What to Do with Virginia’s Pile O’ Money

by James A. Bacon

Virginia is expected to close out the year with a $2 billion budget surplus. An estimated $900 million is required under the state constitution to go into a rainy day reserve fund. That leaves roughly $1.1 billion for the next General Assembly and Governor of Virginia to play with.

According to Brandon Jarvis’ Virginia Scope newsletter, the two candidates for governor, Glenn Youngkin and Terry McAuliffe, have very different ideas of what to do with the surplus cash.

“Virginia families deserve a tax refund from this surplus,” said Youngkin spokesperson Macaulay Porter. “Investing in our kids and our schools, public safety, and infrastructure is the right thing to do.”

Vague… very vague. But at least the statement signals a willingness to return something to taxpayers and to slow the relentless growth in state spending. By contrast, McAuliffe is campaigning on a promise to spend $2 billion per year more on education — much of it to boost teacher salaries.

Said McAuliffe: “I have talked about this for a long time, we have always tried to do it on the cheap, we are 50 out of 50 states on average teacher pay compared to the average pay of our resident. We need to invest in education. I think it is the single biggest thing we can do. If we do that, we build the best workforce in the country — businesses from all over the globe will come into Virginia.”

World Population Review publishes a ranking of teacher pay by state in 2021. With an average pay of $53,267 Virginia ranks 19th from the bottom — below the national average but far from the lowest in the country. But according to Business.org, in Virginia teachers have the worst relative salaries compared to other full-time employees — 28% less. (That study did not adjust for teachers’ time off during winter, spring and summer vacations.)

McAuliffe does have a point. But does it matter? How does teacher pay correlate with the quality of education? It seems intuitively obvious that paying more will help schools recruit and retain more and better teachers. Turnover is a terrible problem. But, as we have written on Bacon’s Rebellion, while pay is a significant factor, so are teacher feelings of how they are treated by administrators and challenges posed by disruptive students.

Naturally, there are studies aplenty — mainly written by educators — making the case of higher pay for teachers. And let us not forget that teacher’s lobbies are a core constituency of the Democratic Party. According to the Virginia Public Access Project, the American Federation of Teachers has donated $50,000 to McAuliffe’s campaign this year (and $25,000 more to Attorney General Mark Herring), while the National Education Association has contributed $50,000 to the House Democratic Caucus.

Erik A. Hanushek, a Stanford University economist, has argued that higher pay can improve student achievement if it is tied to outcomes. “It’s not that resources don’t matter and that they can’t matter,” he said, as quoted in Education Week. “It’s that you can’t trust that you can just drop in a pile of money and expect good performance to come out. …  I think that there’s still a case to be made on targeting extra resources on schools to get better performance.”

That’s probably not what McAuliffe has in mind, as teachers’ unions generally resist accountability. It’s not clear how Youngkin would prioritize public school spending. But the higher-pay-for-better-outcomes idea might be a winner with taxpayers who want to support public education but are weary of indiscriminate spending.


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60 responses to “What to Do with Virginia’s Pile O’ Money”

  1. vicnicholls Avatar
    vicnicholls

    Give it back to the people who EARNED it.

    1. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      What is your idea on how that year-end balance should be divided up among the taxpayers?

      1. Matt Adams Avatar
        Matt Adams

        Refund everyone’s PPT.

        1. Dick Hall-Sizemore Avatar
          Dick Hall-Sizemore

          I apologize. Please remind me what PPT stands for.

          1. Matt Adams Avatar
            Matt Adams

            Personal Property Tax (i.e. yearly tax based upon items NADA book value)

            The tax that keeps people from getting their clunkers off the road and protecting the environment.

          2. Dick Hall-Sizemore Avatar
            Dick Hall-Sizemore

            But that tax is not a state tax; it is local. It did not contribute to the year-end balance that the state is expecting.

          3. Matt Adams Avatar
            Matt Adams

            The 1998 PPTRA is a state law and provides relief for PPT. That could be used as a mean to redistribute the money to all, have it cover 100% for 2021.

          4. Dick Hall-Sizemore Avatar
            Dick Hall-Sizemore

            OK. That is a valid suggestion. However, it would not result in returning money to all taxpayers who helped contribute to the year-end balance. For example, anyone who did not own a vehicle and did not pay PPT, but who bought stuff and therefore paid a state sales tax would not get anything back by being able to miss paying PPT in 2021.

          5. Matt Adams Avatar
            Matt Adams

            If they do not own a vehicles they don’t pay PPT and therefore aren’t subject to it. Even if you bought a vehicle in 2021 it’s still subject to PPT, it’s just prorated for how long you’ve owned it.

            It curbs people from purchasing newer efficient vehicles. Take for instance the following, I saw 3 Tesla’s on route 3 this afternoon.

