GOVERNOR'S RECOMMENDATION

I approve of the general purpose of this bill, but I am returning it without my signature with the request that the attached amendments be adopted.

Together, the 242 amendments to the HB 29 and HB 30 that I am offering preserve the vast majority of spending priorities as passed by the General Assembly.

The $64 billion Common Ground Budget eliminates all proposed tax increases, invests a record $21.3 billion in K-12 education, caps tuition increases at 3%, includes 3% pay raises for teachers and state employees in each year, and increases investments in health and human resources by $3.2 billion over the biennium.

To be very clear, the budget passed by the General Assembly eliminated over $850 million of my priority spending items in the introduced budget and $1 billion of tax relief; the Common Ground budget restores only $230 million of those priorities. The Common Ground budget includes $196 million in additional funding for at-risk students, an additional $1 billion in higher education funding, $175 million for the Housing Trust Fund, toll relief in Hampton Roads, a full funding of the state’s share of WMATA’s short-term funding needs, and $70 million to expedite projects on Interstate-81.

Virginia’s Strong Financial Position

Virginia’s revenues continue to rise steadily. Annual tax collections rose by 40% in the last five years, fueled by more jobs and economic growth. With the highest labor force in Virginia’s history and with more job growth than 42 other states in the last two years, we know that revenues will remain strong even when viewed conservatively against economic uncertainty.

Our reserve fund balances are among the best of any state in the nation. We have over $4.6 billion in reserve funds representing 15% of our annual general fund spending. Revenue collections are running ahead of the revenue forecast by $827 million year to date.

In short, Virginia can fund priorities and maintain our long-term structural balance without raising taxes. I proposed 1 billion in tax relief in my introduced budget, while the budget passed by the General Assembly included tax increases that would cost Virginians $2.6 billion in total. Common Ground – and common sense – says we can write a clean budget without tax increases or tax decreases.

Building on Our Bipartisan Commitment to Funding Education

The Common Ground Budget continues to build on the bipartisan commitment to funding a high-quality education, setting a new two-year record for K-12 education funding, $21.3 billion, and increasing higher education funding by $1 billion.

The budget includes a 3% teacher pay raise in each year, on top of 12% teacher pay raises adopted in the last two budget cycles. These 18% teacher pay raises are projected to raise average teacher pay in Virginia above the national average by nearly $3,500 a year.

The amendments invest over $800 million for early childhood care and education to support 68,000 early learners previously supported by federal dollars and increase the number of early childhood slot, and increase funding for higher education by $1 billion, including over $150 million for affordable access to cap tuition increases at 3%.

The amendments include $75 million to support PELL grant recipients, $33 million for financial aid, and $24 million to support veterans and their families.

Building on Our Bipartisan Commitment to Health and Human Resources

The Common Ground budget reflects the collective commitment to health and human resources, including our ongoing transformation of Virginia’s behavioral health system. The amended budget includes a total of $3.2 billion increase in health and human resources funding over the last biennium.

This includes $895 million to fully fund Medicaid and Children’s Health Insurance, $169 million in additional Right Help, Right Now investment, $516 million for over 3,440 development disability waiver slots, and $56 million to increase personal care attendant reimbursement rates.

Building on Our Bipartisan Commitment to Public Safety

The Common Ground budget provides a total of $72.5 million over the biennium for community violence intervention programs, including $20 million to support Operation Ceasefire and $25 million for the Safer Communities program. The amended budget will provide $49 million for the School Resource Officer Incentive Grant Fund, and $4.7 million for increases in Commonwealth Attorney and paralegal positions to address workload needs.

Building On Our Bipartisan Investments in the Commonwealth

The Common Ground budget provides $90 million over the biennium for site development and $175 million for the Virginia Housing Trust Fund. The amended budgets preserve $42.5 million over the biennium for anticipated payments and invests $114 million for biotechnology and life sciences commercialization. In recognition of the leading role the Commonwealth is taking in the celebration of America’s semiquincentennial, the Common Ground budget includes $20 million in Fiscal Year 2025 for capital improvements at historic sites and museums and over $15 million in priority investments in historic sites and battlefields.

The budget includes $26.5 million to the City of Bristol to help with landfill remediation, $25 million to the City of Norfolk for Coastal Storm Risk management projects, $50 million to the City of Richmond for the combined sewer overflow project. Combined with significant funding for agricultural best management practices, the Common Ground budget puts over $350 million towards state water quality goals.

Finally, the Common Ground budget removes language mandating Virginia rejoin the Regional Greenhouse Gas Initiatives, while providing $100 million in general fund in fiscal year 2025 to the Community Flood Preparedness Fund.

Attached to this letter are my proposed amendments to HB 29.  In your review of these proposals, I think you will find they are consistent with the primary objectives that we all have worked toward this year.  I respectfully request your adoption of these amendments so that they may be incorporated into the Appropriation Act for the upcoming biennium.

Amendment 1: Reflect removal of Lab School transfer

Item 0

Language:

Page 1, line 33, strike "$35,516,292" and insert "($49,610,948)".

Page 1, line 33, strike "$750,233,096" and insert "$665,105,856".

Page 1, line 37, strike "$32,116,683,638" and insert "$32,031,556,398".

Page 1, line 37, strike "$65,308,440,404" and insert "$65,223,313,164".

