Gov. Terry McAuliffe proposed the largest two-year budget in Virginia’s history, under a new spending plan unveiled Thursday for 2016-2018.
With a two year reprieve from sequestration, McAuliffe (D) made the pitch for strong investment in the state’s economy, one roiled by federal spending cuts and dragged down by the third slowest growth in the nation.
The proposal marks the first time the state’s budget crossed the $100 billion mark, increasing to $109 billion.
Education serves as the centerpiece of the spending plan, with more than $1 billion proposed for Virginia’s public schools and higher education.
The governor also revealed the Commonwealth’s public school teachers will now have a fully funded retirement system, after years of substantial losses from the recession and funds borrowed from school construction.
“This historic proposal represents the largest new investment in public education in over a decade, and the largest total investment in the history of the Commonwealth,” McAuliffe told teachers ahead of Thursday’s announcement.
“I believe that if we want to have a world-class economy, we need a world-class education system, and this is where it starts.”
But while much attention focused on two percent raises for teachers and adding 2,500 new positions, McAuliffe relaunched into a battle to expand the state’s Medicaid system.
The standoff between Republicans and Democrats on the issue nearly shut down the state government in 2014, with McAuliffe now changing strategy on how he will present the issue.
McAuliffe will now tie Medicaid savings to specific projects, including $8.5 million for VCU’s Massey Cancer Center and $4 million in support for Prince George’s Commonwealth Center for Advanced Manufacturing.
Republicans remain skeptical that Washington will be able to fund Medicaid expansion in the future. According to the Virginia Department of Planning and Budget, federal grants consistently comprise the highest percentage of funding aside from state tax dollars, approaching $10 billion in 2015.
"The Governor has raised expectations and over promised," said House Republican leaders in a statement Thursday.
"It is unfortunate to see Governor McAuliffe include Medicaid expansion in his budget again, which he knows the General Assembly does not support."
The McAuliffe Administration contends taxpayers will save $352 million by injecting more federal Medicaid money into the state’s economy.
The governor also reaffirmed his call to lower Virginia’s corporate tax rate from 6 percent to 5.75 percent. The state’s Department of Planning and Budget said Thursday the move would save businesses an estimated $64 million over two years.
McAuliffe’s proposed budget would extend from July 1, 2016 through June 30, 2018.
The unprecedented spending plan needs to be approved by Virginia’s General Assembly, which returns to Richmond Jan. 13, 2016. The legislature will meet for 60 days to consider the budget, as well as bills ranging from gun control to the growth of charter schools.