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2020 Session Revenue and Budget Outlook

Robert P. Vaughn, DirectorAnne E. Oman, Fiscal Analyst

House Appropriations Committee

November 19, 2019

Snapshot of U.S. Economy• The U.S. economy is growing, with GDP growth of 2.0% in the second quarter of

2019 and the first estimate of Q3 2019 posting a gain of 1.9% • IHS forecast expects GDP to grow 2.1% in 2019 and 2020

• Growth in GDP aided by strength in consumer spending

• The U.S. economy added 128,000 jobs in October. The monthly average payroll gain for CY 2019 of 167,000 indicates that job growth remains solid• The current unemployment rate is 3.5%• Initial unemployment claims show no signs of rising layoffs

• Recent economic activity in the manufacturing sector has contracted, although the overall economy grew for the 126th consecutive month• Employment in manufacturing trended up in October, a 1.4% increase over September, Although

manufacturing loss 4,447 job in October, on a year-over comparison shows manufacturing employment is up 54,000 jobs

• Trade uncertainty continues to dampen business investments, manufacturing and farmers

1

Snapshot of U.S. Economy• Consistent with a tight labor market, strong growth of hours worked, and an

acceleration in hourly compensation, economists expect real Disposable Personal Income (DPI) growth to remain strong, registering 2.8% growth in 2019 (Q4/Q4)• Forecast growth of 2.2% in 2020, and 2.4% in 2021

• Retail sales are expected to grow between 4.3% - 4.8% for the holiday season according to National Retail Federation’s annual forecast• Job growth and higher wages is the cause for optimism

• Overall home sales are up 3.9% from a year ago according to the National Association of Realtors. Total housing inventory declined 2.7% from a year ago, driving up prices

• Recession risks are somewhat elevated due to a global slowdown and trade wars. Both the New York Fed and IHS probability models suggests about a 30-35% chance of a recession beginning in the next 12 months

2

Is a Recession Coming? Here Are Some Key Indicators To Follow

• Inverted Yield Curve: When the yield curve inverts, it's because investors have little confidence in the near-term economy. They demand more return for a short-term investment than for a long-term one

• GDP: Broadest measure of an overall economy’s health. Technically, we enter a recession when we have two consecutive quarters of negative GDP growth

• ISM Index: Measure of the overall health of the manufacturing industry via its PMI Index. It shouldn’t read below 50, as anything under that represents a contractionary environment

• NMI Index: Measure of the overall health of the non-manufacturing industry

3

Is a Recession Coming? Here Are Some Key Indicators To Follow

• Employment Indicators: Several employment statistics can signal trouble in the economy• A decline in employment & hours worked — especially for more than a month or

two in a row — can signal a slowdown in employment• An increase in unemployment claims is also troubling• Unemployment rate, labor participation rate, quit rates, and job openings

• Leading Index for the United States: This is an index published monthly by the Federal Reserve Bank of Philadelphia used to predict future movements of the economy

• Consumer Confidence: Details consumer attitudes and buying intentions. Whether consumers feel confident about spending and the present or future trajectory of the economy tells us a great deal about where our fortunes are headed. At present, this index continues to demonstrate persistently positive consumer attitudes regarding the economy

4

When a Yield Curve Inverts, It's Because Investors Have Little Confidence In The Near-term Economy

• If investors believe a recession is imminent, they'll avoid any Treasury bill with maturities of less than two years, sending the demand for those bills down, and their yields up, and inverting the curve

5

1.20

1.70

2.20

2.70

3.20

10-Year Treasury versus 3-Month Treasury

3-month 10-year

Survey of 60 Economists’ Expectations of When Next Recession Starts

Source: Wall Street Journal November 2019 Economic Forecasting Survey

34.2%

29.3%

14.6%

7.3% 7.3% 7.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

2020 2021 2022 2023 2024 2025

6

Did The U.S. Economy Really Slow Down?• GDP is the broadest measure of the U.S. economy, however, many economists believe Final Sales

to Domestic Purchasers is a better measure of the strength of the U.S. economy. Final Sales to Domestic Purchasers measures personal consumption of expenditures (PCE) and private fixed investment, and excludes trade, government spending and inventories

• Much of the slow down in Q2 GDP was driven by businesses drawing down their inventories. But lower inventory levels now could translate into fewer layoffs later

• Preliminary estimate of Q3 GDP registered at 1.9%, beating expectations, with consumer spending rising 2.9%. Business investment continues to be a drag on GDP

• “For manufacturers, the biggest challenges remain finding skilled labor and trade uncertainties, which make it difficult to hire and expand business operations,” said Chad Motray, chief economist at the National Association of Manufacturers

7

0.0

1.0

2.0

3.0

4.0

5.0

6.0

GDP and Final Sales To Domestic Purchases

GDP Real Final Sales

PMI Index Below 50% for the Third Month, Although October Rose to 48.3%, and the Overall Economy Grew for the 126th Consecutive Month

