eNews: Special Edition December 22, 2022
Thursday, December 22, 2022 - 03:52pm
A closer look at the proposed Gubernatorial amendments to the biennial budget (2023-2024)
Governor Glenn Youngkin introduced his proposed amendments to the biennial budget to the General Assembly’s budget and finance committees on Dec. 15. The proposed amendments apply to the biennial budget that began on July 1, 2022, and will run through June 30, 2024 (HB 1400/SB 800).
This is a very ambitious mid-biennium budget proposal, with large investments in new initiatives in economic development and workforce, public safety, behavioral health, and tax relief.
Now that the Governor has proposed his budgets, the General Assembly gets its turn to consider those amendments and make its own mark on those amendments and others it chooses to make to the budget. These decisions will have to take into account the proposed tax actions in the budget because those actions would potentially affect available revenues during this biennium and going forward.
The public also has opportunities to comment on the budget proposals at four public hearings to be held Thursday, Jan. 5 (speakers can register online here starting Wednesday, Jan. 4). Anyone unable to attend one of the public hearings may submit their comments electronically here >.
Resources
Virginia Department of Education:
- MEMO 283-22, 2022-2024 Amended Biennial Budget as Introduced by Governor Youngkin
- MEMO 283-22, Attachment A: Governor’s Amended Budget for the 2022-2024 Biennium (Word doc download)
Virginia Department of Planning and Budget:
Compensation Board:
VML staff contacts for specific topics related to the budget:
- Janet Areson, jareson@vml.org – Administration, Executive, Finance (temporarily), HHR, Public Safety, Central Appropriations
- Josette Bulova, jbulova@vml.org – Education, Lottery & VRS, Teacher Compensation
- Michelle Gowdy, mgowdy@vml.org – Commerce & Trade, Labor
- Mitchell Smiley, msmiley@vml.org – Agriculture, Natural Resources, Technology, Transportation
Summary of items of interest to local governments
Note: We have provided links to item numbers in the budget; this will not necessarily take you to the specific applicable amendment we mention in our summary but will put you in right item. If the item is lengthy, you will need to scroll to get to the appropriate subsection and proposed amendment to it.
Use the links below to jump to each topic:
- Executive Offices
- Judicial Department
- Administration
- Commerce and Trade
- Education
- Finance
- Health and Human Resources
- Natural Resources
- Public Safety and Homeland Security
- Transportation
- Central Appropriations
- General Provisions
- Miscellaneous
Executive Offices
Office of the Attorney General
Establish opioid abatement and remediation fund. Language amendment would establish this fund in the Office of the Attorney General. This fund would receive money intended for use in opioid abatement or remediation resulting from any settlement, judgement, verdict, or other court order related to consumer protection claims regarding manufacturing, marketing, distribution, or sale of opioids. Would exclude those funds going to the Opioid Abatement Authority. Provisions would expire on July 1, 2023, following adoption of legislation to be introduced in the 2023 Session to establish this fund. (Item 61 H.1)
VML Contact: Janet Areson, jareson@vml.org
Judicial Department
Supreme Court
Additional funding for specialty courts. Adds $3.5 million in the second year to support specialty treatment dockets for Veterans, Behavioral Health, and Drug Treatment. (Item 42)
Indigent Defense Commission
Address salary and compression issues in public defender offices. Adds $7.43 million in the second year to make compensation adjustments to address recruitment and retention issues in public defender offices. (Item 51)
VML Contact: Janet Areson, jareson@vml.org
Administration
Compensation Board
Compression adjustment for deputies and regional jail officers. Adds $13.89 million in the second year to address compression issues and provide salary increases for sworn deputy sheriffs and regional jail officers. (Item 72S)
Pilot custody and transportation project. Adds $3.96 million in the second year for a pilot program to provide funding to sheriffs’ offices, jails, and regional jails (but NOT local police departments because they’re not funded under the Compensation Board) to assist in the cost of custody and transportation of individuals in their custody subject to a temporary detention order and emergency custody order. Funds would allow up to 71 deputy sheriff positions to be allocated in specific offices, with the balance remaining for reimbursement costs for actual costs incurred in offices without specific position allocations. Funding would be allocated to these entities within regions 1,2,3,4 and 5 as established by the Department of Behavioral Health and Developmental Services (DBHDS). These allocations would supplement, not supplant existing local spending on these services. (Item 72 T.1)
