Virginia Gov. Bob McDonnell proposed millions in new spending for mental health, education and other priorities Monday in a two-year, $95.9 billion state budget.
The spending blueprint McDonnell outlined in a speech to the General Assembly's two money committees is nearly $10 billion larger than the biennial budget that expires July 1, 2014. Most of the increase is attributed to projected general fund revenue growth of 4.2 percent in the next fiscal year and 3.9 percent the year after. Just over $3 billion stems from an accounting change related to interagency payments not previously reported in the budget.
The Republican governor's proposed budget - his last before leaving office in January - includes no tax or fee increases. Kaine's predecessor, Democrat Tim Kaine, proposed a $2 billion state income tax increase on his way out the door four years ago.
"I did not leave the same Christmas gift for my successor that Gov. Kaine left for me,'' McDonnell told reporters after his appearance before the Senate Finance and House Appropriations committees.
Instead, McDonnell is handing Democratic Gov.-elect Terry McAuliffe and the legislature a budget that he said takes a cautious approach because of the uncertainty surrounding how Washington's fiscal policies will affect Virginia and its large number of federal offices and employees.
"This approach is especially important today when my introduced budget is handed off to a governor-elect of a different party,'' McDonnell told the lawmakers.
In a statement, McAuliffe said he and his advisers are already scrutinizing the proposed budget "and looking forward to finding common ground with leaders from both parties to pass a final product that grows our economy and uses every taxpayer dollar to make Virginians' lives better.''
McDonnell is leaving an unappropriated balance of nearly $51 million - cash the 140 legislators will surely attempt to target for pet projects after the General Assembly convenes its 60-day session Jan. 8. That's the most wiggle room in the state budget since 1991, according to the administration.
The budget also earmarks $303 million for the state's so-called "rainy day'' fund, bringing Virginia government's savings account to more than $1 billion for the first time since fiscal year 2008.
Medicaid continues to be a major growth item, increasing by $674 million to account for more than one-fifth of the spending in the two-year budget. That increase does not contemplate Medicaid expansion under the federal health care law - a priority McAuliffe that is opposed by the Republican majority in the House of Delegates. As a compromise, the legislature last year appointed a panel that would oversee expansion of the federal-state entitlement program only if certain cost-containment changes are implemented.
McDonnell proposed continuing the Medicaid panel and including legislation in the budget that would automatically stop any potential expansion on June 30, 2016, to allow a full review of changes. McDonnell said the suspension would force state officials to evaluate whether Virginia could afford expansion in the long term.
The budget provides performance-based bonuses of up to 3 percent for state employees, provided their agencies meet financial goals, and a 2 percent increase for a limited number of employees in high-turnover public safety or health jobs, as well as some general district court clerks. There is no new money for teacher salaries a year after lawmakers approved the state share of a 2 percent raise.
McDonnell had already announced many of his spending proposals before Monday, including $38 million in new funding for mental health initiatives. The issue is expected to receive heightened attention following the November death of a state senator's son, who attacked his father and killed himself hours after being released from emergency custody. Sen. Creigh Deeds, D-Bath, survived the stabbing.
"There is a clear need for additional community and crisis mental health resources and supports based on events we've seen in Virginia and other places the last five or six years,'' McDonnell said.
The governor also previously announced millions in additional spending for public schools and colleges, public safety, water quality, foster care services, prisoner re-entry programs and a proposed Slavery and Freedom Heritage Site in Richmond.
State Sen. Janet Howell, D-Fairfax, said she liked many of the proposals for Virginia's neediest residents but wished for more money for primary and secondary education. The bulk of McDonnell's proposed $583 million increase for public schools would just keep up with growth in enrollment and teacher pensions, although there are modest cash infusions for school construction loans and school safety officers.
Transportation moved down the priority list after the General Assembly last year approved the first major overhaul of highway and transit funding in more than 25 years. However, the budget does include $6.5 million for planning to deepen the harbor in Norfolk and the channel of the Elizabeth River to accommodate larger cargo ships that are expected to visit after the Panama Canal is expanded.