Budget Update: Sales Tax Issue Would Hit Localities Hard
August 25, 2020
August 25, 2020
August 19, 2020
By Kathy Burcher, VEA Director of Government Relations and Research
The Governor introduced a revised 2020-2022 Biennial Budget in response to the economic downturn caused by COVID-19. This budget cuts most of the new spending that was unalloted just a few months ago. For our public schools, this included the nearly $490 million of new spending over the biennium. The Governor was clear that there will be an opportunity to make changes again during the regular General Assembly session in January if the economy picks up, but revenue shortfalls made these difficult decisions necessary.
The VEA believes there are ways to make additional investments in K-12 even when we face the current economic crisis. In fact, we know that for schools to open safely and with equity, they need additional funding to offset the costs of providing equitable virtual instruction or safe in-person instruction. Both options in the age of COVID force difficult decisions for this General Assembly. The VEA believes these investments must be made.
The House of Delegates members have posted their budget amendments to the revised budget introduced by the Governor. We appreciate the amendment by Delegate Jennifer Carroll Foy to unallot all the nearly $490 million the new K-12 spending including funding for additional school counselors. She is the only member of the House to introduce an amendment to reverse the cuts proposed by the Governor. We are also grateful to see Delegate Kaye Kory’s effort to redirect $4.7 million each year of state support for School Resource Officers to school mental health professionals. Her amendment does nothing to stop any school division from deploying SROs in their schools, it simply shifts state funding to our public schools for mental health professionals.
Since the Governor introduced his revised budget, a new, universally impactful issue has come up for our public schools. The significant reduction in sales has resulted in more of the overall cost of funding the SOQs to be paid by the state and locality rather than by sales taxes. Those costs covered by sales tax now go into the larger pot of K-12 direct aid and are funded at the state/local split of 55% state/45% locality. The issue here is that local school divisions build budgets for the 2020-2021 school based on tax revenues that are now not coming in, and instead they are responsible for 45% of the cost of those programs. This is wholly unexpected, and school divisions are facing significant shortfalls in their current year budgets without state support to offset the losses. These losses are estimated to be $95.2 million in the first year of the biennium and $93.6 million in the second. Delegate Cliff Hayes has a budget amendment to cover the losses for the first year. His amendment does not cover the second year as that will need to be evaluated during the regular January session. The VEA intends to work hard to support this budget amendment.
VEA just activated an Action Alert on the state budget to address the sales tax issue and protect funding for local school divisions. Please act now by sending an email to your legislator.