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RICHMOND—Governor Ralph Northam today addressed a Joint Meeting of the Senate Finance, House Appropriations, and House Finance Committees where he discussed the state of the Commonwealth’s finances and the Virginia economy.
“Over the last year we have worked together to maintain Virginia’s triple-A bond rating, put more money in our reserves, and made smart investments in our long-term growth,” Governor Northam said. “But as the global economy changes, we must be both cautious and strategic. During the next budget cycle we will continue laying a strong foundation for Virginia—preparing for a rainy day while investing responsibility in our long-term growth.”
Virginia ended the fiscal year with a surplus of $797 million, with much of that money already obligated for items such as water quality and taxpayer relief. The Commonwealth put $344.4 million into our reserves, which will bring total reserve funding to $1.6 billion—the highest amount ever—by 2021.
Governor Northam highlighted another important milestone for economic development in Virginia, announcing that his administration has secured $20 billion in investment since taking office in January 2018—more than any previous administration has announced in a full four-year term. This economic development has created over 51,000 new jobs across the Commonwealth.
The Governor’s full remarks as prepared for delivery are below.
Good morning, Chairman Norment, Chairman Hanger, Chairman Jones, Chairman Ware, Speaker Cox, Members of the General Assembly, ladies and gentlemen. Thank you for the privilege of speaking with you this morning.
I would like to recognize Lieutenant Governor Justin Fairfax, First Lady Pam Northam, and members of my Cabinet.
I am here today to update you on the Commonwealth’s revenues for the just-ended fiscal year, as we look forward to our next budget cycle and the choices we will make to ensure Virginia remains a strong and diverse place to live and work.
We start out this new budget cycle in a good place, and we all can, and should, take credit for that. We have accomplished a great deal working together.
We have maintained our triple-A bond rating, put more money in our reserves for a rainy day, and made smart investments in Virginia’s long-term growth.
We approved dedicated transportation funding this year, which will make I-81 safer and more reliable while providing much-needed revenue for transportation projects in other parts of the state as well.
We worked together to attract new business to the state—notably Amazon, which is ahead of schedule in hiring, and has submitted its development plans for its National Landing campus. Virginia Tech will offer courses in their new Alexandria location next fall. I want to thank Delegate Rush for his work with Tech, and thank all of you for the bipartisan work that went into this project.
We took a huge step to reduce the criminalization of poverty by ending the practice of suspending driver’s licenses for unpaid court costs and fees. As I have traveled the state to bring awareness to this issue, people have told me how much this means to them.
We found agreement on how to pay for a long overdue rebuilding of Central State Hospital.
We gave our teachers the largest single-year pay raise in 15 years.
We found a bipartisan resolution to the environmental challenge of what to do with 27 million cubic yards of toxic coal ash lying in unlined ponds near our waterways.
And we have now enrolled more than 306,000 additional Virginians in Medicaid through the expansion of that program. These people can now access the kind of health care many of us take for granted, helping them lead more productive lives. They can get treatment for chronic conditions.
They can get preventive care to help head off health problems before they become serious. And they can access treatment for addiction or other behavioral health issues. This access is saving lives, and we made this happen together.
We did all of these things together, working across the aisle, and put our differences aside to serve the people of Virginia.
We have opportunities to continue this good work in the session, and budget, ahead.
But first, let me update you on the financial health of the Commonwealth for the budget year that recently ended.
By and large, our financial health is good. We ended the year with a surplus of $797.7 million. But, as is often the case, much of that surplus is already obligated, for items like water quality and taxpayer relief. We also are putting $344.4 million into reserves, which means by 2021, we’ll have $1.6 billion in our reserves—approximately seven percent of our general fund revenue, the highest amount we have ever put in reserves.
This is something we all should be proud of. Last year I mentioned that putting 8 percent of our revenues into reserves is a goal of our administration, and we’re on the path to do so.
We expect revenues to grow in the coming year. I want to thank all of the economists, business leaders, and General Assembly members who volunteer to help provide our consensus revenue forecast. This is important work, and I thank Secretary Layne for his steady guidance.
While our revenues are positive, we also must plan for mandatory expenditures.
For example, we are due to rebenchmark our Standards of Quality in the coming biennium.
