Bacon's Rebellion

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A Really Sweet Valentine

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Dick Hall-Sizemore
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Photo Credit: WHSV

By Dick Hall-Sizemore

Governor Northam recently gave the budget conferees a $730 million Valentine.

Based on January’s revenue report and year-to-date collections, the Governor has revised the general fund forecast to include an additional $410 million in FY 2021 and $320 million in FY 2022.

The main factor leading to the increase was the unanticipated growth in sales tax revenues. Overall, the General Fund revenues through January grew by 6.0% over the same period a year ago. By comparison, the current budget is based on an estimated annual General Fund revenue growth of 1.2%.  The Governor’s letter to the money committees is here; a Power Point summation of the forecast increase is here; and the detailed January revenue report is here.

Del. Kirk Cox, R-Chesterfield, the former Speaker of the House and a candidate for the Republican gubernatorial nomination, called on the General Assembly to rebate the additional money to state residents in the form of $190 for individuals and $380 for families. He framed the proposal as a way of helping Virginia families struggling as a result of the pandemic.

The administration and the chairman of the House Appropriations Committee, on which Cox sits, were quick to dismiss Cox’s proposal as gubernatorial campaign rhetoric. Del. Luke Torian, D-Prince William, pointed out that, even with the increased forecast, the General Fund forecast is still below what it was a year ago before the pandemic began. He pointed out the additional revenue would go a long way in settling the differences between the House and Senate budget bills. (Translation: Both sides get largely what they want.)

My soapbox

There are certainly families struggling in the Commonwealth from economic hardship caused by shutdowns and business closings resulting from COVID-19.  However, not all families are struggling financially. The year-to-date revenue from nonwithholding sources in January was 28.5% higher than it was for a similar period a year ago. Recordation taxes from deeds, wills, and contracts was 37.5% higher. Both are indications of considerable financial activity going on at certain levels of the economy.

There are better ways to assist struggling families than sending $190 to every potential voter. According to the RTD, the Governor’s office has indicated that the $410 million increase for the current fiscal year should be used for one-time purposes. Directing that money to supplementary unemployment benefits, additional rent and mortgage relief, or grants to small businesses would be much better ways to help those that are really suffering.

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40 responses to “A Really Sweet Valentine”

  1. Steve Haner Avatar
    Steve Haner

    Best proof ever that the push to tax the job-saving PPP grants is greed, not need. Was saving that line for my own post, but will be worth repeating….

    In studying the competing budgets myself, something I’m trying to grasp is how they are reporting all the federal COVID money, whether it is reflected in the program budgets or off budget. House budget as it stands (pre-new revenue) showed just over $95B in non-general funds, but are the COVID dollars all in there? Inquiring minds want to know…I think WITH COVID $$ included, the budget would be way higher than a year ago…but not sure.

    Cox’s idea got some attention, but just as with the 2019 conformity debate, one-time refunds are less attractive to me than real tax reform. Thanks to two previous rounds of much larger federal largess into personal bank accounts, with a third pending, the population is getting accustomed to the idea.

    1. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      The COVID dollars are off budget. The key to that is the language in Item 4879.10. The very first words of that item are: “The Governor is hereby authorized to appropriate sums….” That means the legislature has authorized the Governor to appropriate the money, rather than including the appropriations in the budget bill. Later on, in setting out its priorities, the 2020 Special Session GA used the word “appropriations”, but there was no actual appropriation provided. The Governor’s amendments to that language changes “appropriations” to “allocations”. The Item contains language providing the Governor the flexibility to move the allocations around.

      As it is implemented, funds are “obligated” to agencies. After they have planned and entered into contracts, they request DPB to provide an administrative appropriation, which they use to spend the money.

      1. Steve Haner Avatar
        Steve Haner

        Well then we may never know the totals….

        1. Dick Hall-Sizemore Avatar
          Dick Hall-Sizemore

          Yes, we will. Agencies cannot spend the money without an appropriation, which includes an administration appropriation. And expenditures are recorded in DOA data.

          1. LarrytheG Avatar
            LarrytheG

            I sometimes think folks don’t understand the process between budget and appropriation.

            It’s a normal thing during normal times but just because something is in a budget does not mean it can be spent.

            Talk to any School Board or state agency that wants to spend money in it’s budget.

          2. Dick Hall-Sizemore Avatar
            Dick Hall-Sizemore

            It there is an appropriation, it can be spent. An appropriation is the legal authorization to spend. The exception is nongeneral fund revenue. For NGF, there has to be an appropriation and available cash. For general fund, the appropriation is all that is needed.

