On August 26, the Governor addressed the Joint Money Committees of the General Assembly. Most of you are aware the Virginia economy remains in a sluggish cycle, very much modeling the nation. Last February we adopted a balanced, two-year budget anticipating excess revenues from FY 2016 that would be rolled into FY 2017. Closing out FY 2016 a shortfall of $279.3 million puts an unanticipated hole in the current biennium budget. We are now looking at an additional $1.25 billion projected revenue shortfall over the biennium (FY 2017 & FY 2018). Needless to say this is rather sobering and will require swift corrections to be made. Of course, an improving economy could change the outlook.
A large source of revenue for the budget comes from personal withholding taxes. While job growth has continued, it has been skewed toward lower wage earners. With the silver tsunami of baby boomer retirements, comparable compensation is not there for new workers replacing retirees. Ironically, tens of thousands of higher wage jobs remain vacant because of a skills gap in the available workforce. As you can imagine, this has an impact on spending power, which generates another revenue source in the form of sales taxes. Brick and mortar retail is being challenged by online sales, where sales tax may or may not apply depending on the origin of the purchase.
We will once again revisit the revenue problem in October. The Governor will present his proposal for addressing the anticipated $843 million shortfall for FY 2017. While focusing on rebuilding a new and innovative Virginia economy, workforce development and education must remain a top priority when considering how to close the gap.
Another topic getting much ink these days is the Strategic Investment Fund for our flagship school, the University of Virginia. In 2006, the General Assembly enacted legislation authorizing the universities to make strategic investments. In my opinion, Virginia is underfunding public education at all levels. Recognizing this reality, the legislature has given our universities a tool to address growing needs.
During a public hearing held by the Senate and House subcommittees on higher education, the results of a comprehensive audit were revealed. No maleficence was uncovered but rather total compliance with the Code of Virginia and successful execution of the legislature’s directive were affirmed.
The University SIF has an ROI around 9 percent, is nationally acclaimed, and is being modeled by many universities that have created such a fund. Is there any wonder why UVa and its peers must look for innovative means to address its needs? I commend the Board of Visitors, the Rector and UVa leadership for its outstanding national ranking and the valuable education its students received.
When the smoke clears after the General Assembly many groups rank members on their “performance” regarding their special interest. I take exception with some of these organizations for their grading methods and in particular would like to debunk the myth that Republicans exclusively are pro-business. One of the most damaging anti-business bills introduced in many states has been labeled the “religious freedom” act. It was drafted to allow businesses to discriminate on the basis of a religious ideology. We have all read about the passage of this bill in North Carolina. You may recall that several companies including PayPal, the NCAA and others have either discontinued operations or threatened to do so after the state’s Governor signed this measure into law. It has had a huge economic impact on North Carolina.
We had the same bill before the legislature in 2016. I want to point out only Republicans voted for it with every one of my Democratic colleagues in both Chambers voting in opposition. Fortunately for the Commonwealth, Governor McAuliffe vetoed the measure. Again, it was the demonstrably pro business Democrats that sustained that veto. This was an evidence-based outcome with real consequences for our neighbors to the south.
Coincidentally, the business organizations that ranked the legislators did not include the measure as part of the evaluation instrument. Go figure – no pun intended.
I look forward to seeing you in the community at the many homeowners meetings and events coming up.
Senator Saslaw represents the 35th District in the Virginia State Senate. He may be emailed at [email protected]