Restoring pay raises and budget cuts to the Virginia State Police has emerged as the top priority of the House Appropriations Committee despite the looming challenge of closing a $1.5 billion revenue shortfall in the state’s two-year budget.
Chairman S. Chris Jones, R-Suffolk, declared the priority at the outset of the committee’s annual two-day budget retreat, which began Tuesday in Richmond.
“The number one, primary focus of our committee is making sure we restore cuts to state police,” Jones said in an unexpected prelude to his formal remarks.
The commitment includes restoring the state police share of a 3 percent pay raise that had been budgeted to take effect on Dec. 1, before a state revenue shortfall in the last fiscal year triggered a statutory revision of the budget forecast and wiped out a $346.4 million compensation package for state employees, college faculty, teachers, and state-supported local employees such as sheriffs’ deputies.
It also includes $6.3 million that had been budgeted to take effect this month for state police to address “salary compression,” in which pay for veteran employees lags behind market compensation for new hires.
Finally, Jones wants to restore $6.8 million that Gov. Terry McAuliffe cut from the department’s spending this year to help plug an $861 million hole in the budget that took effect July 1.
In an interview, Jones said he made no promises about restoring pay increases for other employees, including sheriffs’ deputies.
“I’m talking about just for state police,” he said.
However, the Virginia Sheriffs’ Association issued a statement on Tuesday morning that faulted the legislature for tying a scheduled 2 percent raise for deputies, as well as money budgeted for career development, to revenue performance in the last fiscal year.
“In localities that do not supplement local sheriffs’ salaries, a starting deputy sheriff with a family of four and two children qualifies for food stamps,” said John W. Jones, executive director of the association. “This is shameful and has evolved because the General Assembly approved a budget with pay raises that were eliminated by a revenue trigger.”
In his opening remarks at the retreat, the appropriations chairman defended the decision to include a trigger in the budget.
“While I am disappointed that the pay raise did not go into effect, the fact remains that the General Assembly was prudent to tie the implementation of the pay raise to FY 2016 revenue performance,” he said.
State police Superintendent W. Steven Flaherty told a joint legislative committee last week that the department has faced an exodus of sworn officers and other employees since McAuliffe announced the projected shortfall in late August and canceled the scheduled raises.
“We really feel like our backs are up against the wall right now,” he said in a presentation to the Joint House and Senate Transportation Committees, which again will be considering legislation to dedicate funding to the department from a proposed increase in vehicle registration fees.
Flaherty said the department has 268 vacancies — including 146 positions for sworn officers — in a workforce of nearly 3,000. It lost 137 sworn officers from January through October and replaced 118 of them with new recruits that it had to train.
When told of Jones’ promise on Tuesday, Flaherty said, “I appreciate the support.”
Former Superintendent M. Wayne Huggins, now executive director of the Virginia State Police Association, said the chairman’s remarks took him by surprise. “I was extremely appreciative and excited to hear him say it,” Huggins said, “and at the same time anxious to find out exactly what they’re going to support.”
Members of the committee were buoyed by the governor’s announcement on Monday that general fund revenue collections had increased by 3.4 percent in October and 3.5 percent since the beginning of the fiscal year, ahead of the annual forecast of 1.7 percent.
“October was a good month,” Jones told the committee in his opening remarks.
The committee was especially heartened by the source of revenue growth — income taxes withheld from payroll, which account for almost two-thirds of state general fund revenues.
The sluggish growth in withholding taxes last year was the main source of the shortfall, but the revenues grew by 4.8 percent last month and 4.3 percent for the first four months of the fiscal year, putting them well ahead of the revised forecast of 3 percent.
Fiscal analyst Anne E. Oman said the committee staff supports raising the projected growth in withholding taxes this year to 3.5 percent while lowering it from 3.4 to 3.2 percent in the second year of the budget.
The staff also suggested increasing the projected growth in corporate and recordation taxes, while lowering expectations for sales tax collections, which have lagged because of a shift in spending patterns toward internet sales and digital services instead of household goods.
Altogether, the staff supports raising the projected growth in state revenues from 1.6 to 2.2 percent this year, which would generate an additional $226.3 million in the biennial budget.
But the revenue outlook will depend in part on the Governor’s Advisory Council on Revenue Estimates, which will meet on Nov. 28 to consider potential revisions in projected revenue growth for the budget that McAuliffe will introduce on Dec. 16 for the General Assembly to consider when it convenes on Jan. 11.
In the meantime, legislators must find ways to fill a projected $654 million hole in the budget’s second year, while finding an estimated $369 million for mandatory spending increases, including $255.1 million for Medicaid, almost $59 million for the Children’s Services Act, and almost $30 million for health care of prison inmates.
That leaves the assembly with a remaining budget gap of more than $1 billion, before any potential adjustments to the revenue forecast. The governor is considering cuts in executive agency spending of up to 7.5 percent, or $79.1 million, as well as reductions of 7.5 percent in state funds for higher education institutions, or $114.1 million, which he has asked not be offset by tuition or fee increases.
However, Appropriations Director Robert P. Vaughn said the legislature also may have to target cuts to programs that were excluded from across-the-board reductions.
“This means that cuts to local aid, public education, (health and human resources) and public safety will have to be considered,” Vaughn said.