This is critical to ensure that our schools, and school funding, keep pace with our students’ needs, so every child receives a quality education. But it comes with a price tag.
We also know that our Medicaid program is likely to be more costly next year, as healthcare costs across the board continue to rise. Our administration is keenly aware of the issue of rising health costs, and will continue to work with you on solutions.
We also continue the work to build up our community-based behavioral health services, which provide critical support to many Virginians and their families, and we know there are costs to that work.
Over the past few years, we have invested, and will continue to invest, in strengthening our community service boards and ensuring that the services they provide are the same across the state. I want to take a moment to thank Dr. Hughes Melton for his work at our Department of Behavioral Health and Developmental Services.
That work must and will continue. I ask that we have a moment of silence in memory of Dr. Melton and of Hailey Green, who lost their lives in a tragic accident.
As we go into this new budget cycle, we must be both cautious and strategic.
Our unemployment rate remains at 2.9 percent. Our employers continue to add jobs. But because we are close to full employment, our job growth has slowed.
And though we are in the 12th year of economic expansion, we know that can’t last forever.
Federal policies continue to affect us. For example, the trade war with China and its resulting tariffs have already led to drastic cutbacks on purchases of American agricultural products, which hurt our farmers in Virginia.
China used to be the number one destination for Virginia’s agricultural and forestry exports, such as soybeans. In 2016, we exported nearly $700 million in those products to China.
But because of the trade war, our agricultural exports to China have lost nearly two-thirds of their value, resulting in hundreds of millions of dollars of lost revenue for Virginia farmers. Sales of soybeans are now just $235 million, and China has dropped to our number two agricultural trading partner.
Personally, we have soybeans growing on our family farm this year, and they may very well stay in the fields if they can't be sold. The farmers I grew up with would much rather sell at a profit than rely on federal subsidies.
We live in a global economy these days, and that means what happens on a global scale also happens at the local level. As the national economy slows, Virginia’s economy is expected to slow as well.
We’re fortunate that Congress has resolved the issue of sequestration—for now.
But federal fiscal policy and the accumulation of significant federal debt—now over $22 trillion and growing—will continue to be a drag on consumers and the economy.
To best prepare the Commonwealth for the future, we must continue to protect our AAA bond rating, diversify our economy, and make strategic investments in our long-term success. We must ensure that Virginia has the strongest foundation possible.
In the 21st century, broadband is like electricity—it is a necessity of modern life.
The projects we have supported are bringing broadband connections to nearly 70,000 homes and businesses so far across the Commonwealth, and we will continue to work on this important issue.
I thank you all for the additional dollars we put into the Housing Trust Fund in the last budget. But we can, and must, do more for affordable housing.
We must continue our investment in education, from early childhood through higher education and skills training. Every Virginian deserves access to a high quality and affordable education.
Making sure that every child has access to opportunity means starting early.
Last month, I signed Executive Directive 4, establishing the Executive Leadership Team on School Readiness.
That team will work to ensure that all at-risk three and four year olds have access to quality, affordable early childhood education options. I want to thank the First Lady for her work and leadership on this issue.
There is an obvious overlap between investments in education and investments in our workforce.
My administration continues to work with our community colleges and the entire higher education system, to build bridges between education, skills training, and the high-demand jobs we need to fill and want to continue to attract.
We want Virginians to be able to get the skills they need for good jobs.
This fall, I’ll be having conversations about these workforce pathways in our communities, talking to our higher education partners, our businesses, and our local leaders to see what our communities need.
We want to make absolutely sure we continue to support our world-class workforce and educational systems—both of which helped make Virginia the best state in the nation in which to do business.
One of my proudest days as Governor was to be at Shenandoah River State Park for the announcement that CNBC had named the Commonwealth the best state for business.
Over the years, we have moved steadily from 13th, to 7th, to 4th, and we are now back to our rightful place at number one.
This is an achievement for every one of us, and it comes because we have all worked together.
My top priority as Governor is making sure that every Virginian—no matter who you are or where you live—is able to fully participate in our economic growth.
By diversifying our economy, investing in our workforce, and keeping a stable and open business climate, I am proud to report that my administration has secured extensive new investment and jobs across the Commonwealth.