• The latest reading points to the steepest contraction in the manufacturing sector since June 2009

• Despite the contraction, manufacturing employment remains positive, with October year-over-year growth of 49,000 employees• Monthly decline of October manufacturing

employment reflected the GM strike• Average weekly hours are holding up

• “For manufacturers, the biggest challenges remain finding skilled labor and trade uncertainties, which make it difficult to hire and expand business operations,” said Chad Motray, chief economist at the National Association of Manufacturers

48.3

40

42

44

46

48

50

52

54

56

58

60Purchasing Manager’s Index

8

NMI Index Remains Above 50%, With October Increasing to 54.7%. Overall, the Index Indicates Growth for the 123th Consecutive Month

• The 13 non-manufacturing industries all reported growth in October

• All but 1 of the NMI index's remain above 50% • Imports have contracted for 2

consecutive months

• The employment index increased 3.3% in October to 53.7%• Labor shortage remains a major

factor in some industries48

50

52

54

56

58

60

62

Non-Manufacturing Index

9

Record Market Highs Reflect Upbeat Q3 Corporate Earnings, But Q4 Earnings Are Expected to Weaken

• Equity markets have hit new record highs in November, buoyed by better than expected earnings report

• 90% of the S&P 500 companies have reported third-quarter results, with nearly 75% beating profit expectations• Although many of the earnings had been lowered in the second-quarter• On a year-over basis, third-quarter earnings declined 2.4%

• Expectations around U.S.-China trade talks remain a positive force for the market

• Latest data has also improved sentiment, with the ISM services index easing concerns that a slowdown in the manufacturing sector was spreading to other parts of the economy

• Looking ahead, analysts see a year-over decline in the fourth quarter, followed by positive growth in 2020

10

Average Monthly Employment Gains Have Slowed, In Part Reflecting A Tight Labor Market

• 2019 year-to-date average monthly employment gains have slowed to 167,000 versus 223,000 in 2018• However, large revisions in August and

September bring the three-month average to 176,000

• Manufacturing employment remains positive on a year-over basis. Employment declines in October attributable to the GM strike

• A number of factors have contributed to the employment slowdown:• Historically low unemployment rate, and

high labor force participation• Lack of qualified workers• Slowdown in production due to trade

uncertainty• Average work week remains solid• Average hourly earnings have

outpaced inflation

227

193

179

223

167

0

50

100

150

200

250

2015 2016 2017 2018 2019 YTD

Average Monthly Employment Gains(Thousands)

11

Average Hours Worked Has Remained Fairly Consistent, While Worker Wage Gains Have Outpaced Inflation

31.0

33.0

35.0

37.0

39.0

41.0

43.0

Average Weekly Hours Worked

Manufacturing

Al Employees

-1.00

-0.50

0.00

0.50

1.00

1.50

2.00

2.50

Real Hourly Wage Gains(year-over-year percent change)

12

Job Market Participation is Rate Back At Pre-Recession Levels, Unemployment Rate At a 50 Year Low, U-6 Rate At a 19 Year Low

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2007

-08-

0120

08-0

2-01

2008

-08-

0120

09-0

2-01

2009

-08-

0120

10-0

2-01

2010

-08-

0120

11-0

2-01

2011

-08-

0120

12-0

2-01

2012

-08-

0120

13-0

2-01

2013

-08-

0120

14-0

2-01

2014

-08-

0120

15-0

2-01

2015

-08-

0120

16-0

2-01

2016

-08-

0120

17-0

2-01

2017

-08-

0120

18-0

2-01

2018

-08-

0120

19-0

2-01

2019

-08-

01

Unemployment Rate

UnemploymentRate

U-6 Rate

80.0

80.5

81.0

81.5

82.0

82.5

83.0

83.5

2007

-10-

0120

08-0

4-01

2008

-10-

0120

09-0

4-01

2009

-10-

0120

10-0

4-01

2010

-10-

0120

11-0

4-01

2011

-10-

0120

12-0

4-01

2012

-10-

0120

13-0

4-01

2013

-10-

0120

14-0

4-01

2014

-10-

0120

15-0

4-01

2015

-10-

0120

16-0

4-01

2016

-10-

0120

17-0

4-01

2017

-10-

0120

18-0

4-01

2018

-10-

0120

19-0

4-01

2019

-10-

01

Participation Rate 25 - 54

13

4-Week Moving Average of Initial Claims Is Well Below Previous Pre-Recession Levels

