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Virginia revenues up more than $550 million for fiscal year, building reserves

Virginia revenues up more than $550 million for fiscal year, building reserves

Posted by on Jul 16, 2018 in News | 0 comments

BY MICHAEL MARTZ Richmond Times Dispatch, July 12, 2018.

Virginia’s revenue reserves are getting a $550 million boost from soaring income tax collections in the last fiscal year.

Gov. Ralph Northam announced Thursday that income tax collections rose by $325 million in the fiscal year that ended June 30 for taxpayers who make estimated payments on capital gains and other income that isn’t subject to payroll withholding taxes. Those payments began rolling into the state treasury soon after President Donald Trump signed the Tax Cuts and Jobs Act in December.

Virginia also is benefiting from a $227 million jump in income tax withheld from paychecks, the biggest single source of state revenue.

Total revenue collections rose by 6.3 percent in the fiscal year, ahead of the revenue forecast of 3.4 percent growth.

“On the strength of a record $2.4 billion in revenue collections in the month of June, I am happy to announce that preliminary figures indicate that the state concluded fiscal year 2018 with an approximately $551.9 million surplus in general fund revenue collections,” Northam said in a statement.

“This significant surplus will substantially increase the commonwealth’s cash reserves in order to protect taxpayers against a future economic downturn and further affirm our valuable AAA bond rating.”

Withholding revenue rose 5.4 percent for the year, almost 2 percentage points higher than the forecast of 3.5 percent.

“I think a lot of it has to do with the [federal] budget passed by Congress, increasing defense spending, and the tax cuts at the federal level,” Secretary of Finance Aubrey Layne said in an interview. “We think it’s stimulative in the short term.”

The nonwithholding income tax collections are trickier for the state to gauge because they could reflect taxpayer efforts to avoid limits imposed on deductions for state and local taxes in the new federal law.

Virginia has refunded $75 million in estimated tax payments and some large taxpayers have made payments but haven’t filed their state returns, which are due by Nov. 1 for extended filing.

“We still don’t know what part of it is going to be subject to being refunded,” Layne said.

Speaker of the House Kirk Cox, R-Colonial Heights, said in a statement that the revenue surplus is “thanks in large part to responsible budgeting and strong economic growth spurred by Republican policies at the state and national level.”

Wary of windfalls

Virginia lawmakers and policymakers have been wary of counting on windfalls of nonwithholding tax revenues since 2014, when the bottom fell out a year after a big surge in payments in response to an increase in the federal capital gains tax in late 2012.

As a result, the state places a “collar” on the volatile source of revenues that limits the amount of new nonwithholding revenue that can be available for spending in the two-year state budget.

This year, Northam and the General Assembly already have agreed to deposit any surplus tax revenues in either the Revenue Stabilization Fund or a new cash reserve. The commitment helped to persuade S&P Global Ratings to upgrade Virginia’s financial outlook from negative to stable the day after Northam signed the budget on June 7.

“There is no question that the decision to appropriate 100 percent of the surplus to replenishing our cash reserves was key to S&P,” House Appropriations Chairman Chris Jones, R-Suffolk, said of the role the reserve commitment played in the national rating agency’s decision.

His committee had estimated an additional $500 million in revenue to bolster reserves, while the Senate Finance Committee said the total could exceed $600 million.

“I’m very pleased that it exceeded our target by $50 million,” Jones said. “That puts more money into our cash reserve.”

S&P had downgraded the financial outlook to negative a year ago because of concerns that Virginia had depleted its rainy day fund by drawing on reserves even when the state’s revenues were growing.

The state has withdrawn money twice to balance the budget to avoid cutting core services to make up for projected revenue shortfalls — first in 2014 because of the collapse of nonwithholding payments, and again in 2016 because payroll taxes didn’t increase as fast as forecast because of slow wage growth.

Sales taxes

In addition to income taxes, Virginia’s sales tax collections increased by 3.1 percent in the fiscal year, a 10th of a percentage point higher than forecast, for a total of $3.5 billion.

Sales tax collections do not reflect potential changes in Virginia law after a decision by the U.S. Supreme Court last month that overturned a prior ruling that prevented states from collecting taxes on internet sales.

State officials estimate the taxation of online sales — in addition to sales taxes already collected from Amazon and other online retailers with distribution warehouses in Virginia — could boost the state treasury by $250 million to $300 million a year.

