The State Capitol. Photo by Markus Schmidt.

RICHMOND – After nearly three months of off-and-on negotiations, the Virginia General Assembly’s money committee leaders on Sunday released their budget conference reports for the proposed two-year state budget to take effect on July 1. The spending bill includes $4 billion in tax cuts over the next three years, a 10% pay increase for state employees and teachers, a partial repeal of the state’s grocery tax, plus at least $450 million for school construction and modernization in direct grants. In all, the budget includes $1.25 billion in total spending for school construction, which Del. Israel O’Quinn, R-Washington County, said is capable of leveraging up to $3.2 billion in construction.

The budget allocates $11.4 million in relief funding for the victims of last year’s flood in Buchanan County, and $25 million to pay off the remaining debt of the shuttered Central Virginia Training Center, clearing the way for the site’s future development. It also includes $750,000 to study the feasibility of transforming Catawba Hospital into a state-of-the-art campus offering substance abuse treatment and addiction recovery, and a nearly $16 million grant to the city of Roanoke for the renovation of an existing facility to create an advanced laboratory, business incubation and an accelerator space for the development of new biotechnology companies across southwestern Virginia. The city must match the grant with almost $2 million.

The conferees released their compromise agreement just days before the General Assembly is set to vote on the budget. Senate Clerk Susan Schaar confirmed in an email last week that lawmakers will meet Wednesday at 10 a.m. to take action on the resolutions after a three-day reviewal period. Leadership in both chambers of the legislature declined to comment Sunday. 

The Assembly had adjourned its regular session on March 12 without completing its work on the state’s biennial budget, leaving many crucial policies on Gov. Glenn Youngkin’s agenda in limbo. Instead, lawmakers passed a resolution allowing them to approve conference committee reports on bills – including the budget – in a subsequent special session, which was set for April 4 after Youngkin called the legislature back to Richmond. 

But despite the weight of their task, at the time lawmakers did little more than pass two joint procedural resolutions governing the special session, before adjourning once again, leaving the budget negotiations in the hands of the 14 conferees tasked with resolving any differences between the budget versions passed by the two chambers in March. 

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. Both parties were mostly haggling over a $3 billion gap separating their individual spending plans. Most disagreements were related to different versions of tax relief proposals – an important staple of Youngkin’s campaign platform.

Aware that several of his key campaign promises remain unfulfilled unless they were adopted in the budget, Youngkin became increasingly frustrated with the slow pace of 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,” Youngkin told Cardinal News on April 7, reiterating his push for tax relief, salary increases for teachers and law enforcement, and investments in the state’s health and mental health system.

Youngkin spokeswoman Macaulay Porter said in an email Friday that the governor has been briefed on the budget and that “he looks forward to seeing the final language.” She declined to comment further. 

Although Youngkin did not get all the items on his wish list – such as a three-months  suspension of the state’s 26.2 cents per gallon gas tax that Senate Democrats had denied him last month – the conferees agreed on tax rebates. 

Individuals will get $250 and families $500, which is slightly below the $300 and $600 that Youngkin proposed. The budget also includes a refundable tax credit for low-income working families, a larger deduction for military retirement income and an increase of the standard deduction from $4,500 to $8,000 for individual taxpayers and from $9,000 to $16,000 for families. 

If Youngkin signs the budget in its proposed form, Virginians will also benefit from a partial repeal of the state’s 2.5% grocery tax, which remained a highly contested issue throughout the negotiations. Republicans had pushed to repeal the entire tax, as formulated in House Bill 90, a measure sponsored by Del. Joe McNamara, R-Roanoke County. But Democrats only agreed to slashing the state’s 1.5% portion of the grocery tax while retaining the 1% portion that benefits local governments to fund schools, following a proposal by outgoing Gov. Ralph Northam in his own budget in December. 

Stephen J. Farnsworth, a political scientist at the University of Mary Washington, said that the budget deal – if approved by all the players – is a win for Youngkin, a win for the Democrats in the legislature, and a win for consumers. 

“This is what a compromise looks like. Everybody has a reason to be happy with at least part of this package,” Farnsworth said, adding that while Youngkin did not get his gas tax holiday, the other tax cuts in the spending bill are significant and important. “I imagine most of us go to the grocery store at least as often as we got to the gas station. For most Virginians, filling your belly costs more than filling your gas tank, so that will be a welcome relief that both parties can take credit for,” Farnsworth said, referring to the partial grocery tax repeal. 

Budget conferees also approved a proposal freeing up $11.4 million in state funding for the victims of the major flood that destroyed dozens of homes in Buchanan County in August. The allocation is based on legislation sponsored by Del. Will Morefield, R-Tazewell County, that initially sought to create a designated fund for flood victims using money from the Regional Greenhouse Gas Initiative, a cap-and-trade program that has brought more than $227 million to Virginia. But just one day after Morefield filed his House Bill 5, Youngkin said that he would withdraw Virginia from the Regional Greenhouse Gas Initiative via executive order. 

While Morefield’s proposal was on the docket of the House Committee on Agriculture, Chesapeake and Natural Resources in February, the panel tabled the bill at his request, after he had determined a clearer path in securing relief for the residents Hurley in the form of a budget amendment. 

