Public Address on the Budget and Special Session

Thank you for coming here today. It is an honor and a privilege to serve as the 72nd Governor of this great Commonwealth.  

With the first 72 days in office, we have worked together with our Republican friends in the legislature, to find common ground on many issues, including SOL reform, transforming our mental health system, restructuring workforce development, prioritizing transportation projects and growing our economy.  I just want to highlight some of these accomplishments.  

Few issues came up more often in my campaign for Governor than the Standards of Learning (SOL) program. We know that the SOLs are not meeting the needs of our students, parents or teachers.   

Therefore, SOL reform was a main priority for my administration this General Assembly Session.  With the introduction of SOL reform bills by Delegates Tag Greason and Rob Krupicka, and Senator John Miller and others, we were able to work in concert with legislators, parents and education experts to begin making progress on the important work of reforming our standardized testing system.  

Improving our mental health system is a work in progress, but legislation approved this year is moving this system in the right direction.  I want to thank Senator Creigh Deeds and Delegate Rob Bell for their leadership on this critical issue, and I look forward to signing this legislation when it reaches my desk.  

House Bill 2 is landmark legislation that will play a huge role in determining how we prioritize transportation dollars. The bill outlines a transparent, data-driven process for evaluating new transportation projects and will ensure that Virginia’s taxpayers are getting the best value for their money. 

For public safety, I am proud to have already signed both Senate Bill 381 by Senator Bryce Reeves and House Bill 730 by Delegate Scott Lingamfelter.  This legislation transfers the responsibility for overseeing and coordinating efforts to strengthen homeland security from the Secretary of Veterans Affairs and Homeland Security to the Secretary of Public Safety. 

This reorganization resulted from a 2013 report by the Joint Legislative Audit and Review Commission and will ensure the Commonwealth can effectively and efficiently coordinate our preparedness efforts. 

Working with a bipartisan team in both chambers, I was pleased to see the quick success of my first introduced bill in the legislature, Senator Puckett’s Senate Bill 673. 

Without this legislation, the City of Bristol would have been unable to complete an economic development project, which represents a significant local investment and has the prospect of 2,000 jobs for a challenged region.  

We can celebrate many other accomplishments this Session, but our work is not done.  

It is rare that a new Governor ever has the opportunity to submit a budget in his first year.  Usually, I would be looking at a budget I inherited from my predecessor.  While Governor McDonnell has left us with a sound budget, there are significant changes I would like to make. 

Today, I am offering my own budget and introducing HB 5003 and SB 5003.  

To help move the process along for the House and Senate, I have introduced the original McDonnell budget and added another enactment with my amendments.  These 104 amendments will position the Commonwealth to be more competitive and successful in this challenging 21st century economy.  

As you know, I have spent the last few weeks traveling the state visiting hospitals and clinics, speaking to business and civic leaders and meeting with our most vulnerable citizens.  

I have seen firsthand the need for access to healthcare and the consequences if care is not provided.  From Southwest Virginia to even Arlington, these citizens have been waiting long enough. 

We have the opportunity to bring our taxpayer dollars back to Virginia and to insure up to 400,000 individuals.  This is more than $2 billion a year that will run through our economy creating up to 30,000 new jobs.  

We are talking about tax dollars that our citizens have already paid and sent across the Potomac River.  I want to bring those dollars back.  It is morally and economically the right step to take.  

Opponents have thrown up roadblock after roadblock but their arguments have been overcome by simple facts

First, they said that closing the healthcare coverage gap would cost millions of dollars.  Instead, with an actuarial analysis from PricewaterhouseCoopers, we have seen that we will actually save $1.1 billion over the next eight years.  

Then they said we needed an audit first.  We have completed 63 audits in the past years.  

Then they said we need to reform Medicaid first.  Through the Medicaid Innovation and Reform Commission we have started to implement all of the reforms set out by the General Assembly.  Both the Senate and House have actually captured $230 million in savings from these reforms in their respective budgets.  

