Norment rips House GOP leaders on Medicaid as he details Senate’s next moves on budget

An institutional bond holder and groups representing Virginia cities and counties are raising concerns about the state’s budget uncertainty amid finger-pointing between GOP leaders in the Senate and the House.

The Senate, which returns to Richmond on May 14, has yet to refer the House budget proposals to its finance committee for consideration, adding to the uncertainty over when the General Assembly will act on the budget with the end of the fiscal year less than two months away.

Secretary of Finance Aubrey Layne said he received a telephone inquiry Friday morning from an institutional bond holder that holds billions of dollars in public bonds backed by the state.

He said the institution expressed concern about ongoing scrutiny of Virginia’s financial condition by S&P Global Ratings, which downgraded the state’s fiscal outlook to negative a year ago because of Virginia’s depleted rainy-day fund.

“They were trying to get information about the budget and what may or may not happen because they have been reading what S&P has been putting out,” Layne said.

S&P issued a statement after the General Assembly adjourned without a budget on March 10 that said the bond-rating agency would not take any action on Virginia’s AAA credit rating while the state is working on resolving the budget stalemate.

That was more than six weeks ago, and the Senate and House aren’t close to getting the budgets into a conference committee, much less resolving their differences.

“The longer this drags on, the more uncertainty,” Layne said.

Norment and Cox

Senate Majority Leader Tommy Norment on Friday lashed out at House Republican leaders for embracing Medicaid expansion as he detailed the Senate’s plans for taking up the House budget, starting May 14.

“Had Governor Northam and the House not based their budget proposals upon federal revenues the General Assembly has yet to accept and a new tax on hospitals it has yet to enact, Virginia would have a new budget today. We would have completed our work on March 10 and the governor’s amendments would have been considered on April 18,” said Norment, R-James City.

“The Senate is still ‘adjusting’ to the reversal of a minority of House Republicans,” Norment added.

“The responsibility for this impasse lies exclusively with those who are imposing a tax without legislation and signing on to a program the current federal administration has targeted for elimination. As I have contended from the outset, this situation can be resolved expeditiously if all sides construct a budget based on our existing revenue streams.”

Speaker of the House Kirk Cox, R-Colonial Heights, responded Friday: “The General Assembly has a constitutional obligation to pass a balanced budget, but that requires both houses to do their work.

“The House of Delegates passed a budget just six days after the start of the special session, but the Senate cannot say for certain when it will complete its work despite taking nearly a month to even start.

“The House stands ready to reconvene, put the budget in conference, and finalize our negotiations. Local governments, school boards, and national bond rating agencies are waiting, and there is no reason for further delay.”

Gov. Ralph Northam also called on the Senate GOP leadership to get moving, saying it has failed to “do its job” on the budget.

“That failure is particularly remarkable given the fact that a majority of senators are ready to pass a budget that expands Medicaid,” Northam said.

“The time for strident press releases and procedural gimmicks has long passed. Virginians are waiting. It’s time for the Senate of Virginia to come back to Richmond and pass a budget that expands health coverage.”

Next steps

The General Assembly adjourned its regular session March 10 without an agreement on revenue and spending for 2018-2020 because of the impasse over Medicaid expansion.

Legislators returned in special session on April 11, and on April 17 the House passed its version of the budget. Senate GOP leaders have said they are waiting until mid-May to proceed because they wanted more information on state revenue, with Virginia income taxes coming due on May 1.

Norment said Friday that senators will convene at noon on Monday, May 14, to refer to the Senate Finance Committee the two House budget bills – one for the fiscal year ending June 30, the other for the two fiscal years that begin July 1. That afternoon the panel expects to hear an update on revenues from Layne.

On May 15, the Senate Finance Committee plans to begin constructing its version of the two-year budget, which could require an additional meeting the next day. It is not yet clear when the full Senate will return to take up Senate Finance’s version of the budget.

Growing chorus

Layne, the state’s finance secretary, said the level of concern among bond holders appears higher now than in 2014, when a budget stalemate over Medicaid expansion wasn’t resolved until June in the shadow of a projected state revenue shortfall.

In 2014, the state’s revenue stabilization fund was not yet depleted and Virginia’s financial outlook among bond rating agencies was stable, Layne said.

“That’s what’s gotten everyone’s attention now,” he said. “We’re in a position we haven’t been in before.”

Local government organizations also have begun expressing their concerns more loudly. The Virginia Association of Counties urged the state to adopt a budget that meets local needs as soon as possible.

“Counties need to be able to count on the state as a consistent funding partner,” VaCo said in a bulletin to members on Friday. “Continued uncertainty is a strain on this partnership.”

The previous day, the Virginia Municipal League issued a blunt message to legislators: ‘Enough is enough. Pass a budget.”

“It’s time for the General Assembly to accept Medicaid expansion and pass a budget,” VML said in the bulletin.

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