            1) 2 X Model 3 Base MSRP ~$40,000
            2) Model X Base MSRP ~$80,000

            Obviously PPT is accessed per $100 dollar value, so 400 for the Model 3’s and 800 for the Model X. The rate for Spoty as is my assumption where they lived as they were heading in that direction is $6.55/100 for 2019 or newer.

            Model 3’s $2,620 per year in PPT
            Model X $5,240 per year in PPT

            PPTRA reduces that based upon the first $20,000.

            Model 3’s $1,310 per year
            Model X’s $3,930 per year

            So do we really care about the environment or do we just like taxes? As it can’t be both.

          6. tmtfairfax Avatar
            tmtfairfax

            Manassas Park tells the public that the personal property tax on cars is a state tax.

          7. Brian Leeper Avatar
            Brian Leeper

            And the low-information people that live there probably believe it.

      2. Lenhihy Avatar

        For all the taxpayers, who paid state tax, I mean, paid state tax, they should get a one time refund.

        1. LarrytheG Avatar
          LarrytheG

          how much would that actually be? I don’t think it’s more than a few dollars…

        2. Dick Hall-Sizemore Avatar
          Dick Hall-Sizemore

          Do you really mean all taxpayers? Would that include my grandsons who bought stuff with their own money and thereby paid state sales tax? Would that include undocumented immigrants who also paid sales tax on stuff they bought?

    2. Nancy Naive Avatar
      Nancy Naive

      Bezos? Oh, here it Va it’s who, the Waltons?

    3. energyNOW_Fan Avatar
      energyNOW_Fan

      That would be Va. taxpayers in the $100k-$200K income bracket. Our policy is to hit them hard because (1) that is where the money is, and (2) we don’t want to tax people at all below about $100K and (3) we don’t want to be hard to higher income. Fine, but I submit Va. hits middle harder, if not hardest of all states.

      1. vicnicholls Avatar
        vicnicholls

        Uh I do not earn any where near that and I want my money back.

        1. Nancy Naive Avatar
          Nancy Naive

          To quote the Who, “Ya can’t have it!”

  2. James Wyatt Whitehead Avatar
    James Wyatt Whitehead

    50/50 raffle would be fun.

    Could Northam add this to the special session in August? I believe he wants one to spend the federal covid money. What about spending the surplus at this session?

    1. WayneS Avatar

      In an effort to spread the wealth, perhaps they could have multiple raffles, each with a a $1,000,000 prize…

  3. Dick Hall-Sizemore Avatar
    Dick Hall-Sizemore

    This post is mixing apples and oranges. At least, I hope that it is. I hope that McAuliffe is not saying that the state should use that $2 billion surplus for teacher salaries. That is an ongoing expense and the surplus is one-time money. Budgeting 101 says that one should not use one-time money to fund ongoing expenses. But, McAuliffe knows that. So, the post has set up a straw man.

    Today’s Richmond Time-Dispatch lists lots of one-time uses for that $1.1 billion. Topping the list is replenishing the unemployment assistance fund. Then there is broadband expansion, fixing dilapidated schools, helping the tourism industry, and the list goes on. That money could be spent quickly. https://richmond.com/news/state-and-regional/govt-and-politics/virginia-s-budget-surplus-could-now-approach-2-billion/article_b3dd86ab-1448-5656-bbeb-c731f2c72e8b.html

    Finally, neither McAuliffe nor Youngkin will have much to say about how it’s spent. Northam will make recommendations and the General Assembly will make the final decision at its special session in early August.

    1. DJRippert Avatar
      DJRippert

      Budgeting 101 is not Politics 101 and McAuliffe knows that. If the surplus is used to increase teachers’ salaries for a year or two it will not require a tax increase. However, once the budget is spent, the state will have to decide whether to lower teachers’ salaries or raise taxes. At that point it becomes a fait accompli.

      1. LarrytheG Avatar
        LarrytheG

        I just want to point out that it’s a common practice for the Federal Govt to offer grants for public safety – law enforcement, fire & rescue, EMS, and other. The grants only go for a few years and then it’s up to the locality to decide if the value they got from the added positions is worth continuing to pay for out of their own pockets.

        Some folks will see this as nefarious but others including myself see it as a way to try out the added positions and see if they are worth it or not.

        If they are not, drop the grant and let attrition eat the extra positions.

        In education, it’s the same thing and it works the same way. The Feds might fund additional positions for Title 1 or other specialized resources and the ball will then be in the court of the local officials to decide if it’s truly worth keeping and paying for.

      2. tmtfairfax Avatar
        tmtfairfax

        Fire one-half of each school division’s central staff and make a rule that no one on staff except deputy superintendents (with a limit of 10 per division) cannot make more than a teacher. Big shift of money to teachers would result.