Next, they have said we need a “clean” budget and Medicaid should be decoupled from the appropriation act.  Medicaid is currently 20 percent of the budget.  Governor McDonnell included funding in his budget for the Affordable Care Act as early as 2012.  

And let’s not forget, the Medicaid Innovation and Reform Commission itself was a creature of the budget.  

There is nothing "clean" about a budget that sweeps 400,000 uninsured Virginians under the rug. 

Finally, they have said if we embark on closing the healthcare coverage gap, we will not be able to back out.  This is just plain false.  

We can do this the Virginia way and that is why today I am calling for a new two year pilot project.  

Virginia can lead the nation by bringing our taxpayer dollars back and using 100 percent federal funding for two years to help our sickest citizens, keep our hospitals afloat and save our clinics.  

I have asked for and received a letter from the Centers for Medicare and Medicaid Services that states, “if Virginia implemented an expansion of Medicaid coverage for 2 years and then dropped such coverage at the end of that time period, there would be no financial penalty and no reduction to the federal matching dollar rates otherwise available to Virginia for its Medicaid program.” 

We can’t be any more clear than that! 

The letter is significant because it opens the door for a pragmatic and balanced approach to closing the healthcare coverage gap that all sides should find reasonable. 

Now, with CMS’s explicit confirmation that we would face no such challenges, there can be no more excuses. Hundreds of thousands of working families throughout Virginia are depending on us to set aside partisan politics and act with responsible swiftness to close the healthcare coverage gap. 

If expansion doesn’t help our people, then I – and I alone – will bear the responsibility.  It’s a risk I am willing to take for our working families from one end of Virginia to another.  

By closing the healthcare coverage gap, we also gain $225 million in savings to the state’s General Fund.  In my introduced budget, I intend to use some of the savings to move Virginia forward and better fund our core services.  

Here is what I am proposing:  

In my first few months in office, I have been extremely impressed by the professionalism and dedication of our state employees.  In traveling around the state, I have visited with our hard working teachers, all of whom need a raise. 

In my budget, I am providing a two percent salary increase for all full-time state employees, SOQ funded teachers and support personnel, college and university faculty, constitutional officers and state-supported local employees.   Approximately $36.4 million the first year and $163.1 million the second year from the general fund is provided for the cost of this salary increase.  This increase is fully funded in the second year to be fiscally sound.  

In addition, I am including $17 million in the second year to fund the state’s responsibility for the Line of Duty Act.  The program was previously state supported, but in the past few years has been an unfunded mandate on our localities.  

This is the least we can do for the men and women who have paid the ultimate sacrifice to protect our communities. 

In order to fully fund our retirement system, I have set aside $76.3 million from the general fund to increase the employer retirement contribution rates up to 100 percent of the Virginia Retirement System Board certified rates.  This has been identified as a top priority for Chairman Chris Jones, and I thank him for his leadership.  These funds may also be used to offset any downward revisions of the revenue estimates for fiscal years 2015 and 2016, if needed. 

To be fiscally prudent, I have followed the wise counsel of Senator Walter Stosch and have added $100 million in the Virginia Health Reform and Innovation Fund.  This fund will be used to cover the future state costs of closing the healthcare coverage gap at the point that the net costs of the program require state funding.  

Finally, through additional found revenues and amendments I have included:

  • $8.9 million for mental health;
  • $7.4 million for Pre-K;
  • $5.4 million for a cost of competing adjustment (COCA) for support positions in Northern Virginia school divisions;
  • $4.8 million for extended school year grants;
  • $2 million for gasoline for state police; and
  • $7.1 million authorized funds for land conservation. 

Together we have an opportunity to put partisanship aside and pass a budget that makes Virginia a stronger, healthier and more prosperous place to work and live.  I am confident that we can finish our work in no more than three weeks, do what is in the best interest of the citizens and find common ground.  I look forward to working with you more as this process continues.