McAuliffe outlines cuts, tax changes to close $1B budget gap

RICHMOND, Va. — Virginia Gov. Terry McAuliffe would begin to charge some internet retailers a sales tax and would ask most executive branch agencies to trim their budgets to help close a more than $1 billion budget hole.

McAuliffe was upbeat about his ideas on how to deal with the state’s budget woes when he addressed the General Assembly finance committees on Friday.

”The spending plan I am submitting for your consideration is balanced, fiscally conservative and in-keeping with our Commonwealth’s long tradition of financial prudence. It closes our revenue shortfall while investing in strategic priorities that will contribute to our ongoing economic growth,” McAuliffe said.

Republican Sen. Tommy Norment, co-chair of the Senate Finance Committee, said that lawmakers will move cautiously on the governor’s ideas.

Norment does not share the governor’s optimism about Virginia’s economy. “Our economy is only growing at about 2 percent. So things are not quite as robust in our recovery from the Great Recession as perhaps has been suggested,” he said.

The governor has not given up on trying to expand Medicaid with funding from the Affordable Care Act. However he did not include an expanded Medicaide program — long a legislative priority for McAuliffe — or the federal funding that would come with it, in his proposed budget.

Instead, he asked for authority to expand the health care program in the future based on any actions the new Congress might take to replace or revise the Affordable Care Act.

“I think on the Medicaid expansion, he kind of split the baby,” said House Appropriations Chair Chris Jones. “He didn’t put it in there (in the amended budget), but he wants unilateral authority. He knows we’re not going to give him that.”

Republicans control both chambers of the legislature.

McAuliffe’s proposals to plug the budget gap outlined Friday include requiring out-of-state retailers with warehouse and processing centers in the state to collect taxes for online purchases from Virginia residents. Such a change could bring in about $12.6 million a year.

McAuliffe also wants to slow the rollback of a budget-balancing gimmick that requires some merchants to pay early estimated sales taxes.

He also proposed a tax amnesty program, which he said could generate $59.2 million.

His budget maintains funding levels for K-12 education, state police, and the departments of corrections, forensic science and behavioral health.

However, Virginia’s public colleges and universities would see a 5 percent cut in state funding in fiscal year 2018. That’s lower than the 7.5 percent cut that most other executive branch agencies will still have to meet.

The governor also wants to include in the amended budget a 1.5 percent bonus, but no raises, for public school teachers and state workers. Those bonuses would take effect next December.

And he is looking to add nearly $32 million to expand and improve mental health and substance abuse services, including funds for opioid addiction treatment. The governor said that last year 806 Virginians died from opioid-related deaths and this year he said that number is expected to rise above 1,000.

The Associated Press contributed to this report.

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