Layne expects the General Assembly to address the issue of online sales taxes, as well as state conformity with the federal tax reforms, in its 45-day session that begins in January.

Northam will address the assembly’s joint money committees on Aug. 17 with final revenue numbers for the last fiscal year and July. The state will then go through its normal process for revising its revenue forecast for the governor’s budget proposals in December.

“Neither internet sales nor [tax] conformity will be part of the new forecast because they are not law,” Layne said.

The new budget already will spend $60 million a year in additional income tax withholding revenues anticipated in the biennium.

Some of the additional money collected at the end of the last fiscal year could have come at the expense of revenues for the first month of the new fiscal year, Layne said.

With the July Fourth holiday falling on Wednesday, some taxpayers may have made withholding tax payments early because collections in the first two days of the new year were lower than a year earlier.

“It looks like we had about a $100 million flip,” he said. “It’s still cash revenue in the [previous] fiscal year, so it’s got to be counted.”

mmartz@timesdispatch.com

(804) 649-6964

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One House speaker honors another as ‘a special, special man’

One House speaker honors another as ‘a special, special man’

Posted by on Mar 8, 2018 in News | 0 comments

03/07/18

For a moment, the Virginia House of Delegates stood with two speakers of the House.

“Good afternoon, Mr. Speaker,” House Appropriations Chairman Chris Jones, R-Suffolk, greeted House Speaker Kirk Cox, R-Colonial Heights.

Jones then turned to former House Speaker Bill Howell, R-Stafford, standing with his family in the center aisle of the institution he served for 30 years, including 15 as its undisputed leader.

 “Good afternoon, Mr. Speaker,” Jones said to the man who named him to the powerful budget committee more than four years ago.

Howell’s return to the House was emotional for more reasons than his memory. On Jan. 2, a day after he officially retired as a state employee, Howell was stricken by a heart attack and taken into emergency surgery.

“There is life after retirement, though I haven’t found it yet,” he quipped during the House ceremony on Wednesday.

As the year began, the House that Howell had led with a quick wit and firm hand had been transformed by an electoral tsunami that flipped 15 seats to Democratic control and whittled a two-thirds Republican majority to two seats. As he recovered in a Fredericksburg hospital, political control of the House rested on a random drawing of lots from a bowl to determine the winner of a tied election in Newport News.

Del. David Yancey, R-Newport News, won the drawing and the House elected Cox as its new speaker, but instead of the firewall that Howell had erected against Medicaid expansion, the Republican leadership adopted a state budget built on it and the billions of dollars in federal money available under the Affordable Care Act.

 

‘Integrity and character’

Howell was remembered on Wednesday less for his political bearings than his moral example, which Cox called “Bill Howell’s integrity and character.”

“You’re a special, special man,” Cox told Howell, who stood with Cessie, his wife of 51 years, as well as sons Billy and Jack.

Earlier, Howell had appeared on the other side of the Capitol in the Virginia Senate. It also honored the man named as Outstanding Virginian of 2018 by a committee in partnership with the University of Virginia Frank Batten School of Leadership and Public Policy “to recognize leaders who have made an indelible mark on the commonwealth,” according to the resolution adopted by both chambers.

“I tell you, Bill Howell is a man of true integrity and honor, and he’s someone who’s always going to be known for doing what he thinks is right, even if it’s going to be difficult,” said Sen. Richard Stuart, R-Stafford, who introduced the former speaker in the “other” chamber.

For Jones, the proof was Howell’s role in reshaping the way Virginia raises money for highways and mass transit, as well as how it sets the priorities for spending it.

In 2013, Howell sponsored legislation on behalf of then-Gov. Bob McDonnell to overhaul transportation funding in Virginia for the first time in almost 30 years.

But the $6 billion package that emerged looked much different than it did when Howell introduced House Bill 2313. “It became clear that much more was needed to be done to solve the challenges for our commonwealth,” said Jones, who led the House effort to pass the legislation.

The law, raising taxes at the state and regional levels, became the legacy achievement of McDonnell’s term, but also made Howell and other supporters political targets in GOP primaries two years later. Howell won his 2015 primary challenge handily and the subsequent general election for his 15th and final term.

