September 18 Special Session

This afternoon and evening in Richmond, the House and Senate adopted legislation, HB 5010, encompassing the budget agreement agreed to by Governor Terry McAuliffe and senior legislators.

As reported by Kemper Consulting on Monday, September 15, the budget agreement and bill are intended to finalize the current fiscal year budget (FY 2015) and initially address necessary reductions in the second year of the current biennial budget (FY 2016).

The bill will be communicated to the Governor for his consideration.  Kemper Consulting expects him to sign it into law.

The Constitution of Virginia requires a balanced budget.  In August, Governor McAuliffe projected additional state general fund shortfalls of more than $345 million in FY 2015 and more than $535 million in FY 2016.  These reductions are in addition to the $1.5 billion shortfall forecasted and addressed in the adopted 2014-16 biennial budget.  Soon after the announcement of the new shortfalls, the Governor asked state agencies to prepare 5 percent reduction plans for FY 2015 and 7 percent reduction plans for FY 2016.  The Governor is in the process of reviewing and ultimately approving state agency reductions.

Key HB 5010 provisions:

  • Public Education (K-12): Protects from additional reductions at this time; and
  • Higher Education and Local Government: Reductions are lessened compared to additional state agency cuts of up to 5 percent in FY 2015 and up to 7 percent in FY 2016. (The Governor’s Office notes average FY 2015 Higher Education reductions of 3.3 percent – some institutions are lower and some are higher than 3.5 percent).

The agreement, but not the bill, requires an additional FY 2016 reduction of more than $270 million.  The Governor and General Assembly will address these additional budget cuts during the 2015 regular legislative session that convenes in January.

While the General Assembly adopted HB 5010 today, the House and Senate remain in session this evening.  Each chamber is considering health care proposals.  Prior to the announcement of the budget agreement, today’s session originally was called to address the issue of Medicaid expansion. The Governor, Democratic legislators and a handful of Republican legislators support the enactment of Medicaid expansion in Virginia while a significant majority of Republican legislators oppose federally authorized expansion.  In the near term, it is highly unlikely that the General Assembly will agree to accept the federal provisions and funding.

Kemper Consulting will continue to report on key legislative actions as they occur.