Jail per diems. No additional per diem funding is provided; current funding is deemed sufficient based upon revised local- and state-responsible inmate population forecasts. (Item 73)
VML Contact: Janet Areson, jareson@vml.org
Commerce and Trade
Secretary of Commerce and Trade
Business ready sites program fund. Adds $50.0 million in the first year to the Virginia Business Ready Sites Program Fund. (Item 113.P.1)
Site acquisition pilot program. Allocates $200.0 million in the first year for this pilot program to identify and fill gaps in the current portfolio of industrial properties available for economic development projects, or be deposited to the Business Ready Sites Program Fund. Virginia Economic Development Partnership will develop guidelines for implementation. (Item 113 S.1-T. 2)
Housing trust fund. No changes to the $75.0 million appropriated each year. (Item 113.E.1)
Department of Housing and Community Development
Main street program. Increases funding by $2.0 million in the second year but earmarks $1.5 million of this amount for “special initiatives in a locality” located in the Crater PDC. (Item 115 I.)
Broadband grant fund. Retains the $49.73 million in the fund each year. (Item 115 L.1)
Talent pathways and regional plans. Adds a total of $24.5 in the second year to support regional plans to facilitate collaborate creation of talent pathways in regional industry clusters in alignment with the region’s growth and diversification plan. (Item 115 U.1-6)
Capacity building/acceleration of building permits. Adds $10.0 million to the state building code administration program in the second year to provide financial assistance to localities or planning district commissions acting on behalf of member localities to increase capacity for, and accelerate the review and issuance of, building permits by local building departments. DHCD would develop criteria and guidance for deployment and use of funding for this pilot. (Item 117)
VML Contact: Michelle Gowdy, mgowdy@vml.org
Education
Direct aid to public education
Items 136 and 137 contain proposed amendments affecting direct aid to public education. This includes funding for staffing positions, the Standards of Quality (SOQ), and other relevant items.
Teacher performance bonuses. Includes $50.0 million in the second year as a one-time appropriation for teacher performance bonuses. A bonus of $5,000 per individual would be awarded to top performing teachers identified by VDOE in conjunction with local school divisions, using VDOE criteria. (Item 136 DDD).
Incentives for hard-to-fill positions/hard-to-staff schools. Provides $10.0 million in the second year to support recruitment through incentive payments to individuals hired for hard-to-fill instructional positions or in hard-to-staff schools, as defined by VDOE, between July 1 – Sept. 30, 2023. Payments would be based on $5,000 per individual but could be prorated if demand exceeds allocation. VDOE provides the criteria and timing for such incentive payments. (Item 136 EEE)
Proposed retention bonus. Includes $45,152,262 from the General Fund and $137,182 from the Lottery Proceeds Fund in the second year top provide one time, one percent retention bonus for instructional and support positions using the SOQ funding formula. The funding would go to SOQ-recognized instructional and support positions, Governor School instructional and support positions, and regional alternative instructional and support positions.
These funds would require a local match in accordance with the LCI; to be eligible, a recipient must be employed by the local school division during the 2022- 2023 and 2023-2024 school years. The school divisions have discretion when determining the bonus amount per employee.
Direct aid to public education. Item 137 contains the Governor’s proposed budget amendments affecting direct aid to public education. This item appropriates funding for staffing positions, the standards of quality (SOQ), school funding, and other relevant items. It includes:
College partnership laboratory school fund. Proposes an additional $50,000,000 be deposited College Partnership Laboratory School Fund (the Fund) in the first year. Housing the State money for the College Partnership Laboratory School Construction, the Fund was created by the 2022 General Assembly Session to construct and establish new schools. This amendment adds an additional $50.0 million for administrative positions within new schools. VML opposes any diversion of state funds or other resources intended for local public schools to fund lab schools or state directives to shift local funding or resources for those schools.
