Local officials are planning for the worst-case scenario as state lawmakers face a July 1 deadline to break the budget stalemate triggered by proposals to expand Medicaid while also trying to figure out how to address a multi-million-dollar shortfall.
Inaction by the Virginia General Assembly would hit Hanover’s school system the hardest, where about half of education funds — or $86.8 million in the 2014-2015 school budget — come from Richmond. The amount of money allocated to Hanover schools from the state increased roughly 8 percent this year.
Chairman Bob Hundley Jr., Chickahominy District school board member, said if the budget were not agreed upon by the deadline it would more than likely be an issue for the schools.
“That will perhaps create an impact on the local school budget,” Hundley said.
Right now, Hundley said school officials are meeting and discussing contingency plan options, but nothing has been set in stone just yet.
“Everything is in a preliminary stage,” Hundley said.
If a budget isn’t passed, Hundley said they would go back and re-evaluate all aspects of the budget with a focus on not changing classroom spending.
As for the county’s budget, money from the state goes toward ongoing operations such as constitutional officers, social services and the community services board.
Deputy County Administrator John Budesky said this is a concern for county officials, but they are paying close attention to any developments in the state budget and they’re already creating a contingency plan.
If the state budget is not approved by the July deadline, the county will tap into its cash reserves to continue to fund services that are usually supported by the state. Budesky said this is able to happen because Hanover has biannual tax collections, which can support those services for about 60 to 90 days.
“We are in the process of evaluating the impacts of an extended term of non-adoption and what we will be required to do at such point,” Budesky said.
If a budget still does not come to fruition, Budesky said they will begin looking at how to cut the county spending plan based on what aspects would be impacted.
In addition to a stalemate, there is an overall $300 million shortfall in Virginia this year and then for the next two years, a $1 billion general fund shortfall. It’s another issue that state and local governments have to consider.
“We’ll have to evaluate those cuts through the process as well,” Budesky said.
Budesky added county staff is worried how things will develop.
“We are hopeful they’ll come to some conclusions and we can all get onto our existing business at hand,” Budesky said.
But the potential shortfall poses issues for state legislators, if they don’t deliver a balanced budget.
“A shortfall of this magnitude could mean significant cuts to the core functions of government meaning that we will have to significantly re-evaluate our spending priorities,” said Del. Christopher K. Peace, R-97th.
The main issue blocking a state budget is with Medicaid expansion and whether it should be voted on as part of the full spending plan.
“I believe we should set aside Medicaid expansion, and pass a budget right away and return to Richmond later this year to continue the debate over Obamacare’s Medicaid expansion,” Peace said.
On the other hand, Sen. A. Donald McEachin, D-9th, is confident that by the time the state budget is approved, it will include Medicaid.
“I’m here to tell you it’s going to happen this year,” McEachin said.
The Senate has already approved its plan and sent it over to the House of Delegates, but the House was not supportive of the draft budget.
McEachin believes that it’s even more important to include Medicaid expansion with the looming shortfall because he said it will help bring federal dollars back into the state.
“It makes it even more important that it happen,” McEachin said.