$2.6 Billion Budget Surplus
These funds will not be considered in the upcoming Special Session but will be allocated during the 2022 General Assembly Session.
Terry McAuliffe has yet to propose a plan for Virginia’s $2.6 Billion surplus that will be allocated in the first weeks of the new Administration’s tenure. In contrast, Glenn Youngkin released a detailed plan for surplus funds – focusing on providing tax relief to Virginia families and key investments into the rainy day fund.
The General Assembly is currently working to allocate nearly $4.3 billion in funds provided by the American Rescue Plan Act (ARPA), and while Terry McAuliffe hasn’t released any proposals or recommendations for how to best expend these federal funds, we will focus on the proposal put forward by his partisan ally, outgoing Governor Ralph Northam. McAuliffe has not said whether or not his recommendations would differ from Northam’s priorities, but we intend to revise this post if any updates are available regarding McAuliffe’s take.
$4.3 Billion in Federal Funds Available to the Commonwealth from the American Rescue Plan Act (ARPA).
Ralph Northam has proposed record spending using the federal ARPA funds. To better understand Northam’s proposed spending, we’ve broken it down into three major areas: Small Business Relief, Public Education and Public Well Being.
Small Business Relief
The Northam Administration has hailed their plan to help small businesses with ARPA funds – which includes $50 million in a newly created Virginia Tourism Recovery Program and $862 million to help replenish the Unemployment Insurance Trust Fund. Though the Commonwealth is slated to receive historic federal funding, investments in small businesses in Northam’s plan aren’t enough to provide the necessary support for the largest segment of employers in the commonwealth. Before the pandemic in 2019, nearly half of all workers in Virginia were employed by small businesses. (Source: Small Business Association)
Northam’s $50 million distribution to create the “Virginia Tourism Recovery Program,” which would contribute to 114 destination marketing organizations throughout the Commonwealth. $50 million is insufficient for tourism related industries, which suffered tremendously during the pandemic during shutdowns ordered by Governor Northam. Adding insult to injury, Northam is proposing spending nearly 50% more ($73 milion) to modernize the Virginia Employment Commission and its offices, an agency that has underperformed counterparts across the country to the detriment of Virginians in need.
Northam’s largest investment for small businesses is a proposal to use $862 million of the ARPA funds to replenish the Unemployment Insurance Trust Fund, which businesses pay into on behalf of their employees and has provided the greatly needed benefits for furloughed and laid off Virginians.
By contrast, Glenn Youngkin’s proposal would make serious investments into the Unemployment Insurance Trust Fund, allocating $1.3 billion to rebuild the safety net for working Virginians who lose their jobs and need assistance. In total, the Youngkin plan invests $2.7 billion for small businesses, protecting them from anticipated tax increases and preparing the commonwealth for future prosperity.
Governor Northam also announced several funding goals for education. These include using $250 million in American Rescue Plan funding to improve air quality and ventilation in public schools. Unfortunately, these plans require a local match, meaning that these federal funds being allocated by the state would require localities to provide a dollar for dollar match in order to qualify. While the state would put none of its General Fund monies towards the project, rural and small localities would be expected to pay equal amounts as the federal funds in order to make improvements to air and ventilation improvements during a pandemic caused by airborne contagions.
Northam’s plan would set aside another $111 million in American Rescue Plan funding to increase access to financial aid for undergraduate students from low and moderate income households. The plan does not say whether this money would take the form of grants or loans.
Public Well Being
Governor Northam and Glenn Youngkin’s plans agree on the importance of improving the state’s mental health safety net and improving broadband.
Northam’s plan would spend approximately $487 million to expand rural broadband access across the state, and $411.5 million to reduce water pollution and increase access to clean water.
Governor Northam has also announced a $485 million initiative to fund Virginia’s behavioral health system. This money would go towards staff salaries, substance abuse treatment services, and community-based crisis services. We could not find an explanation from the governor’s office as to how this money would be distributed across the state to ensure it reaches the areas hit hardest by opioid overdoses. Nonetheless, mental health services are a funding priority for Republicans and Democrats alike, and we are glad to see both sides taking this issue seriously.