Reading specialists. Proposes $16,969,870 in the second year to increase the number of fourth and fifth-grade reading specialists. One additional reading specialist would be added for every 550 students in the fourth and fifth grades. If approved, the funds would apply to the 2023-2024 school year.
Salary increases. Increases state funding for salary increases (item 137). The 2022 General Assembly Session granted a salary increase of 10 percent over the biennium to SOQ-funded instruction and support positions with a local match requirement. The amendment would add another nearly one million dollars in the first year and $30 million dollars in the second year.
College partnership laboratory school definition. In the back in the budget under General Provisions, a language amendment proposes altering the definition of entities eligible to apply for, and operate, a College Partnership Laboratory School. The definition approved by the 2022 General Assembly states that a lab school may be established by public and private institutions of higher learning that operates a teacher education program approved by the Board of Education.
The proposed amendment strikes the qualifications about an approved teacher education program and expands the definition to include not just a public or private institution of higher education, but also a higher education center, institute, or authority. This would expand the pool of applicants and allow more types of entities to establish lab schools. ( General Provisions- Item 4)
VML Contact: Josette Bulova, jbulova@vml.org
Finance
Department of Accounts Transfer Payments
No changes to financial assistance to localities. Proposes no changes to items including recordation tax distribution, communication sales and use tax, rolling stock taxes, rental vehicle tax. (Item 266)
Revenue stabilization fund deposit. Provides that $405.95 million in the second year from the general fund attributable to actual tax collections for FY 2022 be paid by the State Comptroller on or before June 30, 2024, into the Revenue Stabilization Fund pursuant to §2.2-1829, Code of Virginia. Amendment also states that notwithstanding the provisions of §2.2-1831.3 and §2.2-1831.4, Code of Virginia, the State Comptroller shall transfer $498.7 million from the Revenue Reserve Fund to the Revenue Stabilization Fund on or before June 30, 2024. This amount was provided in Chapter 1, 2022 Acts of Assembly, Special Session I, as an advanced reservation for the mandatory deposit to the Revenue Stabilization Fund required in fiscal year 2024. The combined totals, $904.65 million, is based on certification of the Auditor of Public Accounts of actual tax revenue for FY 2022. These actions meet the mandatory deposit requirement of the Constitution of Virginia (Article X, Sec. 8). (Item 267)
VRS one-time lump sum payment – allocation of funds. Pursuant to amounts contingently appropriated in Item 485 L (Chapter 2, 2022 Acts of Assembly, Special Session I), proceed with a one-time lump sum payment of $250.0 million to the Virginia Retirement System during the first year, contingent on fiscal year 2022 revenue collection to reduce unfunded liabilities. Specifies allocation of the funds including $147.5million to the public school teacher plan; $6.63 million to the Virginia Law Officers’ Retirement System; 4.0 million to the health insurance credit plan for public school teachers; $91,992 to the health insurance credit plan for Constitutional Officers and their employees and, $40,585 for health insurance credit plan for local social services employees, and $2,165 for health insurance credit plan for Registrars and their employees. (Item 269)
VML Contact: Janet Areson, jareson@vml.org
Health and Human Resources
Secretary of Health & Human Resources
Health care workforce consultant. Proposes $250,000 in the second year to cover the cost of a consultant to develop a statewide strategic plan on the Commonwealth’s health care workforce needs. (Item 283 J)
Behavioral health/substance abuse coordination study. Proposes $250,000 in the second year to cover the cost for a consultant to study the state’s coordination of behavioral health and substance abuse programs with an emphasis on services for veterans. Study topics would include state efforts to address substance use disorder, PTSD, and suicide. Report would be due Oct. 1, 2023. (Item 283 K)
Fentanyl public awareness campaign. Proposes $5.0 million in national opioid settlement funds (non-general funds) for a public awareness campaign aimed at reducing the number of fentanyl poisoning incidents among youth. Funding could be used for “landscape analysis,” surveys, research, design, and media purchases. (Item 283 L)
Children’s Services Act
Adjust funding for forecast. Reduces state appropriations by $6.9 million in the first year to reflect projected program spending. (Item 284)
Department of Health
Enhance behavioral health loan repayment program for some. Proposes $1.60 million in the first year and $4.10 million in the second year for the Virginia Behavioral Health Loan Repayment Program. Would increase loan repayment awards from $30,000 to $50,000 for child and adolescent psychiatrists, psychiatric nurse practitioners, and psychiatrists. Allows psychiatrists in residency to apply and qualify for loan repayments. Loan repayments for licensed clinical psychologists, licensed clinical social workers, and licensed professional counselors would remain at $20,000 in this item. (Item 287 B.1)
