Gov. Ralph Northam

Virginia Gov. Ralph Northam

There’s a common saying that your budget reflects what you value. That holds true whether the budget is for a household or for a government.

The budget amendments proposed last December by Gov. Ralph Northam showed what he and his administration value.

There were investments in public education through funding for teacher pay raises, at-risk students and school construction; investments in infrastructure such as universal broadband and transportation, as well as environmental protections and water quality; funding to improve affordable housing initiatives; and proposals to provide tax relief for working families. The governor’s budget set aside $1.1 billion to increase reserves and preserve our AAA bond rating.

Those budget items showcase what is important to this administration: helping the Virginians who need it the most, encouraging policies that allow equal opportunities for all, budgeting responsibly and positioning the commonwealth for the future.

The governor’s goal was clear: Fund what Virginia needs, and what we can afford. We did not propose to borrow money, nor to pay for the bulk of these investments with one-time windfalls. It was a strategic, fiscally responsible plan.

It was based in part on additional tax revenues that will come to Virginia through the federal Tax Cuts and Jobs Act. While the notion of additional taxes strikes fear in the hearts of some elected officials, the fact is that conformity to the post-TCJA federal tax code resulted in short-term limited incremental state taxes.

Northam sought to direct the majority of that revenue to long-term investments, and to tax relief for working Virginians.

But as legislators are fond of saying, the governor proposes but the legislature disposes.

It’s meant as a reminder to governors that no matter what ideas they come up with, the legislature has its own powers to change or reject the governor’s proposals.

Instead of the governor’s plan for targeted tax relief, lawmakers chose to return that additional revenue to a broader base of taxpayers. They also passed legislation to recoup revenues from internet sales taxes. While Northam agreed to this approach, he had sought to target tax relief to those lower-income taxpayers who did not significantly benefit from the federal tax cuts.

In other areas, the budget as passed by the legislature largely follows the governor’s lead. Lawmakers supported a 5 percent pay raise for teachers, keeping the funding Northam originally proposed.

Legislators also supported the governor’s priority of investing in universal broadband, although they reduced the level of support.

And lawmakers agreed with the governor that bolstering reserve funds is important, although they also reduced that level of investment.

While the spending totals differed, the overall alignment in support for teacher pay raises, broadband expansion and reserves shows that the legislature shares Northam’s interest in investing in Virginia’s future and preserving our reputation as a fiscally responsible state.

Unfortunately, not all of the governor’s proposals received the same level of support. Some important opportunities were missed, including investments to build a safer Central State Hospital facility, and to ensure that all Virginians are counted in the 2020 census. The Northam administration is evaluating ways to address these needs.

The budget process requires collaboration and input from both parties, and both the executive and legislative branches. Comparing the governor’s introduced budget to the bill approved by the House and Senate, this year’s results for the Northam administration are strong.

While the governor continues to consider options on the budget bill, many of his original proposals remain in that legislation. You can look at that budget and see what he values. He continues to prioritize investments in Virginia’s people and its long-term needs.

Overall, the current budget is a positive outcome for the commonwealth — and it’s important to remember where it started.

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Aubrey L. Layne Jr., MBA, CPA, is secretary of finance for the commonwealth of Virginia. Contact him at finance1@governor.virginia.gov.

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