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Projected Revenues Look Strong;

So Are Competing Demands for Funds

By Ralph Byers, director of government relations

Spectrum Volume 20 Issue 15 - December 11, 1997

A great deal of activity is under way in preparation for the 1998 session of the Virginia General Assembly, which begins January 14. In November, the Senate Finance Committee held a retreat to discuss revenue and budget issues for the upcoming biennium. Projections for state revenues for the next two years are strong; the Finance Committee staff estimates that even after allocating $1.2 billion to fund mandates in public education, corrections, Medicaid, debt service, and the like, about $1.l billion will remain uncommitted. From this amount the reduction in the personal property tax on automobiles must be funded, which is estimated by the staff at roughly $500 million for the biennium, depending on assumptions.
In addition, the Finance Committee staff identified $1.7 billion of state-agency funding priorities that will be competing for the $1.1 billion, not including the personal-property-tax reduction. This $1.7 billion does not include salary increases for state employees; each one percent increase in salaries for state employees will require $115 million for the biennium. Clearly, the General Assembly will have a major challenge in reconciling these competing claims on the state's budget.
The Business Higher Education Council (BHEC) has recommended a total of $910 million in funding for higher education for the next biennium. This includes $400 million for operating support for the institutions and faculty salaries; $60 million for student financial aid; and $450 million for capital outlay. The State Council of Higher Education's (SCHEV) recommendations were similar to the BHEC's. The state council recommended $254 million for the biennium for operations and faculty salaries; $62 million for financial aid; and $467 million in high-priority capital projects. (The major difference between the BHEC and SCHEV is that SCHEV made no recommendations on institution-specific projects; the BHEC recommended $130 million in this category.)
Virginia Tech submitted its request for the 1998-2000 biennium to the secretary of education on October 24. Not including items such as salary increases and financial aid, the university requested an increase of $29.8 million in annual operating funds, $5.8 million in one-time equipment purchases, and $11.4 million to correct the Year 2000 problem in computing. The university also requested an overall increase of $4.7 million annually for the Cooperative Extension and Agriculture Experiment Station Division. These funds would support the multi-year plan laid out in the Plan to Serve Virginia's Agriculture, Human, and Natural Resources.
Governor George Allen will make his budget recommendations public on December 19. The House Appropriations and Senate Finance Committees will hold public hearings on the budget between Christmas and the beginning of the General Assembly session. For more information, please contact the Office of Government Relations at 1-7111.