Match for drinking water infrastructure projects. Adds $3.37 million in the second year as state match for additional federal awards for the Drinking Water State Revolving Fund from the federal Infrastructure Investment and Jobs Act. (Item 296 E)
Department of Medical Assistance Services
Workgroup study of residential treatment in managed care. Proposes a workgroup to examine the impact of including psychiatric residential treatment services in the managed care program, including how local funding (i.e., the CSA program) and the federally required independent assessment process for these services would be accounted for in managed care. Workgroup members include only state agency and money committee representatives (OCS, DSS, DBDHS, DPB, Senate Finance & Appropriations, House Appropriation). Report due Dec. 1, 2023. (Item 308 EE)
Department of Behavioral Health and Developmental Services
School based mental health pilot. Provides $15.0 million in the second year for DBHDS and partners to provide technical assistance to school divisions seeking guidance on integrating mental health services; and grants to school divisions, public and private community-based providers to contract for provision of school-based services. Removes the word “pilot” from the budget language and requires annual reports from the programs and from DBHDS to the Behavioral Health Commission on success factors, identified funding and resources needed to continue programs. (Item 311 HH)
Funding for psychiatric emergency programs or care in emergency departments. To help address the issue of individuals staying in emergency rooms for extended periods for evaluation/treatment without any treatment, proposes $20.0 million in the second year for comprehensive psychiatric emergency programs or similar models of psychiatric care in hospital emergency departments. May include public-private partnerships and contracts with private entities. All programs must collaborate with the community services board or behavioral health authority; exempts program from the public procurement process. (Item 311 MM)
Combine alternative transportation and custody. Combines efforts for alternative transportation and alternative custody for children and adults within the temporary detention order process who are awaiting transport to an inpatient bed. Gives DBHDS an additional $2.0 million the first year and $4.36 million the second year to fund provision of both alternative transportation and for a program of alternative custody. Directs DBHDS to work with local law enforcement, CSBs and other stakeholders to implement a plan for alternative custody options to reduce current impact on local law enforcement resources and improve patient outcomes. This may include contracts with private entities, agreements with local law enforcement agencies, contracts with CSBs, or other methods as necessary. Report is due Oct. 1 each year. (Item 312 D.1)
Local law enforcement off-duty officers for TDO duties. Related to Item 312 D.1 above, provides $1.0 million the second year for DBHDS to contract with local law enforcement agencies who agree to use off-duty officers to provide transportation or assume custody of individuals with a TDO who are awaiting admission to treatment bed or for whom a bed has not been identified. (Item 312 D.2)
Additional funding for REVIVE kits. Adds $1.42 million in each year from non-general funds provided from amounts reflected in the Commonwealth Opioid Abatement and Remediation Fund (proposed under the OAG, see Item 61 H.1) to purchase and distribute additional REVIVE! Kits and associated doses of naloxone for treatment of emergency opioid overdoses or suspected overdoses. (Item 312 H)
Crisis services expansion/modernization. Provides $57.0 million in the second year to expand and modernize the comprehensive crisis services system, including investment in additional crisis receiving centers, crisis stabilization units, and enhancements to existing sites. A separate item adds $845,204 in the second year for increased administrative costs of the expanded system. (Items 312 W.1., W.2)
Additional mobile crisis one-time costs. Provides $20.0 million the second year for one-time costs of establishing additional mobile crisis services in underserved areas. (Item 312 Y)
Supervised residential care. Adds $8.0 million the second year for this purpose. Directs DBHDS to give priority to projects that prioritize individuals in state facilities on the extraordinary barriers to discharge list. Projects may include public-private partnerships, to include contracts with private entities. Contracts would be exempt from competition as otherwise required by the Virginia Public Procurement Act. (Item 312 X)
Department of Social Services
Auxiliary grants. Proposes an increase in the auxiliary grant rate from $1,609 to $1,682 a month, beginning Jan. 2023, with a 15 percent differential to the maximum amount in Planning District Eight. (Item 344 A.1)
Opioid Abatement Authority