That includes Premier Tech, in your district, Chairman Norment—20 jobs and almost $2 million of investment in King and Queen County.
It includes Merck in Chairman Hanger’s district—152 jobs and a billion dollars of investment in Rockingham County.
In an area of Suffolk represented by Chairman Jones, Target is investing $2.8 million to expand its distribution center, bringing 225 new jobs.
Volvo Trucks, in Delegate Rush’s district, plans to invest $400 million and create 777 new jobs in Pulaski.
In Senator Howell’s district, Appian invested $28 million to expand its headquarters to McLean, bringing 600 jobs. Senator Howell couldn’t be here today, but we wish her a speedy recovery.
In Chesapeake, in Delegate Hayes’ district, Cloverleaf Cold Storage invested $21 million to create 33 jobs.
In Senator Ruff’s district, in Dinwiddie, Richlands Creamery is investing $1.7 million and creating 17 new jobs.
And in Portsmouth, in Senator Lucas’ district, Preferred Freezer has invested $60 million to create 60 new jobs.
There are similar stories across the state. From a large company like Amazon, to a small-town Main Street shop with five employees, every business contributes to the fabric of Virginia.
Every dollar of investment, and every job created, means more Virginians can put a roof over their head, put food on their table, and sleep soundly at night knowing they are able to support themselves and their families.
That’s why I am thrilled to announce today that over the last 20 months, we have secured 378 new economic development projects that will bring over $20.3 billion in investment.
This is a record. The $20 billion of investment is more than any previous administration has announced in a full four-year term, and we have achieved this significant milestone in less than half that time.
I am proud of what this means for Virginia, and I am equally proud that $2.7 billion of this investment is in distressed communities around the Commonwealth that have often been overlooked by these types of investments.
These economic development projects will create more than 51,000 new jobs, including over 8,700 in distressed communities.
We couldn’t do this without our local, legislative, and state economic development partners.
I want to particularly thank Secretary Brian Ball and his Commerce and Trade team, as well as Stephen Moret and his team at VEDP, for their efforts to promote the Commonwealth and its communities as ideal locations for business.
And I want to thank all of you. We have done strong work to attract business and jobs, and ensure that we have a diverse economy that is strong enough to weather headwinds. As I travel the Commonwealth, businesses are excited about locating or expanding in Virginia.
We also must continue to do the work needed to make Virginia a more welcoming and inclusive place, ensuring that a person's race, income level, or place of birth doesn't keep them from accessing a world-class education, quality health care, or business opportunities.
I have spent the past several months traveling the Commonwealth listening to leaders and everyday Virginians share the daily inequities they face.
As we prepare this budget, I will prioritize initiatives that level the playing field for small-, women-, and minority-owned businesses, reduce the unacceptable racial disparity in Virginia’s maternal mortality rate, and ensure equal access to a world-class education.
Ensuring that Virginia is a welcoming place to live also means continuing to work to make sure this is a safe place.
As we meet here this morning, the Virginia Crime Commission has also been meeting to take up gun safety legislation that we have proposed for years, and introduced again for the special session I called earlier this summer, after the tragic mass shooting in Virginia Beach.
Universal background checks, extreme risk protective orders, one gun a month laws, and tougher penalties for people who leave loaded guns around children, are a few of the commonsense proposals that we have made.
I know where many of you stand on these issues. But I also know that we have an opportunity to come together to save lives. I hope we will seize that opportunity.
As we look to this next budget, we’re seeing larger requests for security funding, for state buildings and from outside groups. Already, for fiscal year 2020, we doubled the money in our School Security Equipment Fund. And we’ve had 133 state employees spend 4 hours each in active shooter training since July 1.
Those are resources we’d rather spend on other priorities, but our refusal to address gun violence requires us to instead prioritize self-protection.
We have made good choices together that led CNBC to award us that number one ranking.
And we have made good choices together, to invest in our infrastructure and our educational systems.
We can continue to make good choices.
From economic development to our spending priorities, we have seen that when we work together, we can build a better Virginia. When we invest in our people and our places, our roads, and the education and training people need to get good jobs, we thrive.
No matter what happens in the coming months and years, we are laying a strong foundation for Virginia to weather stormy days and prosper on sunny ones. I look forward to continuing to build upon that foundation in the upcoming session.
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