As budget deal looks likely, Virginia lawmakers turn to reserves

By Kathryn Watson | Watchdog.org, Virginia Bureau

ALEXANDRIA, Va. — There’s an end in sight to the knock-down,drag-out budget battle in Richmond.

With Republicans now controlling both chambers of the General Assembly after the unexpected resignation of Democratic State Sen. Phil Puckett, the path is paved for a two-year budget that leaves no room for Medicaid expansion. The House and Senate will convene Thursday night for the umpteenth time to consider a budget, this time, with a tentative agreement and a lot less resistance.

The 2014-2016 budget, however, is complicated by fears revenue collections will fall at least $1.5 billion short of expectations over the next two years. And to fill that gap, lawmakers are looking to dip into around $700 million in the commonwealth’s Rainy Day Fund, on top of about $800 million in spending cuts.

Whatever happens, lawmakers are determined to avoid a few things: like slashing payments to the Virginia Retirement System — the way Gov. Bob McDonnell balanced the budget a few years ago — or halting debt service payments.

In order to tap into that Rainy Day Fund — officially dubbed the Revenue Stabilization Fund — lawmakers first have to pass a budget. To avoid a government shutdown, they have to pass a budget before July 1.

“(The) objective would be to enact a budget in order to access the Revenue Stabilization Fund during the 2015 session,” a Wednesday presentation to the House Appropriations Committee reads.

Whatever happens, Gov. Terry McAuliffe’s hopes of pushing for Medicaid aren’t looking promising. The governor, who made Medicaid expansion his single-largest campaign issue, could still try to expand the entitlement program by executive action. Still, with both chambers under Republican control, doing so might mean more political turmoil than it’s worth, as he could be the only thing standing between passing a budget or allowing much of state government to shut down.

Republican Sen. Emmett Hanger, one of the few of his party championing Medicaid expansion, might still bring up a bill to expand Medicaid, separate from the budget.

The Senate convenes at 5 p.m. Thursday, while the House convenes at 6 p.m.

— Kathryn Watson is an investigative reporter for Watchdog.org’s Virginia Bureau, and can be reached at kwatson@watchdog.org, or on Twitter @kathrynw5.