 

Retirement system reform

Howell’s achievements also include playing a major role in pushing for reforms of the Virginia Retirement System to reduce its long-term unfunded liabilities and require the legislature to fund the full state contribution required to keep pension plans for state employees, teachers and local employees on sound actuarial footing.

This year, the pension plans will be fully funded, ahead of the schedule adopted in the reform package that Jones carried for the House and Howell in 2012.

However, the former speaker was denied his long-held dream of establishing a system of 401(k)-style retirement savings plans instead of traditional pensions for new state employees. Legislation he had championed as chairman of a joint commission on employee benefits and pension reforms died in a Senate committee on the last day of the 2017 session.

“Beneath the affable demeanor was one of the most savvy and intelligent leaders Virginia has ever known,” Jones said.

Howell, who announced his retirement at the end of the last session, praised his wife for her steadfast support, “not just in the late unpleasantness, but for 51 years,” and thanked his legislative colleagues.

“The only thing I love more than Virginia, perhaps, is the Virginia House of Delegates,” he said to one last thundering ovation.

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House of Delegates drives new Medicaid vehicle onto the legislative freeway

House of Delegates drives new Medicaid vehicle onto the legislative freeway

Posted by on Mar 6, 2018 in News | 0 comments

House Appropriations Committee Chairman Chris Jones, R-Suffolk, drove a new vehicle for Medicaid expansion onto the legislative freeway as the General Assembly entered the final week of its scheduled 60-day session.

Jones, the architect of a House budget that includes Medicaid expansion, commandeered a bill on Monday that was the model for the limited expansion of Medicaid services that the Senate included in its version of the budget without money to pay for it.

The committee stripped a financial contingency clause — linking enactment to funding in the budget — out of Senate Bill 915, proposed by Sen. Siobhan Dunnavant, R-Henrico, and whisked it to the House floor on an 18-0 vote, hours before the deadline for committees to complete work on all legislation.

 “This is to continue the dialogue in the arena of expanding health care coverage for Virginians,” said Jones, who is leading the six-member House contingent on a conference committee with the Senate that is trying to reconcile the competing budget proposals.

After the meeting, he said, “this keeps another vehicle for further discussion on this issue.”

The budget discussions began Sunday with a wide gulf between the chambers, primarily because of the House’s insistence on expanding Medicaid coverage for more than 300,000 uninsured Virginians and accepting billions of dollars in federal money to pay at least 90 percent of the bill.

The House budget also includes a “provider assessment” — essentially a tax on hospital revenues that the industry has conditionally supported — to pay the state’s share. The House version also includes an estimated $371 million in savings from using federal money to replace state tax dollars in paying for indigent care at hospitals, inmate medical costs, community mental health services and other Medicaid programs that currently receive less federal matching money.

The Senate budget would not expand Medicaid or impose a provider assessment, although two Republican-controlled committees approved an early version of Dunnavant’s bill that included a hospital tax to pay for limited expansion of Medicaid services for people with mental illness, addiction or complex medical conditions.

It also would extend Medicaid waiver services to a waiting list of about 2,300 Virginians with developmental or intellectual disabilities, create a new waiver program for people with brain injuries, and require screening of almost half a million children for childhood trauma.

Finally, it would require a statewide program of alternative transportation for people in psychiatric emergencies to be evaluated for additional involuntary detention.

The “Priority Needs Program” proposed by Dunnavant is part of the Senate budget, but only as what Senate Republicans call “aspirational goals” without any money to pay for them or apply for federal approval of waivers to carry them out. The Senate amended the legislation on the floor to eliminate the provider assessment before sending the bill to the House with a clause that links enactment to budget funding.

The Appropriations Committee did nothing with the bill until Monday, when Jones proposed to remove the contingency clause and send the measure to the House floor, where he expects a substitute amendment to be proposed that would expand Medicaid.

If the House were to amend the bill with Medicaid expansion and approve it, the Senate would have the option of accepting the amendment or not. Republicans control the Senate by a 21-19 majority, but Senate Finance Committee Co-Chairman Emmett Hanger, R-Augusta, remains an unpredictable vote on an issue that he has long championed.

Hanger voted against Medicaid expansion in the House budget and refused to support a provider assessment in either budget proposal. But he publicly voiced hope in a newsletter emailed to constituents over the weekend that the Senate will approve a more comprehensive approach to expanding coverage while bolstering the struggling federal marketplace and commercial insurance markets.