Page 2, line 8, strike "$81,831,500,314" and insert "$81,746,373,074".

Page 2, line 8, strike "$172,182,156,678" and insert "$172,097,029,438".

Explanation:

(This amendment reflects changes to General Fund resources from the removal of the Lab School transfer to the General Fund.  A companion amendment to Section 3-1.01 removes the transfer of Lab School balances to the General Fund.)

Amendment 2: Update state share of FY 2024 salary increase and Academic Year Governor's School payments

Item 137

Language:

Page 55, line 44, strike “$9,033,415,134” and insert “$9,039,314,901”.

Page 57, line 4, strike “$586,032,395” and insert “$591,835,633”.

Page 57, line 6, strike “$24,408,379” and insert “$24,504,908”.

Page 57, line 44, strike “$1,610,080,621” and insert “$1,615,980,388”.

Page 89, line 19, strike “$2,714,518” and insert “$2,726,546”.

Page 93, line 51, strike “$586,032,395” and insert “$591,835,633”.

Page 94, line 32, strike “$2,714,518” and insert “$2,726,546”.

Explanation:

(This amendment provides additional funding to support the required state share of the FY24 K-12 salary increases and Academic Year Governor's School payments based on corrected school division data that the Department of Education (DOE) received after HB/SB29 was introduced.)

Amendment 3: Remove administrative costs associated with skill game legislation

Item 274

Language:

Page 105, Line 24, strike “$65,518,047” and insert “$65,136,897”.

Explanation:

(This amendment removes $381,150 in the second year in general fund appropriation and two positions that were provided for the administrative costs of implementing skill game legislation, which is being amended by the Governor.)

Amendment 4: Fund income verification contract increase

Item 342

Language:

Page 179, Line 28, strike “$596,113,324” and insert “$601,600,192”.

Explanation:

(This amendment provides additional funding for the Department of Social Services to address increased costs associated with its income verification contract.)

Amendment 5: Remove language mandating Regional Greenhouse Gas Initiative (RGGI) participation

Item 381

Language:

Page 203, strike lines 14 through 34.

Explanation:

(This amendment removes language requiring the Commonwealth to rejoin RGGI and directing any state agency or authority with responsibilities identified in § 10.1-1330, Code of Virginia, to take necessary action.)

Amendment 6: Menhaden bait license and quota language

Item 391

Language:

Page 209, Line 6. strike “Not Set Out” and insert:

Authority: Title 28.2, Chapters 1 and 2, Code of Virginia.

A. The Marine Resources Commission shall recover the cost of reproduction, plus a reasonable fee per record, from persons or organizations requesting copies of computerized lists of licenses issued by the commission.

B. From the amounts collected pursuant to § 28.2-200 et seq., Code of Virginia, and deposited into the Virginia Marine Products Fund (§ 3.2-2705, Code of Virginia), the Marine Resources Commission may retain $10,000 the first year and $10,000 the second year for the administrative cost of issuing gear licenses.

C. The Virginia Marine Resources Commission shall report by December 15 of each year all projects and expenditures funded from the Virginia Saltwater Recreational Fishing Development Fund. The report shall be submitted to the Chairs of the House Appropriations and Senate Finance and Appropriations Committees.

D. The Commission shall amend § 4 VAC 20-1270 no later than June 30, 2024, to protect Virginia’s Commercial Bait Sector by establishing an amendment to facilitate the purchase and sale of purse-seine bait license and quota. This Emergency Amendment shall be adopted after a 30-day public comment period of a draft amendment. The Emergency Amendment shall be exempt from the provisions of § 28.2-201.8 of the Code of Virginia.”

Explanation:

(This amendment is to prevent the loss of allocated quota of allowable commercial menhaden landings [4 VAC 20-1270-30. C. 1-2] in the event a commercial menhaden bait business which currently holds a license decides to cease commercial fishing. This amendment would direct the Commission to amend regulations to prevent the loss of the current allocated menhaden bait landings, which is 9.96 percent of the commercial menhaden fishery.)

Amendment 7: Amend ARPA language regarding unobligated funds

Item 486

Language:

Page 236, strike lines 23 through 26.

Page 241, unstrike “$5,000,000” and strike “$2,000,000”.

Page 242, strike lines 8 through 20.

Page 242, strike “5)” and insert “2)”.

Page 242, strike “6)” and insert “3)”.

Explanation:

(This amendment adjusts the planned use of American Rescue Plan Act (ARPA) State and Local Fiscal Recovery Funds (SLFRF). The conference budget reallocated funds away from the Department of Health, however, the department has already obligated those funds. A companion amendment to HB30 provides alternative direction on the reallocation of unobligated funds.)

Amendment 8: Correct name for appropriate ARPA recipient

Item 486

Language:

Page 236, line 46, strike “Service Authority”.

Page 236, line 50, strike “Service Authority”.

Explanation:

(This amendment is a technical correction to allow King George County access to American Rescue Plan Act (ARPA) funds previously authorized to the King George County Service Authority. The County, not the Service Authority, will be performing the work associated with the project.)

Amendment 9: Restore Lab Schools reversion

Item 3-1.01

Language:

Page 272, strike lines 28 through 30.

Explanation:

(This amendment eliminates the transfer of $85 million to the General Fund intended to support Lab Schools.)