Initial appropriation. Provides $3.5 million in non-general funds (i.e., Opioid Abatement Fund) in the second year as an initial appropriation and five staff positions. This allows the authority to provide grants, loans, and awards at the beginning of the FY2024 fiscal year without delay. (Item 362.50)
VML Contact: Janet Areson, jareson@vml.org
Natural Resources
Department of Conservation and Recreation
WQIF deposit. Proposes a deposit of $87.1 million into the Water Quality Improvement Fund (WQIF) in the second year; a deposit is required by statute when there are surplus general fund revenues collected. Includes a total of $45.71 million of this appropriation is directed towards agricultural best management practices within the Chesapeake Bay Watershed and $19.5 million for matching grants for agricultural best management practices on lands outside the Chesapeake Bay Watershed. (Item 374 T.1)
Resilient Virginia Revolving Loan Fund. Proposes $100.0 million additional funding for the Resilient Virginia Revolving Loan Fund each year. Funding in the second year is contingent on sufficient FY2023 revenues being collected. This Fund provides loans or grants to local governments to finance or refinance the cost of resilience projects. Funding in the second year is contingent upon actual general fund revenue collections for FY2023. (Item 374S.1.2)
Department of Environmental Quality
Enhanced nutrient removal certainty program. An item under Central Appropriations uses federal pandemic funds to provide $86.05 million in the first year to the Department of Environmental Quality to reimburse eligible entities for costs incurred for implementation of the Enhanced Nutrient Removal Certainty Program; a related item allows the same for funds authorized in Chapter 1, 2021 Acts of Assembly Special Session I. (Item 486 A.1.f.12)
WQIF deposit. Proposes deposit of $43.9 million in the second year into the Water Quality Improvement Fund (WQIF). This amount is to reimburse the excess general fund revenues collected in 2022 and $107 million of federal State and Local Recovery Funds to the Enhanced Nutrient Removal Certainty Program. This program assists small and medium size wastewater treatment plants with capital improvements to reduce nutrient loads such as nitrogen and phosphorous loads that otherwise flow into the waters of the Commonwealth and ultimately the Chesapeake Bay. The proposed budget notes that the $43.9 million of excess revenues is a share of the statutory 10 percent deposit of excess revenues that must be made to the Water Quality Improvement Fund. (Item 380 L.1.,2. M)
VML Contact: Mitchell Smiley, msmiley@vml.org
Public Safety and Homeland Security
Department of Criminal Justice Services
Revise body worn camera grant language. Removes existing language that requires any distributions made through the body worn camera grant program be subject to a 50 percent local match. (Item 408 P)
State assistance to local law enforcement (HB 599). No new funding is added to this program; the Code requires that funding increase as state revenues increase. (Item 410)
Operation ceasefire grant fund. Provides a one-time addition of $20.0 million in the second year (original appropriation is $2.5 million). Funds can be used for violent crime reduction strategies, law enforcement training, training for prosecutors, equipment, and grants to organizations engaged in group violence intervention efforts. (Item 408 N.2.c)
Operation Blue Line. Provides $30.0 million in the second year as a one-time appropriation to support Operation Bold Blue Line initiative. Authorizes the DCJS director to distribute funds to state and local law enforcement agencies to help with recruiting and training efforts to attract qualified applicants from other states and develop skilled in-state talent. Includes signing bonuses for new personnel being relocated; to support fast-tracked lateral training academies for local and state law enforcement agencies; and establish and manage statewide centralized recruitment efforts including advertising and marketing efforts inside and outside of the state. Progress reports are due Sept. 1, with report on funding use and effectiveness. Includes one state staff position to coordinate the program. (Item 410 F.1., 2., 3)
Department of Juvenile Justice
Lease and operate local juvenile detention centers. Provides $2.93 million in the second year for the DJJ director to enter into lease agreements and operate three local juvenile detention centers for the purpose of housing juveniles committed to the Department. Additional funding is also included ($764,839) in the second year to expand capacity at the Bon Air Juvenile Correctional Center. (Item 427 D)
VML Contact: Janet Areson, jareson@vml.org
Transportation
Virginia Department of Transportation
Transportation Partnership Opportunity Fund. Proposes redirection of $300 million of transportation revenues from the Six-Year Improvement Program ($200 million) and Transportation Infrastructure Bank ($100 million) in the first year as a deposit to the Transportation Partnership Opportunity Fund (TPOF). The TPOF is a fund used to “address the transportation aspects of economic development opportunities” administered by VDOT with grants for improvements directed towards eligible regional and local governments. (Item 452 Q-R).
