing,” said Hanger, who is a member of the Senate Finance Committee. “When the House bill came over to the Senate, we laid on our amendments and they did the same thing with the Senate bill. Then we set up a conference to resolve the differences.”
This year, 14 legislators – the so-called conferees – were tasked with resolving any differences between the budget versions passed by the two houses, resulting in a single enrolled bill. The conferees are appointed by the chairs of the two money committees, based on their qualifications for certain subject matters. The six House conferees include Del. Terry Austin, R-Botetourt County, and the eight Senate conferees include Hanger and Sen. Steve Newman, R-Bedford County. Austin could not be reached for this story.
As the budget is usually one of the last things to get approved, the conference committee began meeting in the first week of March on the 14th floor of the Pocahontas State Office Building in Richmond’s Capitol Square. Sometimes conferees met in a House conference room on the 13th floor, at other times in a leadership conference room on the 6th floor. “Generally we float around these locations during session,” Hanger said.
On some days, the conference committee broke up into smaller focus groups, dealing with more specific issues, said Hanger, who took a lead on Health and Human Resources – the largest area of expenditures in the state budget. “Then you have another pairing group looking at education, general government, and public safety, and others. You sometimes break out into even smaller groups, when dealing with the judiciary and other areas. This year we had pretty substantive meetings in all of those areas, and we did a lot of work before the regular session concluded.”
But when the regular General Assembly session adjourned after 60 days on March 12, lawmakers went back home without a budget vote, because conferees were unable to close the $3 billion gap that still separates the spending bills of both parties, with most disagreements relating to different versions of tax relief. Most notably, Youngkin wants to see his $5.5 billion package of proposed tax cuts in the budget – a plan that several Senate Democratic conferees are grappling with.
“The big thing this year, of course, that cannot be resolved, is tax policy which has changed our resources, and we are discussing how much of our projected resources we are going to allocate, since we are having some surplus,” Hanger said. “Tax policy changes have been the sticking point, and there has been the governor’s agenda, including the proposed gas tax holiday.”
Stephen J. Farnsworth, a political scientist at the University of Mary Washington, said that Youngkin’s impatience and his push to get the legislature to pass his tax relief proposals sooner than later left most Democratic lawmakers unimpressed.
“The impasse wouldn’t be a surprise for anyone who pays attention to how long it takes the legislature to do things, and it seems like the governor’s effort to force a more rapid agreement backfired,” Farnsworth said. “While the governor can reconvene the legislature, he can’t make them reach an agreement. The effort to try to force a deal when the parties weren’t ready to agree on terms seemed to stiffen the resolve of the Democratic Senate majority to hold out for their priorities.”
The normal approach in Virginia politics is to fight things out in the 11th hour, Farnsworth said. “When there is a divided government, there are two approaches and they tend to not get resolved quickly. The core issue for Virginia lawmakers is the state’s AAA bond rating, so both parties never want to do anything to call that into question. That’s why shutdowns federal government style rarely happen in Virginia, and when it does happen, it doesn’t happen for long.”
Sen. David Suetterlein, R-Roanoke County, blamed a small number of Senate Democratic conferees for the budget impasse. “If you put the doubling of the standard deduction on the Senate floor, I’m sure it would pass, and there is broad bipartisan support for the repeal of the grocery tax,” said Suetterlein, who is not a member of the budget conference, referring to the Republican proposal to eliminate the entire 2.5% tax on groceries and essential personal hygiene products, which passed the House of Delegates by a 80-20 vote in February.
“The vast majority of House Democrats have already voted for it, and I think many of my Senate colleagues want to see a full repeal as well. Unfortunately, a handful of Senate Democratic conferees are obstructing the process and holding hostage tax relief for working Virginians and Virginia’s largest investment in public education.”
However, Gianni Snidle, a spokesman for the Democratic Party of Virginia, rejects the notion that Democrats are the ones obstructing the process. “We have been clear about standing up for public education funding, health and mental health infrastructure services, which are two very important things that we need to get out of this budget,” Snidle said. “These are generational investments that will help our students and hospitals, especially in rural areas where they have staff shortages.”
Snidle added that Democrats are not against tax cuts. “Our budget provides for tax cuts. But especially the gas tax holiday, how much will that save Virginiains, maybe $40 a year on average?” he said. The Senate budget, Snidle continued, includes rebates that would save Virginians between $400 and $500 a year, in addition to more funding for public education and school construction. “If they are taking money away from education, we don’t want that to happen,” he said.
