House, Senate committees present dueling budgets

The House and Senate money committees presented their versions of Gov. Bob McDonnell's $85 billion two-year state budget Sunday, highlighting differences in spending priorities on public education, health care, transportation and funding the retirement plans of state employees.

"Budget Sunday" marks the first significant step in the budget process — a meticulous tango of money, politics and policy that takes two willing participants to balance, and execute, before state lawmakers head home March 10.

Despite differences, the 15 Republicans and seven Democrats on the House Appropriations Committee unanimously approved its spending plan that restores some of the governor's cuts to health care and supports diverting additional sales tax revenue to fund transportation.

The Virginia Senate's budget also makes restorations to public education and health, while supporting raises for state employees. But it strips McDonnell's sales-tax diversion in favor of indexing the gas tax to fund transportation maintenance, and offers localities more money to offset increases in their contributions for teachers in the Virginia Retirement System.

Every Democrat on the Finance Committee voted against the Senate spending plan, which was approved 9-6. The vote could herald a power struggle in the 20-20 chamber that could bring the budget process to a standstill.

It takes 21 votes to pass the budget in the Senate and Democrats, still irate over Republicans' refusal to share power in the chamber, seem willing to use their leverage.

"Democrats feel that (they) should have gotten a better deal out of it," said Sen. Charles J. Colgan, D-Prince William. "They got no deal at all. That's the problem."

"Absent zero changing, there probably won't be a Senate budget," said Sen. Richard L. Saslaw, D-Fairfax, who would not specify whether changes needed to be made to the Senate budget or power structure, or both.

"They've politicized the budget process," said Sen. John Watkins, R-Powhatan. "This is just hardball politics."

Both proposals go before the full House and Senate this week. Here's a look at the details:

K-12 education

The House proposes giving schools an additional $136 million over the biennium, including $106 million to fund inflation costs for non-instructional personnel. The House also allocates $60 million to help with retirement system contributions.

Some programs that McDonnell sought, however, got the ax, including paying testing fees for all 10th graders to take the PSAT.

The Senate recommends an additional $165 million in spending on public education over the governor's budget to mitigate additional costs to localities resulting from an increase in payments to shore up the Virginia Retirement System.

The money would come from stripping out the governor's proposal to divert $110 million in general fund sales tax revenue to transportation maintenance and legislation that requires online retailers with bricks and mortar business interests in Virginia to collect the state sales tax.

In fiscal year 2014, public education, which has been cut $1.6 billion since 2008, will still be funded at levels below fiscal year 2007.

Health and human services

The House and Senate restore funding to the health safety net, which takes a 50 percent cut in 2014 under the governor's proposed budget.

The House restores $6.2 million in funding in 2014 for community health centers, free clinics and the Virginia Health Care Foundation and increases Medicaid hospital inpatient payments and nursing home payments.

Committee members also added 250 waiver slots over the biennium to provide community-based care for people with intellectual and developmental disabilities.

The House further provides more than $1 million to scrap fee increases for restaurant inspections and community waterworks connections that were included in the governor's spending plan. Delegates stripped out fees elsewhere in the introduced budget as well.

The Senate budget restores $113 million of cuts in the governor's proposed budget — most of it to account for inflationary costs incurred by nursing homes and hospitals, the state's key Medicaid providers.

Roughly $10 million in new spending is added to expand prenatal care and mental-health services. The restored funds come from savings in other state agencies as well as overestimates on the cost of implementing federal health-care reform.

State workers

The House and Senate propose giving a 2 percent pay raise to state workers and college faculty.

The House budget includes $42.2 million for a 2 percent raise in 2014 for state employees and local constitutional officers and their staffs if certain revenue estimates are met. It also includes $13 million toward a 2 percent wage increase for faculty and classified staff in higher education.

The Senate also proposes a 3 percent bonus for state employees this December contingent upon a revenue surplus.

McDonnell's proposal to have employees pay an additional 1 percent of pay toward their retirement is not included in the House or Senate plans.

Transportation

The House and Senate differ here, with the Senate proposing to index the gasoline tax to rise with inflation. The committee did not agree with the governor's proposal to divert an additional percentage of the state sales tax to fund transportation maintenance.

The House does include that provision, setting up what could be a significant sticking point between the chambers. The Senate designates a portion of state's unappropriated general fund revenue to support intercity passenger rail service in Virginia.

House amendments include language directing the secretary of transportation to create a work group including the Virginia Municipal League to consider potential options for "devolution" of secondary roads — putting them under the control of local governments — and report to the money committees later this year.

Higher education

The House largely tracks the same amount of higher education funding as the governor proposed but changed where the money goes. It redirected financial aid funds into the proposed 2 percent faculty salary increase with the thought that it would stave off tuition increases to keep salaries competitive.

The Senate adds $5 million to the governor's proposed increase of $210 million, including $41 million for financial aid — some of which will be targeted to making college more affordable for middle class families.

In other action of note, the House's fiscal amendments would allocate $2 million to help earthquake-damaged Louisa County High School.