  “I could not be more thrilled that the Hurley flood relief funding is included in the budget,” Morefield said in a text message Sunday. The language included in the budget will give the Virginia Department of Housing and Community Development the ability to immediately establish the program upon Youngkin’s signing of the bill into law. “DHCD will work closely with local officials and it is my hope the details of how to apply for the grant assistance will be announced in the coming days ahead,” Morefield said, adding the flood victims will finally have the resources to help rebuild their lives. “I would like to thank my colleagues and all of those who supported this effort for their support. This is a real example of how Republicans and Democrats can work together for the common good,” he said. 

Unexpected was the decision by budget conferees to clear $25 million in site bond debt for the Central Virginia Training Center, a state-owed campus of more than 300 acres on Colony Road in Amherst County that closed in 2020. 

The facility first opened in 1910 to serve people with mental disabilities but it relocated its last patients two years ago. The Amherst County Board of Supervisors last month approved a redevelopment plan that aims to open much of the property to a range of future mixed commercial and residential uses – but those plans are contingent on the clearance of the debt. 

State Sen. Steve Newman, R-Bedford County, in February told Roanoke’s Channel 10 News that he was proposing to pay the state’s bonds through the General Assembly, including $2.6 million for a pilot program to turn part of the property into a temporary triage center. 

For Del. Sam Rasoul, D-Roanoke, the budget allocation funding the Catawba study with $750,000 marks a victory in his fight that began with his House Bill 105 in January. The legislation would have directed the Department of Behavioral Health and Developmental Services to study the feasibility of transforming the hospital into a state-of-the-art campus offering substance abuse treatment and addiction recovery.

The bill unanimously passed the House but was defeated in the Senate, where the Rules committee continued the proposal to the 2023 session. However, Del. Terry Austin, R-Botetourt County, a member of the House Appropriations Committee, said in March that the panel had allocated about $1 million in their spending plan to pay for the study.

“I’m glad that the conferees saw the value in us taking a long hard look into how we can transform the Catawba campus,” Rasoul said in a phone interview Sunday. 

Lawmakers will now have to weigh the proposed budget in addition to a spending plan for the fiscal year ending June 30. If the General Assembly approves both proposals on Wednesday, the two budgets will then be headed to Youngkin’s desk, who will have seven days to propose amendments or veto provisions. 

Farnsworth, the political scientist, said that considering the timeline, chances are that the budget will make it out of the legislature with few changes. “Partisan ill will in Richmond has made it difficult to secure bipartisan compromise this year, but with the end of the year budget bearing down on the state government, the prospects of this deal holding are better than they would have been in March,” he said. 

Also in the proposed budget:

  • $6 million to Botetourt County for construction of a new Fincastle Museum – contingent on $500,000 in matching funds from the county. This refers to the Botetourt County Historical Museum, which is about to be displaced by courthouse renovations.
  • $4 million for Halifax County to build a water line from Danville to the Virginia International Raceway.
  • $2.5 million in fiscal year 2023 for Unite Virginia, a technology platform that connects health care and social services agencies across the state and allows them to more easily make referrals for clients who could benefit from a broad array of services. The platform was rolled out in 2020 with $10 million in CARES Act funding. Northam’s budget had included $16 million to pay for the program over the next biennium, a level of funding that would have allowed for some expansion of its services. Officials with Unite Us, the company that developed the platform, said last week that maintaining the current level of service would cost $5.5 million. The budget says the e-referral system is expected to continue beyond fiscal year 2023 with the support of user fees.
  • $2.5 million for Virginia Tech “to partner with local industries including Volvo Truck, Mack Truck, Torc Robotics (Daimler) and their suppliers to create a unique, world-class future truck research and development center in Southwest Virginia.”
  • $2 million for “technical assistance” for Bristol to help with its odor-producing landfill.
  • $1.8 million for Danville Community College to “to establish an aviation maintenance technology program.”
  • $1.3 million for job training connected to the Blue Star medical glove factory coming to Wythe County that’s projected to create 2,500 jobs.
  • $500,000 for the American Civil War Museum in Appomattox.
  • $500,000 for PBS Appalachia.
  • $500,000 for the Virginia Museum of Transportation in Roanoke.
  • $465,000 for the Mendota Trail in Washington County to restore abandoned railroad trestles and rehabilitate the former railroad bed for conversion to use as a walking and cycling trail.
  • $400,000 for planning commissions in Southwest Virginia’s coal counties to develop economic development programs “that align with federal funding opportunities, including Assistance to Coal Communities funding.”
  • $327,8000 for  repairs to the Rosenwald Community Center-Campbell County Training School.
  • $200,000 to study whether the state should build “inland ports” in either the Bristol or Lynchburg areas or the Mount Rogers Planning Commission District, which extends from Bristol to Wythe County.
  • $150,000 for the Get Schooled program at Center in the Square in Roanoke that provides “science, math, and agriculture programming for public school students.”
  • $125,000 for the Wine Board of Virginia to study “developing vinifera-style wine grapes adapted to the Mid-Atlantic region.” The Tobacco Region Revitalization Commission has been promoting wine-growing as a substitute for tobacco farming in Southside.
  • $100,000 for the Danville Welcome Center.
  • Language that directs the state tourism authority to “provide technical assistance to the city of Danville on how best to plan for increased tourism in the Southside region due to infrastructure improvements at the Virginia International Raceway and the opening of a casino in the City.”

Reporter Megan Schnabel contributed to this report.

Markus Schmidt

Markus Schmidt is a reporter for Cardinal News. Reach him at markus@cardinalnews.org.