RICHMOND — General Assembly budget leaders said they are near an informal agreement on a revised two-year state budget, but Gov. Ralph Northam warned them Wednesday he would not sign the spending plans the House of Delegates and Senate approved last week without major changes to preserve the state’s flexibility to respond to the COVID-19 public health emergency.
House Appropriations Chairman Luke Torian, D-Prince William, and Senate Finance Chairwoman Janet Howell, D-Fairfax, said in a joint interview Wednesday morning they are close to a final budget deal, but they still expect to go through the formal process of moving the two spending plans into conference committee for final action, possibly next week.
“We’re making a lot of progress,” Howell said. “There are some outstanding issues, but hopefully we can finish today.”
The Senate Finance & Appropriations Committee voted 13-2 on Wednesday to substitute the budget the Senate adopted last week for the House budget bill, which is the first step in putting the budget legislation into a conference committee to reconcile differences. Howell and Torian said their committee staffs and leaders have been working closely together for four of the past five days to reach a compromise they said is imminent.
“We’re just a few days away,” Torian said.
However, Northam sent General Assembly leaders — including the budget leaders, House Speaker Eileen Filler Corn and Senate Majority Leader Dick Saslaw — a letter Wednesday morning that made clear he does not support legislative proposals to include contingency funding that would commit cash he had proposed to leave unspent because of uncertainty over the pandemic. He called on them to wait for the next legislative session in January before committing the state to hundreds of millions of dollars in spending priorities.
“I need to be clear I want to sign the budget you send me,” Northam said. “But that is not yet possible.”
Northam’s two-page letter is the first public suggestion he won’t support the budgets the two chambers have produced in a special session now in its eighth week. Northam called the special session primarily to deal with a projected $2.8 billion revenue shortfall.
Secretary of Finance Aubrey Layne reiterated in an interview Wednesday the position he took before the budget committees Aug. 18 after the governor presented his budget proposal: “We do not need a new budget for financial purposes.”
That does not mean Northam doesn’t support many of the policy initiatives the House and Senate proposed in their budgets. That includes his own proposals to restore a limited amount of spending on priorities the governor and assembly had frozen in response to the public health emergency he declared March 12, the same day the Democratic-controlled assembly adopted a sweeping new budget.
“I am writing today because it is important for Virginia to take emergency special-session budgetary actions now only if they reflect extensive public input that acknowledges the long-term consequences of those decisions,” he said. “Otherwise, we should preserve financial options for the 2021 regular session, when public health and economic conditions could allow us to make longer-term spending commitments that reflect the people’s input.”
“Right now, the best course is to address the pandemic and the recession by preserving cash and continuing to building capacity to respond if the economy declines further,” Northam said. “Doing otherwise threatens to erode the commonwealth’s ability to weather the current pandemic economy without making budget cuts, reducing services, or laying off state workers.”
The governor raised specific concerns about legislative proposals to include hundreds of millions of dollars of contingency spending that would proceed if the state’s revenues do not decline steeply before he presents his next revenue forecast and budget Dec. 15. The House budget would pay for that spending by reducing the $490.5 million unappropriated balance in the governor’s budget by $186 million, while the Senate plan does not reflect its proposed contingency spending in the uncommitted balance.
Northam also asked them to maintain his flexibility to respond to the public health emergency, including how Virginia uses more than $1 billion in uncommitted federal funds under the CARES Act.
“An emergency response needs less bureaucracy, not more,” he said. “As an Army veteran, I know that wars fought by committee are losing battles.”
In their joint interview, Torian and Howell declined to discuss the details of their pending agreement, including their response to concerns that Northam already had voiced during a conference call with assembly leaders on Sunday, as well as publicly through Layne and Chief of Staff Clark Mercer.
“We listened to the administration,” Torian said, but added that the legislature also has a responsibility to act on the budget the governor proposed.
Howell said, “We’re very aware of their concerns. We’re taking them seriously, like we do with all stakeholders.”
“Hopefully, when we have acted on a final budget, the administration will be satisfied with it,” she said.
Howell and Torian said the two money committees are close to agreement on a plan that focuses on health care — particularly spending on behavioral health that the Senate made a priority — K-12 and higher education, and criminal justice and police reforms that have dominated the special session.
Torian said the budget the legislature adopted in March under newly installed Democratic majorities in both chambers was “one of the best budgets” in state history, but the pandemic forced the assembly to freeze more than $2 billion in new spending because of potentially steep declines in revenues.
“It wasn’t like we were going into special session to pass a budget,” he said. “We had to come back in to redo a budget.”
“We believe we’re going a great job with the budget.”
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