Surovell: Coronavirus likely to put some parts of state budget in jeopardy

This column was submitted by State Sen. Scott Surovell (D-36) and does not necessarily represent the views of Covering The Corridor.

Last Thursday, we passed the Senate Budget and nearly as soon as it was passed, the Corona-19 Virus situation exploded. While this virus crisis is unprecedented, our budget was well-structured and balanced as required by our constitution, and we are prepared for a recession.

Virginia has its largest cash reserves in the history of the Commonwealth – over $2 billion. We have been building this reserve both because of constitutionally required deposits to our Revenue Reserve or “Rainy Day” Fund, but also because analysts have been warning us about a likely recession for years even though until last week, we were in the longest economic expansion in American history.

Our outside bond rating agencies have been warning us that much of American economic growth has been generated by government stimulus versus underlying solid economic fundamentals. For example, the Trump tax cuts from 2017 and additional federal government spending accounted for about 1.1 percent of the country’s Gross Domestic Product over the last three years. Some of Virginia’s productivity was generated by the $1 billion annually invested through Medicaid Expansion.

There have been warning signs present for the last 12 months. For example, the “inverted yield” curve — when short term money can be borrowed at higher interest rates than long term money — has predicted every recent recession. The American yield curve inverted in January, and the markets briefly paused and then went on speculating. We cautiously budgeted and planned for a recession with significant reserves.

While legislators are beginning to talk among ourselves and with the Governor’s Office about next steps, Gov. Ralph Northam has significant authority to make budgetary decisions without legislative approval if revenues do not meet forecasts. There some actions that could require a special session such as unemployment benefit extensions, temporary Medicaid expansions, limitations on liability, minimum income payments or sick leave expansions. We will see where things go.

Unfortunately, the final budget has some important policy changes in it which are now likely in jeopardy. It assumed three-percent revenue growth which allowed for a two percent pay increase for teachers in the first year and a two percent increase in the second year, plus a two percent bonus for state employees this year and a two percent raise next year along with increased State Trooper compensation. It also contained an historic $84 million investment in early childhood education, $46 million for new school counselors, and $180 million in school construction, plus $80 million in free community college tuition for the Governor’s “G3” program for low income students studying certain fields.

Overall, Fairfax County was poised to receive an additional $185 million for K-12 over the next two years, Prince William is budgeted for $122 million and Stafford $56 million. This could be in jeopardy if revenues fail. We also budgeted major investments in higher education, increases in Medicaid reimbursements and water quality funding.

The budget also contained several of my requests for the 36th District prerogatives. First, it requires the Commonwealth to collaborate with Fairfax and Prince William Counties to study the extension of the Blue Line from the Franconia-Springfield Station to Lorton, Woodbridge, Potomac Mills and potentially Quantico. Second, the budget funds the creation of the Prince William County Public Defender’s Office creating twenty-five new attorney positions along with ten support staff. Third, there is a $3 million grant for the U.S. Army Museum which was saved largely due to the efforts of Del. Mark Sickles.

The budget also funds my request to remove a barge from Belmont Bay which is a navigation hazard. It also included my request restore two staffing positions at Mason Neck State Park and to require the Virginia Park State Parks to collaborate with Stafford County Public Schools on a new environmental education program at Widewater State Park.

The Governor is continuing to take actions to make more testing available and coordinate our response to this crisis. Please stay tuned to my twitter feed (www.twitter.com/ssurovell), official Facebook (www.facebook.com/surovell) and my blog, The Dixie Pig (scottsurovell.blogspot.com), where I will post continued updates.

Please stay safe over the coming weeks and if you have any questions, feedback or ideas, please email me at [email protected].