          3. LarrytheG Avatar
            LarrytheG

            So you know this.

            Where is the actual money? Is it in a central state account with authorized “pulls” or is it in the agency-specific accounts controlled by the agency ?

          4. Dick Hall-Sizemore Avatar
            Dick Hall-Sizemore

            Some of the CARES cash is sitting in a central account and some is sitting in a agency code account. However, in either case, in order to spend that cash, the agency must get authorization and an appropriation from DPB. In some cases, the appropriation is transferred; in other cases, an appropriation is provided to spend some of the NGF cash balance.

            In practice, DPB controls the appropriation and DOA controls the cash. DPB appropriation actions are accessible to the public on DPB’s website. The actions that DOA takes to move cash around are not accessible.

  2. Steve Haner Avatar
    Steve Haner

    Best proof ever that the push to tax the job-saving PPP grants is greed, not need. Was saving that line for my own post, but will be worth repeating….

    In studying the competing budgets myself, something I’m trying to grasp is how they are reporting all the federal COVID money, whether it is reflected in the program budgets or off budget. House budget as it stands (pre-new revenue) showed just over $95B in non-general funds, but are the COVID dollars all in there? Inquiring minds want to know…I think WITH COVID $$ included, the budget would be way higher than a year ago…but not sure.

    Cox’s idea got some attention, but just as with the 2019 conformity debate, one-time refunds are less attractive to me than real tax reform. Thanks to two previous rounds of much larger federal largess into personal bank accounts, with a third pending, the population is getting accustomed to the idea.

    1. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      The COVID dollars are off budget. The key to that is the language in Item 4879.10. The very first words of that item are: “The Governor is hereby authorized to appropriate sums….” That means the legislature has authorized the Governor to appropriate the money, rather than including the appropriations in the budget bill. Later on, in setting out its priorities, the 2020 Special Session GA used the word “appropriations”, but there was no actual appropriation provided. The Governor’s amendments to that language changes “appropriations” to “allocations”. The Item contains language providing the Governor the flexibility to move the allocations around.

      As it is implemented, funds are “obligated” to agencies. After they have planned and entered into contracts, they request DPB to provide an administrative appropriation, which they use to spend the money.

      1. Steve Haner Avatar
        Steve Haner

        Well then we may never know the totals….

        1. Dick Hall-Sizemore Avatar
          Dick Hall-Sizemore

          Yes, we will. Agencies cannot spend the money without an appropriation, which includes an administration appropriation. And expenditures are recorded in DOA data.

          1. LarrytheG Avatar
            LarrytheG

            I sometimes think folks don’t understand the process between budget and appropriation.

            It’s a normal thing during normal times but just because something is in a budget does not mean it can be spent.

            Talk to any School Board or state agency that wants to spend money in it’s budget.

          2. Dick Hall-Sizemore Avatar
            Dick Hall-Sizemore

            It there is an appropriation, it can be spent. An appropriation is the legal authorization to spend. The exception is nongeneral fund revenue. For NGF, there has to be an appropriation and available cash. For general fund, the appropriation is all that is needed.

          3. LarrytheG Avatar
            LarrytheG

            So you know this.

            Where is the actual money? Is it in a central state account with authorized “pulls” or is it in the agency-specific accounts controlled by the agency ?

          4. Dick Hall-Sizemore Avatar
            Dick Hall-Sizemore

            Some of the CARES cash is sitting in a central account and some is sitting in a agency code account. However, in either case, in order to spend that cash, the agency must get authorization and an appropriation from DPB. In some cases, the appropriation is transferred; in other cases, an appropriation is provided to spend some of the NGF cash balance.

            In practice, DPB controls the appropriation and DOA controls the cash. DPB appropriation actions are accessible to the public on DPB’s website. The actions that DOA takes to move cash around are not accessible.

  3. LarrytheG Avatar
    LarrytheG

    re: ” The main factor leading to the increase was the unanticipated growth in sales tax revenues. Overall, the general fund revenues through January grew by 6.0 percent over the same period a year ago. In comparison, the current budget is based on an estimated annual general fund revenue growth of 1.2 percent.”

    So how can this be if folks are saying the entertainment economy is dead on it’s butt?

    How did Virginia do so well on sales tax if we have businesses closed and people unemployed?

    What might be interesting is a regional look at the sales tax. My bet is that the regions with large numbers of government and corporate who worked at home did not change their buying habits.

