GOV. WANTS $2B FREEZE IN SPENDING
Amid outbreak, Northam proposes budget cuts; delay of minimum wage hike expected
Gov. Ralph Northam wants lawmakers to put $2 billion in new spending on pause while the economic impact from the coronavirus pandemic plays out in Virginia, his top fiscal adviser said Sunday.
Among the other changes the
General Assembly will consider when it returns to Richmond next week: delaying an increase in the state’s minimum wage.
It’s still too soon to know how much revenue the state has lost and will continue to lose because thousands of Virginians are out of jobs and spending is down, Northam’s finance secretary, Aubrey Layne, said on a call with reporters Sunday afternoon. The budget that was passed a month ago, before the pandemic, also doesn’t include all of the COVID-19 expenses the state has incurred, let alone still to come.
“The only thing I know for certain right now is that the economy and the outlook for us — for both the U.S. and the Virginia economy — are undergoing a contraction without precedent in our history,” he said.
Northam is asking the General Assembly to approve freezes of $874.6 million in the fiscal year that starts July 1 and $1.4 billion in the next fiscal year. They would last until the state has a better idea of how much less money is coming in. Northam would then ask lawmakers to come back to Richmond sometime in late summer or early fall to reshape the budget.
The freeze also gives time for the Northam administration to know exactly how it’s allowed to spend the $1.8 billion Virginia is expected to get from the federal stimulus package.
Localities are expected to get another $1.5 billion.
Halting new spending means there won’t be money for a state commission to investigate the Virginia Beach mass shooting, at least for now.
It also means no raises for
teachers or state employees, as well as no new spending on infrastructure such as roads.
Northam’s chief of staff, Clark Mercer, told state agency heads earlier this month to halt any discretionary spending and freeze hiring.
To make up for some of the lost revenue expected, Northam is proposing to tax so-called games of skill — slot-like machines found in restaurants, bars and convenience stores — and put the revenue into a COVID-19 relief fund for small businesses, as well as for housing and nursing home assistance.
Lawmakers voted to ban the machines effective July 1, saying they were harmful to Virginia Lottery sales — which generate revenue for schools — and would increase the risk of problem gambling.
But Northam wants to temporarily tax them at 35%, which Mercer said could generate around $100 million. They’d then be banned after a year.
In addition to bringing the state money, Mercer said allowing the games for a year would ease the burden on restaurants that have had to severely limit business or close entirely.
Northam had until 11:59 p.m. Saturday to take action on any bills. He could sign, veto, recommend changes to them — or do nothing. The bills that don’t get his signature automatically will become law on July 1.
One of the biggest changes Northam proposed is delaying the first increase in minimum wage from $7.25 an hour to $9.50 an hour. The bill was supposed to go into effect Jan. 1, and Northam suggested pushing that start date to May 1, 2021.
If that change is approved, the minimum wage would still increase incrementally as lawmakers originally proposed after May 2021, ending with $12 an hour in 2023.
Del. Todd Gilbert, the GOP House leader, said in a statement the businesses required to implement the minimum wage increase would be “digging out of this financial hole well past May 1, 2021.”
“The actions taken by the governor fail to provide long-term certainty for Virginia’s businesses and their employees,” he added.
Northam also suggested delaying when public government employees — including teachers — can begin collective bargaining until May 2021, rather than July 1.
Casinos
Northam also recommended changes to the bill that would legalize casinos in five cities — including Portsmouth and Norfolk — pending approval of a voter referendum in those cities in November. He suggested any revenues that don’t go to the cities, Indian tribes or the gambling addiction relief fund go toward school construction and renovations, rather than to the state’s general fund.
Some lawmakers have been pushing for a permanent revenue source to help local school divisions pay for much-needed building upgrades, but bills to create one died during the regular session. Lawmakers instead passed a bill creating a school construction commission to provide guidance to school divisions and make funding recommendations to the governor and General Assembly.
Elections
Northam already moved the June 9 Congressional primaries to June 23 and proposed moving municipal elections from May to November.
A bill to eliminate the requirement that people give an excuse for voting absentee — the Department of Elections has been encouraging people to select the “disability/illness” excuse during the coronavirus pandemic — and extend early voting to 45 days before any election will go into effect July 1.
He also signed a bill eliminating the requirement that voters present a photo ID, and another making Election Day a holiday in November. That bill also removes Lee-Jackson Day as a holiday in February.
And he approved a bill that creates automatic voter registration when people go to the DMV for a transaction. All Virginia DMV locations are closed until at least April 23.
Environment
Northam signed the Clean Economy Act, which requires Dominion Energy to be 100% carbon-free by 2045 and Appalachian Power to be 100% carbon-free by 2050. It also requires nearly all coal-fired plants to close by the end of 2024.
Northam also signed legislation introduced by freshman Del. Martha Mugler, D-Hampton, that creates a division of offshore wind focused on making Hampton Roads a wind industry “hub” and approved a bill declaring the state’s opposition to offshore
drilling.
Criminal justice
The governor is also proposing an emergency clause to let the so-called Fishback inmates — whose juries weren’t told parole was abolished — be eligible for parole immediately, rather than July 1. About 300 Fishback inmates would be eligible.
In other criminal justice-related legislation, Northam agreed to raise the dollar threshold for larceny to be a felony from $500 to $1,000. He also signed a bill that permanently eliminates the suspension of driver’s licenses for unpaid court fines, as well as a bill that raises the age a minor can be tried as an adult without court approval from 14 to 16.
And on a bill that makes possession of small amounts of marijuana a civil penalty with a $25 fine rather than a misdemeanor, he made one technical amendment: that a study looking at how to legalize marijuana be completed by November 2021 instead of this November.
One veto
The Democratic governor vetoed one of the more than 1,200 bills lawmakers sent to his desk: one that sought to change the state’s definition of “milk” to exclude products made from nuts or other plants, like almond or soy milk.
The bill, carried by Del. Barry Knight, R-Virginia Beach, defined milk as coming from a “healthy hooved mammal” and directed the Board of Agriculture and Consumer Services to ban the sale of any impostor liquid branded as milk. It would have gone into effect only once 11 other states approve it, to alleviate interstate commerce concerns.
Proponents of the bill said it’s a way to protect the shrinking dairy industry, which is competing with the alternative beverages that are deceiving to people who think they might be drinking milk from a cow. Opponents called the bill unnecessary and anticompetitive.
“While the governor is very supportive of the dairy industry, he is concerned this bill is unconstitutional and could violate commercial freedom of speech,” Northam’s spokeswoman said in a text message.
The Democrat-controlled General Assembly is slated to take up Northam’s amendments April 22 in Richmond.