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What’s in Virginia’s long-delayed 2023 budget deal

Budget negotiators have unveiled detailed plans for how Virginia will allocate its surplus funds for the remainder of the fiscal year, ahead of the General Assembly’s special session, scheduled for Wednesday.

The deal, announced on August 25th, includes various proposals, some of which mirror those seen in the 2022 agreement, such as one-time state tax rebates to Virginians, increased standard deductions, raises for teachers and state employees, and funding for a range of programs. This year’s budget is designed to focus on one-time initiatives due to concerns about potential decreases in revenue growth.

Here are some of the key highlights from the 758-page budget document:

Tax Reductions: The plan includes $1.05 billion in tax reductions, primarily in the form of one-time tax rebates. Individual Virginians may receive up to $200 in rebates, with joint filers eligible for up to $400. An additional $48 million will come from a short-term change to Virginia’s standard deduction.

Education: The deal allocates $645 million in additional state funding for public education. Almost $55 million will go toward a 2% salary increase for public school teachers, resulting in a total 7% salary increase over two years. Over $152 million will fund additional support and instructional positions, while nearly $420 million will be provided for “flexible one-time payments” to school divisions for learning loss recovery and preparation for the Virginia Literacy Act.

Higher Education: Virginia colleges and universities will receive an additional $190 million. Of this, $75 million will support student support services and address increased costs resulting from inflation. There will also be funding for need-based undergraduate financial aid and compensation increases for faculty at nursing schools.

Mental Health: The budget includes $58 million to expand and modernize Virginia’s crisis services system. Additionally, staff at community services boards will receive pay raises with an additional $18 million in funding.

State Employee Raises: The plan includes $44 million for state employee raises, set to take effect in December. Targeted increases will also be provided for various positions, including public defenders, deputy sheriffs, and general district court clerks.

Pollution Cleanup: Hundreds of millions of dollars will be allocated to the Water Quality Improvement Fund to support pollution control and cleanup efforts. An extra $286 million will go toward matching grants for farmers who adopt agricultural best management practices.

Enforcement of Hemp Laws: The budget includes funding for new enforcement positions at the Virginia Department of Agriculture and Consumer Services to oversee the contents and labeling of hemp products.

Safer Communities: A $10 million Safer Communities Program will provide funding for Norfolk, Portsmouth, and Richmond to hire personnel overseeing community violence reduction strategies. An Office of Safer Communities will also be created to serve as an intervention hub.

Climate Change Resilience: $100 million is designated for the Resilient Virginia Revolving Loan Fund, which assists those impacted by flooding. The fund serves as an alternative to the Community Flood Preparedness Fund, which was funded through revenues from Virginia’s participation in the Regional Greenhouse Gas Initiative.

Data Center Development: Virginia plans to allocate up to $140 million in grants to a data center operator from the newly created Cloud Computing Cluster Infrastructure Grant Fund.

Business-Ready Sites: Recognizing the need to increase the availability of sites for economic development projects, the budget allocates an additional $125 million to the Business Ready Sites Program Fund and $75 million to the Business Ready Sites Acquisition Program and Fund.

Sports Team Relocation Study: The budget includes $250,000 for the Secretary of Finance to explore the possibility of attracting sports teams, such as the Washington Commanders, to Virginia.

These proposals, if approved during the special session, will shape the allocation of surplus funds in Virginia for the remainder of the fiscal year.

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