“With the House including some of the Medicaid expansion components in their budget, this certainly advances the conversation,” the senator wrote in “Emmett’s Virginian Voice.”

“The majority of the Senate has still not agreed to any such plan but I believe other conservative senators will emerge to stand with me,” Hanger wrote. “If not, I will stand with anyone willing to make bold moves to address the need because it impacts all of us, our budget, and my personal beliefs tell me it is the right thing to do.”

Gov. Ralph Northam said Friday that he is prepared to propose an amendment with Medicaid expansion if the assembly approves a budget without it. Lt. Gov. Justin Fairfax, a Democrat who supports Medicaid expansion, may not break a tie vote on the budget itself, but he could vote on either a gubernatorial amendment or the potential House substitute for Dunnavant’s bill.

Jones told the committee on Monday that sending Dunnavant’s bill to the House floor would allow “further discussion” on the issue until it is ready for a vote.

“I assume there would be a substitute that would be presented at that point in time for the body to consider,” he said.

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Top Virginia lawmaker attacked in downtown Richmond after stepping in to help homeless woman

Top Virginia lawmaker attacked in downtown Richmond after stepping in to help homeless woman

Posted by on Mar 5, 2018 in News | 0 comments

02/27/18

After pushing an unusually contentious state budget through the Virginia House of Delegates last week, House Appropriations Chairman Chris Jones woke up with only a short Friday to go before some weekend relief. Then the screaming started.

Around 6:30 a.m., Jones was in his downtown condo at the Miller & Rhoads building getting ready for another day at the General Assembly when he heard a man berating a woman outside the window.

The Suffolk Republican, a pharmacist when he’s not in Richmond putting together a $115 billion government budget, rushed downstairs and into a confrontation that underscored the dangers faced by those who have no safe place to go.

 When Jones got outside, he saw a homeless woman — someone well-known to many Miller & Rhoads residents because she frequently occupies a nearby bench — being threatened by a man who seemed mentally disturbed.

The man, who wore a military jacket and ranted about al-Qaida and Jewish groups, had thrown a cup of hot chocolate on the woman and was talking about burning her eyes out.

“She is not bothering anyone. Go,” Jones, 59, recalled saying as he stepped between the two. “Just leave her alone.”

The man seemed to be moving away from the woman. But when Jones turned to go back inside to call the police, the aggressor redirected his rage, following Jones into the vestibule and attacking him from behind.

“We had each other’s throat,” Jones said. “I wasn’t letting him go. And he wasn’t letting me go.”

Jones’s wife, Karen, had to get dressed before following her husband down to check on the situation. When she got to the lobby and saw him struggling with the attacker, she shouted to a neighbor for help.

Tim Glass, a 50-year-old phlebotomist who recently moved to Richmond from Atlanta, happened to catch the same elevator as Karen Jones as he headed down for an early morning coffee and cigarette.

“I just darted out the door to break it up,” Glass said.

Glass yelled to startle the attacker, a tactic that seemed to work as the two men in the doorway released each other. Glass then walked the attacker away from the scene as the man made a final threat that he would return to kill Jones.

After living downtown for six months, Glass has met several “rude people” asking for a cigarette, but the episode last week was his first encounter with someone who seemed truly dangerous, he said.

If Jones hadn’t intervened, Glass said, the woman could’ve been seriously hurt.

“I’m sure he saved a life,” Glass said. “This guy was like the worst I’ve ever seen since I’ve been here.”

Downplaying his role in the drama, Jones — who came out unharmed except for some scratches around his neck and rips in his pink dress shirt — said several other people eventually came outside to help.

“I just happened to be the first one on the scene,” Jones said.

Jones began to dial 911 when he got free, but police were already arriving on the scene.

Attempts to locate the woman at her usual spot Tuesday were unsuccessful.

According to recent data gathered by Homeward, a nonprofit that coordinates homelessness services in the Richmond region, 17.8 percent of homeless people said they had been a victim of violence in the past year. The percentages for men and women were similar.

“Homeless people are vulnerable,” said Kelly King Horne, Homeward’s executive director. “Not having a safe space to be is really troubling.”

The encouraging side to Friday’s episode at the Miller & Rhoads building, King Horne said, is that residents knew the woman outside and came to her defense.

