Governor Northam’s Letter to General Assembly Budget Conferees

From Gov. Northam’s office:

Governor Northam’s Letter to General Assembly Budget Conferees

RICHMOND – Today, Governor Ralph Northam sent the following letter to the General Assembly Budget conferees outlining his position with respect to ongoing negotiations on the state budget:

February 15, 2018

The Honorable Emmett W. Hanger, Jr.
Co-Chairman, Senate Finance Committee
Pocahontas Building, Room E507
Richmond, Virginia 23219

The Honorable Thomas K. Norment, Jr.
Co-Chairman, Senate Finance Committee
Pocahontas Building, Room E603
Richmond, Virginia 23219

The Honorable S. Chris Jones
Chairman, House Appropriations Committee
Pocahontas Building, Room W1312
Richmond, Virginia 23219

Dear Senator Hanger, Senator Norment, and Delegate Jones:

I want to express my sincere thanks to each of you for your efforts and dedication to the citizens of the Commonwealth.  I commend you for your hard work and the commitment reflected in both the House and Senate versions of the proposed budget.  Thank you for your efforts to communicate with me as you considered many of your decisions.

I especially appreciate the priority you placed on maintaining conservative revenue estimates by not increasing the revenue forecast.  This commitment to prudent and sound fiscal planning, along with your agreement to make additional deposits to the Revenue Reserve Fund, will help guard against short-term revenue shocks. It will also help ensure that the Commonwealth has cash on hand to address potential future impacts from economic downturns or federal actions that could have a negative impact on Virginia.

In the few weeks since our work together began, we have established a new tone of bipartisan productivity here in Richmond. This budget offers the opportunity to build on the successes we have achieved together so far this year and respond to many of the challenges our fellow Virginians are facing.

As I review the budget proposed by each chamber, it is clear that we will struggle to reconcile the differences between them until we reach an agreement on the issue of expanding health care to Virginians who need it. Until we decide on a path forward, it will also be more difficult than it has to be for leaders in Richmond to make progress on many other issues that are important to the families we serve.

I am confident that you will resolve this issue and allow Virginia to reap the benefits that expanded coverage will bring for the nearly 400,000 people who will be directly impacted, for our economy, and for our budget. Expanding coverage will also allow us to improve access to care and treatment for people suffering from mental illness and addiction, two issues where we have made bipartisan progress in recent years. Once this policy issue is resolved, I am confident that the remainder of the differences in the two budgets will follow a natural course that reflects our shared values.

As you consider the balance of the issues in this budget, I ask that you ensure that the final product strengthens our financial standing and lays a foundation for growth and opportunity in every corner of Virginia. My primary concerns include:

• Education – Our economic future depends upon a successful and well-funded education system, including K-12 and higher education.  It not only attracts businesses to the Commonwealth but also builds a qualified workforce that will sustain our economy.

• Compensation – Good government relies upon dedicated state employees, teachers, and other state-supported local employees. I hope that you will consider additional funding to compensate these employees, with a particular focus on compensation adjustments for law enforcement, mental health, and corrections personnel.

• Additional revenue reserve contributions – We will deposit $156 million in FY 2018 but we all know that this will not be sufficient.  Our jointly stated goal is two percent of operating appropriations.  While I appreciate the need for a measured approach that acknowledges the needs of other services, we should find the resources to strengthen our revenue reserves as soon as possible.

• Structural balance – Given the potential for future economic headwinds, we must ensure that on-going revenues can support our spending.

While there are other amendments that I hope you will make to the budgets as the process moves forward, I have intentionally limited my message to these basic, overarching issues.  I realize that the conference on the budget is a difficult process and that you have many detailed issues that you must address.  Further, until the issue of health coverage is resolved and the final related savings are known, it would be difficult to provide definitive guidance on which services are funded at what level.  I hope that the priorities that I have listed above will give you guidance as you approach your final decisions.

These priorities will benefit Virginia families, our budget, and our economy. Many of these priorities will also be instrumental in ensuring that Virginia preserves its AAA credit rating. As you know, ratings agencies expect that we will work together to pass structurally balanced budgets that invest in policies that strengthen our economy. They also expect that we will maintain adequate revenue reserves to defray the impacts of unexpected disruptions. I hope you will work with my team and me to finalize a budget that continues our proud tradition of exceptional fiscal management and investment in core priorities.

Going forward, my team and I will engage directly with the conferees and provide every resource we can to assist with the decisions you are preparing to make.  I have asked Secretary of Finance Aubrey Layne to lead this effort. It is my sincere hope that the General Assembly will finalize a budget before the end of the regular session that expands health coverage to Virginians who need it, achieves structural balance and increased reserves, and invests strongly in priorities that will serve Virginians and grow our economy. Again, I want to thank you for your service and for your willingness to put first what is best for our Commonwealth.

Sincerely,

Ralph S. Northam

Enclosure

cc: The Honorable Janet D. Howell
The Honorable Stephen D. Newman<
The Honorable Frank M. Ruff, Jr.
The Honorable Richard L. Saslaw
The Honorable Frank W. Wagner
The Honorable M. Kirkland Cox
The Honorable T. Scott Garrett
The Honorable Barry D. Knight
The Honorable Christopher K. Peace
The Honorable Mark D. Sickles
The Honorable Luke E. Torian
Ms. April Kees
Mr. Jason Powell
Mr. Robert Vaughn