Virginia’s Revenue Shortfall Increases, Possible Budget Solution Offered

Virginia’s House of Delegates and State Senate continue their standoff and refuse to negotiate their differences to enable passage of a biennial state budget.  To further complicate the issue, state revenues have fallen $300 million short of projections for this state fiscal year, and the revenue shortfall may be as high as $1 billion for the upcoming biennium.

The House continues to insist a “clean” budget should be passed without any form of Medicaid expansion, while the Senate continues to insist the state should not pass up the additional federal funds that would accompany passage of Medicaid expansion especially with the increasing revenue shortfall.  Meanwhile time is running out.  The current state budget ends June 30th.  While there is much conjecture, no one really knows what will happen in state government without a budget on July 1st.  Governor McAuliffe has stated that he has powers to keep government running; the House of Delegates says he doesn’t because the state constitution does not provide guidance for government operation without General Assembly appropriation of funds.  

On Thursday, a key Senate Republican offered a proposal to a break the standoff on the issue of Medicaid expansion that has held the state budget hostage.  Senator Emmett Hanger Jr. from Augusta  offered a plan to end the General Assembly’s budget-Medicaid deadlock. The dispute has prevented passage of a two-year, $96 billion state budget because the Senate includes it in its spending plan but the House does not.  Hanger’s proposal would pull Medicaid out of the budget, but it also calls for changing voting requirements for a state Medicaid reform commission established in part to make recommendations about expansions of the program.  

The pressure is mounting on the legislature and the governor to address the biennial budget before July 1st.  When a budget agreement does occur, it will likely include changes to reflect Virginia’s alarming revenue shortfall.  At this point, however, no discussions have taken place concerning where cuts would be made to account for the shortfall.

VHCA will continue to monitor budget activities including the proposal from Senator Hanger and keep members informed of significant developments.