    2. Stephen Haner Avatar
      Stephen Haner

      The surplus is the tip of a large iceberg and will be followed by more revenue growth in future years, and I’ve explained why several times. It is time to revisit the tax reform that was abandoned two years ago, when the General Assembly (both parties) decided to keep 90% of the windfall from the Tax Cuts and Jobs Act. The two steps that should be taken are:

      1) Expand the standard deduction as close as possible to the federal level and

      2) index the brackets, etc. to inflation.

      There is not enough money to satisfy the demands of government workers who want higher salaries. Not enough money in the world…And you are mixing fruits, Dick, because the UI deposit would be from federal COVID money, not the surplus.

      1. LarrytheG Avatar
        LarrytheG

        I see some expenditures as investments with ROI.

        I know most Conservatives do not but some actually are.

        You build a better Fire Dept and it results in lower insurance premiums for taxpayers. THe extra they pay for additional firefighters is more than compensated by lower insurance premiums.

      2. Dick Hall-Sizemore Avatar
        Dick Hall-Sizemore

        As you know, the Republicans missed their chance to enact these policies, which have merit.

        1. Stephen Haner Avatar
          Stephen Haner

          Yeah, they get their political advice from Larry. It explains their success.

          1. LarrytheG Avatar
            LarrytheG

            Not ME! But I WILL say this – if Steve or TJ or some fiscal conservative CAN make a principled case that Virginians pay too much in taxes compared to other states (or pick some other metric), then I might buy it more.

            But the knee jerk, “we don’t want to pay taxes no matter what they are” ain’t getting it.

            So the GOP and Youngkin can’t make a real prima facia case beyond knee jerk? 😉

            SOME tax-funded things ARE actually true investments and actually can have an ROI and some kneejerk anti-tax stuff is just pennywise and pound foolish.

      3. LarrytheG Avatar
        LarrytheG

        Is three a succinct set of numbers that show how much MORE Virginia taxpayers are paying and will pay in the future? Net additional over now?

    3. Nancy Naive Avatar
      Nancy Naive

      Well, you could invest it and use 4.5% ad infinitum… or divide it by 10 and use an equal portion for the next 10 years… added bonus: after 3 years you can tell the GA it’s a traditional expense and it will forever be included in the budget, leaving you 6 or 7 parts to use to create another “ongoing expense”.

      Gotta think like a gonif if you’re going to get into an elected office.

      BTW… snark alert.

  4. LarrytheG Avatar
    LarrytheG

    I’d vote for universal Pre-k, child care for full time workers, further cleanup of the Chesapeake Bay, more money for mental health community services, and accelerating the I-81 improvements.

    There is never enough money. It is always about priorities, and “giving money back” is the conservative version of virtue signaling… It’s not like the money goes into a black hole, it goes to benefit the taxpayers in the longer run.

    We need – better educated kids especially the at-risk ones. We need parents to get full time jobs rather than entitlements for not working. We need more done on the Bay. We desperately need more community-based mental health services and I-81 could use some acceleration of it’s improvements.

    1. DJRippert Avatar
      DJRippert

      If money solved the educational problems of at-risk kids, Washington DC would be a wonderland of well educated at-risk children. Spoiler alert: It isn’t.

      1. LarrytheG Avatar
        LarrytheG

        Money pays for paras and specialists which are needed for at-risk kids.

        When an entire school is at-risk kids, and you have one Title 1 specialist – bad stuff happens.

        When you have a child with autism – you NEED a specialist if you want that child to reach their potential.

        When a child has English as a second language, you NEED someone beyond just a standard teacher.

        Ditto for kids with dyslexia and other learning disabilities.

        That’s a reality that some just refuse to deal with.

    2. tmtfairfax Avatar
      tmtfairfax

      Amend both the federal and state income tax code to disallow any deduction for compensation for any worker that doesn’t pass E-Verify. Same rule for any contractor who works 30 or more days per year for the same business.

  5. DJRippert Avatar
    DJRippert

    Use the money to set up an endowment to fund bonuses for exceptional teachers. At 5% that $1.1b generates $55m per year. There are about 90,000 teachers in Virginia. The top 10% would constitute 9,000. $55m / 9,000 = $6,111 per year per top teacher in bonus money.

    Someone needs to teach McAuliffe to be a businessman instead of just another rent seeking crony capitalist.

    Alternately, we could use some of the money to refund the public funds committed by Mississippi to Green Tech along with an apology from our state for not warning them about McAulife in advance.

    1. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      The idea of an endowment for exceptional teachers is a good one. The problem, of course, will be defining “exceptional”.

