Day 82: From Impasse to Crisis

HouseGOP2014 General Assembly Session, Health Care, Issues

After 82 days, Governor Terry McAuliffe’s budget impasse has become a full-blown budget crisis.

Virginia is facing a budget shortfall for the next two years that could exceed $1 billion. And without a budget in place by July 1, the state will not have access to the rainy-day fund, meaning the only way to close the shortfall is through significant cuts to the core functions of government.

From the Richmond Times-Dispatch:

The General Assembly’s money committees are bracing for a possible state revenue shortfall that could exceed $1 billion over the next two years and force deep spending cuts in a biennial budget that has yet to be adopted.House Appropriations Committee Chairman S. Chris Jones, R-Suffolk, informed local government officials Wednesday that a potential shortfall of $300 million to $350 million in the fiscal year that ends June 30 would have major consequences for state and local government in the next two fiscal years.

“While we will not know the final revenue numbers until the end of June, it appears very likely that the commonwealth could face a significant revenue shortfall for the current and next fiscal years,” Jones said a letter that he also sent to Gov. Terry McAuliffe and members of the assembly. “That shortfall could exceed $1 billion for the biennium.”

Sen. John Watkins, R-Powhatan, a member of the Senate Finance Committee, estimated a potential two-year shortfall ranging from $1.1 billion to $1.4 billion.

“I’m guessing it’s worse rather than better,” Watkins said Wednesday.

The worst-case scenario is that Virginia will face a significant revenue shortfall without being able to tap the state’s Revenue Stabilization Fund, or rainy day fund, for potentially hundreds of millions of dollars because the assembly has not yet adopted a budget for the biennium that begins July 1 and ends June 30, 2016.

Under the state constitution, the rainy day fund can be used to offset a certified shortfall of revenues under an enacted budget.

“If there is no budget, there is no enacted budget to measure a shortfall against,” Brown said.

If the governor and assembly are unable to tap the rainy day fund, Jones said their options “will be severely limited” and “may result in significant cuts to core functions of government.”

With the state facing a $1 billion shortfall, it would be beyond irresponsible to take on new, long-term financial obligations, especially by expanding the fastest growing line item in the state budget. Despite the best efforts of Democrats to argue to the contrary, you don’t save money by making government programs bigger.

The need to complete action on the budget is real. Without a budget in place, the Governor and General Assembly will not have access to the rainy day fund to address the budget shortfall. That could mean significant cuts to the core functions of government.

This news should create a sense of urgency for Governor McAuliffe and his Democrat-controlled Senate, who refuse to pass a budget that does not include Obamacare’s Medicaid expansion.

The clear path out of this crisis is to set Medicaid expansion aside and pass a budget as quickly as possible so the General Assembly can protect funding for K-12 and higher education, public safety, mental health and local governments.