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RICHMOND — Averting a potential government shutdown with less than three weeks to spare, the General Assembly passed an austere two-year budget June 12 after hours of behind-the-scenes wrangling over the thorny issue of Medicaid expansion.
The spending plan does not include a provision aimed at expanding the federal/state health insurance program for low-income people, a cornerstone of the federal health care overhaul that was left as an option to the states.
Moreover, on a party-line 20-19 vote, the Republican-controlled Senate inserted language into the budget aimed at prohibiting Democratic Gov. Terry McAuliffe from taking action to expand Medicaid without explicit authorization by the General Assembly.
Democrats said the language kills any chance of expanding eligibility in the program to as many as 400,000 uninsured Virginians for the next two years.
Denying them that coverage is “immoral,” Sen. Donald McEachin (D-Henrico County) complained.
“This budget fails for lack of common sense,” said Sen. Chap Petersen (D-Fairfax County) noting that Virginia will forfeit $2 billion in federal money. Medicaid expansion would have been fully funded by the federal government for the first three years and 90 percent after that.
Senate Majority Leader Tommy Norment (R-James City County) accused dissenting Democrats of “demagoguery.” Hammering out the budget was “the most difficult night I have ever spent in the General Assembly,” he said.
The language barring McAuliffe from expanding Medicaid on his own was necessary to make sure he won’t “slip it in through the back door,” said Sen. Dick Black (R-Loudoun County).
Final votes on the budget largely followed party lines, with Republicans in favor and Democrats opposed.
It now goes to McAuliffe for his signature or amendments.
“Virginians deserve better than representatives who put narrow ideology ahead of what is best for our families, economy and budget,” McAuliffe said in a statement after the votes.
“When this budget reaches my desk I will evaluate it carefully and take the actions that I deem necessary, but this fight is far from over.”
Medicaid expansion “is the right thing to do for Virginia, and I will not rest until we get it done,” McAuliffe said.
Reflecting an estimated $1.6 billion shortfall caused by lagging tax revenue, the $96 billion plan eliminates pay raises approved by lawmakers earlier this year for school teachers, college professors and other state employees.
The revenue gap prompted spending cuts across all state operations, and higher education took the biggest hit, with $184 million in reductions.
Also eliminated was the entire budget of the Opportunity Educational Institution, a school takeover agency ruled unconstitutional this week by a Norfolk judge.
Until this week, the General Assembly was paralyzed by a monthslong stalemate over the Medicaid issue, with McAuliffe and a majority of the Senate pushing expansion and the Republican-dominated House opposing it.
The political calculus changed last weekend when Sen. Phillip Puckett (D-Russell County resigned his seat abruptly, handing Republicans a 20-19 majority in the Senate.
The partisan shift, together with the July 1 fiscal deadline and the worsening revenue forecast, broke the back of the pro-expansion majority in the Senate.
Local leaders react to budget situation
While Gov. Terry McAuliffe considers the long-overdue state budget from the General Assembly, localities are continuing to prepare for the worst case scenario.
“The governor has received the state budget from the General Assembly and has until [June 22] to take action on the bill,” said Dean Lynch, deputy executive director of the Virginia Association of Counties (VACo).
This means that McAuliffe could exercise his line-item veto, recommend amendments to the budget or veto the budget entirely. The General Assembly is scheduled to convene on June 23 at 5 p.m. to take action on the governor’s decision on the state budget.
While Carroll County officials are hopeful that this will bring an end to the stress and concerns that have stemmed from the lack of a state budget, County Administrator Gary Larrowe pointed out that they are not out of the woods yet. “I have no reason to believe there will be an issue, however we still do not have a budget until [the governor] signs,” he told The Gazette in an email.
“Until [the governor] signs [the budget] and it is adopted, I don’t think we have a state budget,” said Galax City Manager Keith Barker. “We will continue our planning and seeking a possible tax anticipation note until the state budget is passed.
At press time, there were no details from local officials on how the proposed state budget could affect local budgets that have already been passed. However, Larrowe noted that localities will feel a much bigger impact if the state doesn’t have a budget by the June 30 deadline, which would trigger a government shutdown.