“They didn’t write her off just because she spends time on a bench,” King Horne said.

For Jones, Friday’s assault wasn’t his first brush with danger. After his pharmacy was robbed at gunpoint in 1985, a drug-addicted woman walked in in 1987, stuck a gun in Jones’ side and demanded drugs. He pulled his own gun and shot her in the shoulder. She later thanked him for helping to turn her life around.

If Jones was fazed by Friday’s scuffle, he didn’t let it show when he got to the General Assembly. Days later, few people at the Capitol seem to know it happened at all.

“I changed my shirt,” Jones said. “And came on in.”

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S. Chris Jones: Virginia’s path forward on health care reform

S. Chris Jones: Virginia’s path forward on health care reform

Posted by on Feb 22, 2018 in News | 0 comments

2/22/2018

By S. Chris Jones

AS A 16-YEAR MEMBER of the House of Delegates’ Committee on Appropriations, and chairman for the past five, I have seen dozens of state budgets come and go, but I can say confidently that the House budget presented this week is one of the most responsible budget blueprints the committee has ever produced.

A key priority of the House budget is investing in our workforce through education and training through a strategic approach, changing how we fund programs and align them with Virginia’s economic needs.

The budget is balanced, cautious with revenue estimates and consistent with our long-term public policy goals. It targets investments in the core functions of state government, such as K-12 and higher education. Most notably, though, the House is taking a significant step to expand and reform health care for low-income Virginians.

 The House plan would set up a path for Virginia to use federal Medicaid funding to provide private health insurance to low-income Virginians and include long-sought conservative reforms. Virginia will simultaneously pursue additional health care funding and a waiver to reform parts of the Affordable Care Act.

Virginia will use the expanded federal funding to enroll participants in a private insurance plan. Options include a managed-care plan negotiated between an insurer and the state, an individual plan available on the health insurance exchange or employer-sponsored plans. Health savings accounts to encourage personal responsibility — similar to the plan adopted by Vice President Mike Pence when he was governor of Indiana — also would be included.

Our key reforms include a new requirement that abled-bodied individuals on Medicaid enroll in the Training, Education and Employment Opportunity Program. TEEOP is modeled after the waiver approved for Kentucky and represents our vision for educational opportunities and the dignity of work.

For Virginians with incomes between 100 and 138 percent of the federal poverty level, our plan provides access to private health insurance or employer-sponsored health plans through premium assistance. It also includes reasonable and sensible premiums and cost-sharing so that newly eligible individuals are accountable for improving their well-being. Primary care services and wellness checkups are prioritized over emergency room visits, encouraging people to adopt healthy behaviors and bringing down overall health care costs for everybody.

Our plan requires hospitals to pay for the state’s share of the cost of expansion. This responsible step means individual taxpayers will not have to pay more, or risk seeing funds cut from education, in order to increase health care coverage.

My colleagues and I in the House have expressed concerns about the potential effect of expansion and whether the federal government will keep its commitment. We do not pretend that these concerns are going away, and we took proactive steps to address them.

We included a taxpayer safety switch. If the federal funding for this program is reduced below the state commitments, new recipients will be removed from enrollment. We faced a very similar situation with the Children’s Health Insurance Program earlier this year, and while I’m hopeful we will not have to take that kind of action, we will if the federal government fails to meet its obligations.

We also recognize that the current administration is our best chance to secure conservative reforms to control costs and safeguard taxpayers. We are confident that President Donald Trump and Pence will ensure that Virginia is allowed to enact the reforms that make this program work.

The steps we are taking on health care opened up several other important areas of the budget: We are now able to move state health care resources to other areas. Our budget provides a 2 percent pay raise for teachers and fulfills our commitment to return 40 percent of the educational lottery funds to school divisions without requiring a local match or prescribing their use. It also invests more than $150 million in new funding in higher education to increase the number of degrees earned in four key areas: data science and technology, science and engineering, health care and education. We face chronic worker shortages that require these degrees.

The budget also provides $350 million in funding for dredging the Port of Virginia. This includes $20 million for the engineering and planning phase, and a $320 million bond authorization to begin the work.

The House has laid out a blueprint for the Senate. I am proud of the work we have done, and I believe it is the best path for Virginia to follow.

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