Outgoing Virginia Gov. Terry McAuliffe presented a budget proposal to state lawmakers Monday that includes spending for Medicaid expansion, pads the state's rainy day fund and gives state workers a 2 percent raise.
McAuliffe addressed the House and Senate budget committees to unveil his two-year spending plan that also includes some regional tax increases to pay for Virginia's share of additional funding for the Washington area's struggling public transit system.
"Today, I am proud to leave you with a structurally sound budget that prepares us for inevitable future storms, meets every single one of our commitments, and builds on the work we have done together to create a diversified economy with a well-educated and healthy workforce," McAuliffe said.
The spending plan for fiscal years 2019-2020 will serve as a starting point for negotiations during the upcoming General Assembly session, which starts in January. Republican legislative leaders said they would review the proposal and are committed to developing a balanced budget, one they said likely wouldn't expand Medicaid the way McAuliffe envisions.
McAuliffe, a Democrat who leaves office in January, has pushed unsuccessfully his whole term to expand Medicaid under former President Barack Obama's health care law to cover more low-income Virginians.
Republicans have fiercely rejected expansion, saying it would be fiscally irresponsible. But Democrats hope their successes in last month's election, where they nearly wiped out the overwhelming GOP majority in the House, have improved the odds of getting it done this year.
McAuliffe noted Monday that Republicans at the federal level have been unsuccessful at undoing the Affordable Care Act, showing it is "here to stay."
"There are no excuses left," he said.
Under the Affordable Care Act, the federal government picks up almost all of the cost, gradually phasing down to a 90 percent share. McAuliffe's proposal projects a savings of $421.7 million over the biennium.
The spending plan also includes $516 million in additional funding for public education, including money to fund a full-time principal position at every elementary school for the first time.
Attracting and retaining teachers in Virginia is a "growing crisis," he said, adding that the proposal includes funding to automate the teacher license application system and to support principal recruitment and retention in the hardest-hit school divisions.
Teachers and other state workers would also get a 2 percent pay raised under the plan.
Citing uncertainty from the federal government, McAuliffe said the state should put "every available dime" into its rainy day fund.
His plan would grow the cash reserve to $427 million, or two percent of the total general fund operating appropriations in fiscal year 2020.
Those savings would be "welcome news" for ratings agencies, the governor said. Earlier this year, S&P Global changed the state's rating outlook from "stable" to "negative."
The budget also calls for $150 million per year for Virginia's share of the additional $500 million the Washington Metropolitan Area Transit Authority says it needs to keep running.
Metro has suffered declines in ridership amid concerns about safety and reliability. Without the additional funding, Metro's general manager has said he will need to cut service as of July.
Some of Virginia's portion would come from funds already marked for transportation. The rest comes from tax hikes on the northern Virginia hotel tax, real estate tax and wholesale gas tax, which would likely add 2 cents per gallon at the pumps.
"I think we really need to look at some of these reforms before anybody ever talks about a tax increase," said Del. Tim Hugo (R-Fairfax and Prince Williams counties).
McAuliffe said the taxes were previously approved by the General Assembly as part of the 2013 transportation funding plan rolled back by former Gov. Bob McDonnell (R).
"The General Assembly's already voted for it, so it's sort of a no-brainer," McAuliffe said.
But Republicans say Metro reforms most come first.
"I don't see anything there to really say we're going to fix the problem whether it be on the pensions, whether it be on the spending, whether it be on the cost, we're really just saying, what the governor is saying, is, 'Give me the money first, maybe we'll fix it later," Hugo said.
Virginia's contribution is contingent on the District of Columbia and Maryland paying their share, the governor said.
"Everybody's got to step up to the plate," McAuliffe said. "We have stepped up to the plate."
Democratic Gov.-elect Ralph Northam said in a statement he agreed with many of McAuliffe's priorities, including investing in education and mass transit systems, building a cash reserve and expanding Medicaid.
"Virginians elected us all to put politics aside and do what is right -- expanding Medicaid should be at the top of the list this session," he said.
Del. Chris Jones, chairman of the House Appropriations Committee, said he expects "some additional coverage for Virginians when it deals with health care" but that he doesn't know yet what form it might take.
GOP House Leader Kirk Cox, who is slated to be speaker should the Republicans maintain their majority, said the party would not support "full blown" Medicaid expansion.
Republicans currently have a 21-19 lead in the Senate and will have a 51-49 lead in the House, unless recounts change the outcomes in three very close races.
The General Assembly will convene Jan. 10.