    They still buy groceries and stuff and I hear that home sales are actually way up.

    How about RoVa? Did they do well or are they hurting?

    1. Steve Haner Avatar
      Steve Haner

      “How did Virginia do so well on sales tax if we have businesses closed and people unemployed?” What, no Amazon trucks in your neighborhood? Yes, the consumer economy has been pumped up by huge federal stimulus and low interest rates — another reason it is pretty shameless the state wants to come in like the Mob and skim off the top.

      As for the entertainment industry, well, sure, we haven’t been in a movie theater, but the streaming fees are up. Xfinity hit me with another price increase this month (that box rental fee is a scam!) Restaurants and leisure remain deeply depressed. But as you’ve said and I agree, much of that is customer reluctance and not just government restrictions.

      1. LarrytheG Avatar
        LarrytheG

        Why is Virginia said to be better off than other states? what the difference?

        1. djrippert Avatar
          djrippert

          Because Virginia laps up the largesse of the Federal government. How many federal workers got laid off over the last year?

    2. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      You are right–some sectors of the economy are being slammed. But according to Secretary of Finance Aubrey Layne and Chamber of Commerce President Barry DuVal, Virginia’s economy is not as dependent on those sectors as are other other states. As the RTD summarized it, ” Virginia relies increasingly on “knowledge-based” industries and employees, most of them earning much more than workers in hard-hit service industries and many of them benefiting from federal contracts and emergency aid during the pandemic.” Aubrey Layne put it another way, ““If I had to describe what’s going on in Virginia, I’d say it’s reverse sequestration,” Layne told the Senate Finance & Appropriations Committee, referring to the 2011 federal budget act that imposed across the board cuts in domestic and defense spending on which Virginia depends for its economy. https://richmond.com/news/state-and-regional/govt-and-politics/recovery-va-economy-revenues-buoyed-by-consumer-demand-big-business/article_782c8d79-1e1c-545e-b81b-527769f2b3b8.html

      1. LarrytheG Avatar
        LarrytheG

        So, does this mean that Virginia has attracted the RIGHT KIND of businesses so that it’s economy is more resilient ?

        GAWD FORBID Virginia has done something right! 😉

        and oops: ” reverse sequestration “… there must be some numbers to
        show this…

        1. Steve Haner Avatar
          Steve Haner

          No, he is talking about massive federal spending, contracts and stimulus. For decades there was whining we were too dependent on federal spending, and needed to diversify. Surprise! It is Uncle Sam saving us again.

          1. Reed Fawell 3rd Avatar
            Reed Fawell 3rd

            Steve says:

            “Surprise! It is Uncle Sam saving us again.”

            Which means Virginia is otherwise a Basket Case. Head for Florida, folks, before it’s too late.

        2. djrippert Avatar
          djrippert

          Virginia did two things right – it was the birthplace of Thomas Jefferson and George Washington. Those two native sons finagled the capital of the new country to be on what is now Washington, DC. That guaranteed that we could elect train wreaks like Harry Byrd and Ralph Northam and still be fine.

          Since the birth of those two, Virginia has done very few things right.

          1. Dick Hall-Sizemore Avatar
            Dick Hall-Sizemore

            Actually, it was another Virginia native rather than Washington who was instrumental in getting the capital located on the Potomac–James Madison. The “Compromise of 1790” resulted from a secret meeting of Hamilton, Jefferson, and Madison. https://prologue.blogs.archives.gov/2015/05/31/the-compromise-of-1790/

  4. LarrytheG Avatar
    LarrytheG

    re: ” The main factor leading to the increase was the unanticipated growth in sales tax revenues. Overall, the general fund revenues through January grew by 6.0 percent over the same period a year ago. In comparison, the current budget is based on an estimated annual general fund revenue growth of 1.2 percent.”

    So how can this be if folks are saying the entertainment economy is dead on it’s butt?

    How did Virginia do so well on sales tax if we have businesses closed and people unemployed?

    What might be interesting is a regional look at the sales tax. My bet is that the regions with large numbers of government and corporate who worked at home did not change their buying habits.

    They still buy groceries and stuff and I hear that home sales are actually way up.

    How about RoVa? Did they do well or are they hurting?

    1. Steve Haner Avatar
      Steve Haner

      “How did Virginia do so well on sales tax if we have businesses closed and people unemployed?” What, no Amazon trucks in your neighborhood? Yes, the consumer economy has been pumped up by huge federal stimulus and low interest rates — another reason it is pretty shameless the state wants to come in like the Mob and skim off the top.