Farnsworth, the political scientist, said that when looking at the current budget impasse, it is important to remember that Virginia politics has become a lot more partisan in recent years, when compared to previous years. “For generations there always was a voice of centrist Democrats and centrist Republicans that told extremists on both sides how things would be going down, and that created very little brinkmanship. That’s very different from where we are now, neither party seems to have many centrists anymore,” he said.
But there is still time to resolve the disputes before the veto session, which is April 27, Farnsworth said. “A key measure of the willingness of the two sides working together will be whether they are going to work out the remaining differences within the next few weeks. Even when lawmakers say they aren’t far apart, the issues that remain at the end are often the most difficult ones,” he said.
It is often regular Virginians who have to bear the cost of a budget stalemate caused by a partisan divide in the legislature. “The local governments are in a posture because they need to make timely decisions,” Hanger said. “Because they don’t have the luxury of waiting, they need to hire teachers or enter in construction contracts, they need timely decisions. We are already at the point where this creates urgency.”
Or take the residents in Buchanan County who were denied federal disaster funds after flooding, mudslides and rockslides triggered by a downpour in August wiped out dozens of homes in the Guesses Fork section of Hurley, washing many others downstream. One person was killed during the disaster. Homeowners who had insurance found that their policies wouldn’t cover their losses – even those who held flood policies were denied coverage for damage caused by mudslides.
The two-year state budget proposed by House Republicans includes $11.4 million in state funding for the victims of this major flood, who under an emergency clause would receive the much needed help once Youngkin signs the budget.
“With slim majorities it only takes a handful of votes to significantly change the fate of legislation,” said Morefield, the Republican delegate from Tazewell County who sponsored the measure to help the Hurley flood victims that is now tied up in conference.
Several of the Democrats and Republicans on the Senate Finance and Appropriations Committee have already expressed support for his proposal, Morefield said. “Dozens of families lost everything they owned, and most of them had no insurance or insurance claims were denied. We can only hope that a budget will be adopted well before July 1.”
Hanger said that while lawmakers were waiting for about 10 days for Youngkin to summon them back to Richmond, at least some work still went on behind the scenes. “There were conversations on the Senate side and the House side, between the chairs of both finance committees and staff, to refine the work we had done so far,” he said.
But there was no substantive movement during those days. “I had hoped we would make progress and lay the budget on the table when the governor announced the special session for April 4th, that’s what I was in favor of. But it didn’t work out because of people’s schedules. We were running into some issues and some decision makers just weren’t available.”
On Monday afternoon, after the General Assembly adjourned for the day, conferees met in Richmond for about four hours to go over the updated numbers prepared by staff, showing them where they were at and what would happen if they made certain concessions.
And then, everybody packed up and went back home again.
“Sometimes there is a sense of urgency because members want to get it done, and sometimes it breaks off and we need a cooling-off period and see more of how the revenue projections are going,” Hanger said.
And what’s next? “We now rely heavily on the leadership of the committees to communicate and set up a work schedule, so I anticipate that some work will be done soon,” Hangar said. “Once that happens, I hope that we would then proceed with in-person meetings. I had hoped that this would conclude before Easter, but that was probably overly ambitious.”
Del. Sam Rasoul of Roanoke, the lone Democrat from Southwest Virginia in the House of Delegates who is known for his willingness to work with Republicans, said that for most lawmakers, it’s a wait-and-see mode.
“We certainly have been part of budget negotiations that have stretched out into June before,” said Rasoul, who has served as a legislator since 2014. “But I’m going to be more optimistic and state that in a divided government, there are differences of opinion, and generally speaking, we tend to figure out what might work best and how to get things done in time. Because we operate on a cash basis where we must have a budget to move forward, I think everyone feels the urgency in getting it done,” he said.
Rasoul added that his caucus meets virtually several times a week to discuss any updates and to “figure out what can be done that is palpable for all sides. He hopes that by the end of April the General Assembly will be able to vote on a budget during the veto session.
Once a budget is approved, Youngkin has 30 days to review the enrolled appropriation bill. He may sign it, veto the entire bill or selected line items, or recommend amendments. “At that point, it will be up to the governor to sign it and move on,” Rasoul said.