      1. Stephen Haner Avatar
        Stephen Haner

        The union bosses will pick. 🙂

        Pretty good political lesson here. Something is better than nothing. Terry had a concrete suggestion, Younkin’s camp offered an aphorism. We’ve spent the string talking about McAuliffe’s suggestion.

        1. Dick Hall-Sizemore Avatar
          Dick Hall-Sizemore

          And it is not clear that McAuliffe was linking his idea to the year-end balance, which I don’t think he was because that had been his proposal before the potential size of the balance was known.

        2. LarrytheG Avatar
          LarrytheG

          Youngkin needs to do better than that if we wants more votes that just the base.

    2. Nancy Naive Avatar
      Nancy Naive

      How about just buying school supplies?
      In the 11 years my daughter was in Va schools, every year we bought batteries, markers, pencils, ink cartridges, and my company supplied boxes of paper… well, at my urging.

    3. LarrytheG Avatar
      LarrytheG

      I like the endowment idea but no union and no principles pick. Both will (not always) , but often, pick the wrong folks.

      I like the idea a lot though.

  6. tmtfairfax Avatar
    tmtfairfax

    I’d support the Commonwealth keeping all the money if it would buy out Bezos’ investment in the Post and just shut it down.

  7. Matt Hurt Avatar
    Matt Hurt

    I’m afraid if we don’t meaningfully increase teacher salaries that we won’t have enough folks to staff our classrooms. 20 years ago in Southwest Virginia you’d post a K-6 teaching position and have folks lined up around the corner from whom to take your pick. Now most divisions pretty much hire all applicants. Some divisions are actually recruiting teachers from other countries to fill vacancies.

    1. tmtfairfax Avatar
      tmtfairfax

      Lay off one-half of the central staff and provide that no staff member can make more than the top-paid teacher.

      1. Matt Hurt Avatar
        Matt Hurt

        Not every division has a well staffed central office, in fact many don’t.

  8. WayneS Avatar

    RE: Teacher pay in Virginia – USA Today tells a different story:

    https://www.usatoday.com/story/money/2019/07/09/the-states-where-its-best-and-worst-to-be-a-teacher/39647529/

    Virginia comes in at #6 on their list of best places to be a teacher.

    The story is 2 years old now, but I sincerely doubt teacher salaries in Virginia have dropped since 2019.

    I wonder who is right…

    1. LarrytheG Avatar
      LarrytheG

      I think teachers in NoVa and in the exurb rings around NoVa don’t do badly… but suspect further out, it’s not as good as Matt Hurt has related.

      1. WayneS Avatar

        I was taken aback by the disparate claims regarding average salary.

        One source says $53,267
        Another says $66,314 as of two years ago.

        That’s quite a difference.

        1. LarrytheG Avatar
          LarrytheG

          Average teacher salary varies considerably in Virginia. If they average it across the state, NoVa will bias the numbers.

          Actually, 33K in some places in Virginia.

          https://www.virginiamercury.com/blog-va/whats-the-average-teacher-salary-in-virginia-depends-who-does-the-math-lawmakers-find/

    1. Stephen Haner Avatar
      Stephen Haner

      Meaningless without the year it represents. Most of the tax growth in VA has been AFTER 2019. Some more kicks in Thursday.

      1. Brian Leeper Avatar
        Brian Leeper

        And how about the cost of living? The higher the cost of living, the higher the tax burden, all else being equal. Northern Virginia’s cost of living is around 150% of the national average…and that was before the recent run-up in housing prices.

        1. Matt Adams Avatar
          Matt Adams

          It was always high when I lived there, it began to grow exponentially to go with the housing costs when Amazon made their deal.

          1. Brian Leeper Avatar
            Brian Leeper

            And then you start to wonder what, exactly, you are getting for this high cost of living. I mean, easy access to civil war historic sites can’t account for all of the value.

          2. Matt Adams Avatar
            Matt Adams

            Proximity to hell on earth traffic between the hours of 0530 and 1930.

            We moved to be closer to family and because of the median house price of $525,000. We had been renting a townhouse and our neighbors sold theirs (adjacent end units with no upgrades built in 2003) for $178,000 profit.

  9. Brian Leeper Avatar
    Brian Leeper

    Flush it down the toilet!

  10. Jane Smith Avatar
    Jane Smith

    While raising teachers salaries sounds like a noble and good idea, it’s not. As of now teachers go into teaching because it’s a passion and that is who you want teaching your children. Raise salaries too much and you get people who just want the paycheck and summers off. Look at medicine in our country it’s a great example of how throwing money at something never gives you a better outcome, it actually gives a worse one!

  11. Lenhihy Avatar

    The Teachers Mafia have enough coming from the federal corrupt government. Give the surplus back to the tax payers in a form of a one time refund check. Stop playing with our tax money blackface McAuillife. Democrats and their pandering to the teachers.

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