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How Should Virginia Allocate $4.3 Billion in Federal Funds From the American Rescue Plan? A Special Session of the General Assembly Will Consider This Question, Starting 8/2…

Gov. Northam: “We have an opportunity to make generational investments in Virginia’s future” with this money.

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With Virginia now flush with billions of dollars in American Rescue Plan funds flowing in, Gov. Northam has called a special session of the General Assembly for August 2 to consider how to allocate it. As Gov. Northam says, “We have an opportunity to make generational investments in Virginia’s future” with this money. The question is, how exactly should this money be allocated? Obviously, this is the kind of problem we *want* to have, but that doesn’t mean it’s an easy thing to figure out. For some perspective, data and a few thoughts, see below for video of yesterday’s House of Delegates Appropriations Committee meeting, as well a bunch of facts and figures, including:

  • A look by VPAP at how $4.3 billion compares to the Virginia state budget, which is around $67 billion in 2021, and specific line items. For instance, according to VPAP’s graphic, highway construction costs about $2 billion a year; K-12 public education costs $8.4 billion a year; Medicaid costs $13.2 billion; etc. So obviously, $4.3 billion is a lot of money in absolute terms, but relative to the overall budget it’s less than 7%,  and relative to the costs of Medicaid or K-12 public education, it’s not even close to one year’s worth of expenditures…
  • Or how about the cost of replacing school buildings greater than 50 years old in Virginia? That would cost nearly $25 billion, which means that if we allocated all the $4.3 billion to replacing those school buildings, it would get us something like one-sixth of the way there.
  • On the other hand, $4.3 billion is more than enough to cover the $205 million to make all Virginia school buildings compliant with the Americans with Disabilities Act (ADA).
  • $4.3 billion could also fund a lot of upgrades to school HVAC systems, electrical and plumbing, technology, sports and playgrounds, etc.
  • Other than schools, $4.3 billion could do a lot of good in pretty much any area you can think of – see here for a list of budgetary items.
  • Another option, which presumably Republicans will support, is to not use most or all of the money for important investments in education, healthcare, transportation, environment, etc, etc., but to give some of it back to Virginians. Of course, if they give $2 billion, let’s say, to 8.5 million Virginians, it would only amount to about $235 per person – not enough to make a huge difference, really, in most people’s lives. So, the question is, which gives the bigger “bang for the buck” in terms of benefits to the state – investing the money in areas that would really benefit from it or giving everyone a couple hundred bucks? The answer to that question should be obvious, but…we’ll see what happens starting on August 2nd, and what kind of pressures – political and otherwise – there are at that time.
  • For his part, Democratic gubernatorial nominee Terry McAuliffe wants to go “big and bold” on “workforce development and education to take Virginia’s economy to the next level.” As for Republican nominee Glenn Youngkin, he called the American Rescue Plan a “bailout to blue states,” so presumably he wants to…what, send the money back to the federal government? invest none of it in Virginia education, etc? Who knows with that guy. (Note: Virginia Scope reports, McAuliffe wants to invest in education, while Youngkin’s spokesperson says “Virginia families deserve a tax refund from this surplus”)
  • So what would you do with this money?

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