VML Contact: Mitchell Smiley, msmiley@vml.org
Central Appropriations
Reimbursement of presidential primary costs. Provides $5.898 million in the second year to core costs associated with the presidential primary. Of this amount, up to $5.75 million may be used by the Department of Elections to reimburse localities for their primary expenditures. (Item 485 M)
Reversion plan. In the event that actual general fund revenue collections for FY2023 are less than the official forecast included in the budget, the director of Planning and Budget is authorized to unallot $750.0 million in funding. This includes $250.0 million in additional funding for site development; $100.0 million in additional funding for Resilient Virginia Revolving Loan Fund, $100.0 million in state employee performance bonuses, and $300.0 million in state capital cost supplements. Allows the Governor to restore within available resources, tax policy changes included in his budget proposals and allotments in this priority order: reduction in the top marginal individual income tax rate from 5.75 to 5.5 percent; site development funding, Resilient Virginia Revolving Loan Fund, state employee performance bonuses, and capital cost overruns. The balance of amounts unallotted would revert to the state general fund. (Item 485 P.1)
Derelict structures fund program. Reduces by $250,000 the appropriation in the first year to the Department of Housing and Community Development for continuation of funding to support the Virginia Removal or Rehabilitation of Derelict Structures Fund program. (Item 486A d.1)
Overtime to local departments of social services. Uses federal pandemic funds to provide $10.0 million in the second year to the Department of Social Services to cover one-time cost of making overtime pay available to local departments’ eligibility staff to perform Medicaid redeterminations in the 12 months following the end of the federally declared Public Health Emergency. (Item 486 A.1.i.7c)
VML Contact: Janet Areson, jareson@vml.org
General Provisions
Additional situation to trigger potential state technical assistance/intervention – overdue audit information. Adds new language to section addressing local fiscal distress and situation in which state technical assistance/intervention would take place. New language begins with steps the state would take if a locality does not complete and submit its annual audit within 18 months of the required deadline of Dec. 15. This includes notification by the Auditor of Public Accounts to parties in the Executive and Legislative Branch; examination of any outstanding debt or payments to any Commonwealth entity or federal funds received through the Commonwealth during fiscal year(s) in which audit(s) is not completed; and determination by the Secretary of Finance if a plan for state technical assistance is necessary to help remediate the situation. If such plan is deemed necessary, the Governor and Secretary of Finance will effectuate the provisions of this section. (Item §4-8.03)
VML Contact: Janet Areson, jareson@vml.org
Miscellaneous
Taxpayer relief fund. Re-establishes in the state Treasury and on the books of the State Comptroller a “Taxpayer Relief Fund”, a special non-reverting fund, to which on or before June 30, 2023, the State Comptroller shall transfer $128.0 million from the general fund. Specifies that any general fund revenues generated from tax collections during FY2023 and thereafter in excess of the official estimates in the appropriations act, less the amounts required for deposit to the Revenue Stabilization Fund, the Revenue Reserve Fund, and Water Quality Improvement Fund Part A deposit be transferred to the Taxpayer Relief Fund. Amounts in this Fund shall be used to effectuate and continue the tax policy changes set forth in the Appropriations Act for subsequent fiscal years and to provide additional future tax relief measures. (Item §3-5.28)