      As for the entertainment industry, well, sure, we haven’t been in a movie theater, but the streaming fees are up. Xfinity hit me with another price increase this month (that box rental fee is a scam!) Restaurants and leisure remain deeply depressed. But as you’ve said and I agree, much of that is customer reluctance and not just government restrictions.

      1. LarrytheG Avatar
        LarrytheG

        Why is Virginia said to be better off than other states? what the difference?

        1. djrippert Avatar
          djrippert

          Because Virginia laps up the largesse of the Federal government. How many federal workers got laid off over the last year?

    2. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      You are right–some sectors of the economy are being slammed. But according to Secretary of Finance Aubrey Layne and Chamber of Commerce President Barry DuVal, Virginia’s economy is not as dependent on those sectors as are other other states. As the RTD summarized it, ” Virginia relies increasingly on “knowledge-based” industries and employees, most of them earning much more than workers in hard-hit service industries and many of them benefiting from federal contracts and emergency aid during the pandemic.” Aubrey Layne put it another way, “”If I had to describe what’s going on in Virginia, I’d say it’s reverse sequestration,” Layne told the Senate Finance & Appropriations Committee, referring to the 2011 federal budget act that imposed across the board cuts in domestic and defense spending on which Virginia depends for its economy. https://richmond.com/news/state-and-regional/govt-and-politics/recovery-va-economy-revenues-buoyed-by-consumer-demand-big-business/article_782c8d79-1e1c-545e-b81b-527769f2b3b8.html

      1. LarrytheG Avatar
        LarrytheG

        So, does this mean that Virginia has attracted the RIGHT KIND of businesses so that it’s economy is more resilient ?

        GAWD FORBID Virginia has done something right! 😉

        and oops: ” reverse sequestration “… there must be some numbers to
        show this…

        1. Steve Haner Avatar
          Steve Haner

          No, he is talking about massive federal spending, contracts and stimulus. For decades there was whining we were too dependent on federal spending, and needed to diversify. Surprise! It is Uncle Sam saving us again.

          1. Reed Fawell 3rd Avatar
            Reed Fawell 3rd

            Steve says:

            “Surprise! It is Uncle Sam saving us again.”

            Which means Virginia is otherwise a Basket Case. Head for Florida, folks, before it’s too late.

        2. djrippert Avatar
          djrippert

          Virginia did two things right – it was the birthplace of Thomas Jefferson and George Washington. Those two native sons finagled the capital of the new country to be on what is now Washington, DC. That guaranteed that we could elect train wreaks like Harry Byrd and Ralph Northam and still be fine.

          Since the birth of those two, Virginia has done very few things right.

          1. Dick Hall-Sizemore Avatar
            Dick Hall-Sizemore

            Actually, it was another Virginia native rather than Washington who was instrumental in getting the capital located on the Potomac–James Madison. The “Compromise of 1790” resulted from a secret meeting of Hamilton, Jefferson, and Madison. https://prologue.blogs.archives.gov/2015/05/31/the-compromise-of-1790/

  5. James Wyatt Whitehead V Avatar
    James Wyatt Whitehead V

    I like what Delegate Cox said.

    “This plan takes the $730 million that the reforecast came down with, and does a straight tax rebate. The feeling is that families have really struggled — no question about that — and this would help them with what they need to do. That could be an electric bill, clothes for kids, tutoring expenses,” Cox said in an interview.

    The working class Virginian will use that money far more wisely and efficiently than the cronies in the General Assembly.

    1. djrippert Avatar
      djrippert

      “The working class Virginian will use that money far more wisely and efficiently than the cronies in the General Assembly.”

      If the money was given to the cats and dogs in Virginia it would be better spent than to allow the cronies in the General Assembly to spend it. At least Fido would get a bone.

  6. James Wyatt Whitehead V Avatar
    James Wyatt Whitehead V

    I like what Delegate Cox said.

    “This plan takes the $730 million that the reforecast came down with, and does a straight tax rebate. The feeling is that families have really struggled — no question about that — and this would help them with what they need to do. That could be an electric bill, clothes for kids, tutoring expenses,” Cox said in an interview.

    The working class Virginian will use that money far more wisely and efficiently than the cronies in the General Assembly.

    1. djrippert Avatar
      djrippert

      “The working class Virginian will use that money far more wisely and efficiently than the cronies in the General Assembly.”

      If the money was given to the cats and dogs in Virginia it would be better spent than to allow the cronies in the General Assembly to spend it. At least Fido would get a bone.

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