294,125312,700

214,875

200,000

250,000

300,000

350,000

400,000

450,000

500,000

550,000

600,000

650,000

700,000

2000

-01-

0120

00-0

6-01

2000

-11-

0120

01-0

4-01

2001

-09-

0120

02-0

2-01

2002

-07-

0120

02-1

2-01

2003

-05-

0120

03-1

0-01

2004

-03-

0120

04-0

8-01

2005

-01-

0120

05-0

6-01

2005

-11-

0120

06-0

4-01

2006

-09-

0120

07-0

2-01

2007

-07-

0120

07-1

2-01

2008

-05-

0120

08-1

0-01

2009

-03-

0120

09-0

8-01

2010

-01-

0120

10-0

6-01

2010

-11-

0120

11-0

4-01

2011

-09-

0120

12-0

2-01

2012

-07-

0120

12-1

2-01

2013

-05-

0120

13-1

0-01

2014

-03-

0120

14-0

8-01

2015

-01-

0120

15-0

6-01

2015

-11-

0120

16-0

4-01

2016

-09-

0120

17-0

2-01

2017

-07-

0120

17-1

2-01

2018

-05-

0120

18-1

0-01

2019

-03-

0120

19-0

8-01

Initial Unemployment Claims

14

Help Wanted - More Job Openings Than Number of Unemployed - But Do They Have The Skills?

• A high number of job openings is a mix of good and bad news

• The good: Employers are hiring. When the Great Recession was at its worst in 2009, job openings fell to 2.2 million, an all-time low

• Will spur employers to pay more to attract workers

• The bad: The pool of qualified Americans is shrinking and making some positions tougher to fill

• In 39 states there are more jobs than people looking for them

• 59% of all job openings are in: Professional and Business Services; Trade, Transportation and Utilities; and Leisure and Hospitality

• South region of the country accounts for 39.4% of all openings

1,750

3,750

5,750

7,750

9,750

11,750

13,750

15,750

17,750

2000

-12-

01

2001

-12-

01

2002

-12-

01

2003

-12-

01

2004

-12-

01

2005

-12-

01

2006

-12-

01

2007

-12-

01

2008

-12-

01

2009

-12-

01

2010

-12-

01

2011

-12-

01

2012

-12-

01

2013

-12-

01

2014

-12-

01

2015

-12-

01

2016

-12-

01

2017

-12-

01

2018

-12-

01

Job Openings

UnemploymentLevel

15

Quit Rates Are the Highest Since 2001• The quit rate is a useful measure of

how confident workers feel about the opportunity to switch to a more attractive job

• The percentage of working-age Americans who voluntarily left their job stood at 2.3% in August, above 2007 pre-recession levels• South region quit rates are the highest,

at 2.6%, up from 2.5% a year ago

• The rise in the quit rates also bolsters expectations that wage gains will accelerate

• Leisure and Hospitality; Retail; and, Professional and Business Services have the highest quit rates

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2007

-07-

0120

08-0

1-01

2008

-07-

0120

09-0

1-01

2009

-07-

0120

10-0

1-01

2010

-07-

0120

11-0

1-01

2011

-07-

0120

12-0

1-01

2012

-07-

0120

13-0

1-01

2013

-07-

0120

14-0

1-01

2014

-07-

0120

15-0

1-01

2015

-07-

0120

16-0

1-01

2016

-07-

0120

17-0

1-01

2017

-07-

0120

18-0

1-01

2018

-07-

0120

19-0

1-01

2019

-07-

01

Quit Rates as a Percent of Employment

16

Leading Index for the U.S. Has Ticked Up the Last 2 Months, Suggesting Moderate Growth Should Continue

1.00

1.20

1.40

1.60

1.80

2.00

2.20

Leading Index for the U.S.(percent)

• The leading index for each state predicts the six-month growth rate of the state's coincident index. In addition to the coincident index, the models include other variables that lead the economy:• State-level housing permits (1 to 4

units), state initial unemployment insurance claims, delivery times from the Institute for Supply Management (ISM) manufacturing survey, and the interest rate spread between the 10-year Treasury bond and the 3-month Treasury bill

17

Consumer Confidence Remains Favorable

95.5

50.0

60.0

70.0

80.0

90.0

100.0

110.0University of Michigan Consumer Sentiment

18

Virginia’s FY 2019 Economic Performance

19

Virginia’s FY 2019 Job Growth Was About Half the Rate Of the Nation’s

• In the Great Recession, Virginia’s job losses were not as severe as the nation’s -- Virginia’s loss equaled about 5.0% of total employment versus 6.3% nationally

• During the recession and shortly thereafter, Virginia out-performed the nation

• Budget sequestration and continued federal budget uncertainty impacted Virginia’s growth in 2013, 2014, and 2015

• Uncertainty created by the inability of Congress to pass Appropriations Bills continues to have a chilling effect on industries tied to federal spending

• Virginia’s recent job performance is impacted by a number of factors:

• Already low unemployment rate• Labor shortage, especially skilled workers for high

demand jobs • Virginia’s job opening of 5.3% is among the highest in

the nation, slightly behind North Carolina’s at 5.7%,• Available workers to job openings ratio is 0.6

-6.0

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

2007

-01-

0120

07-0

8-01

2008

-03-

0120

08-1

0-01

2009

-05-

0120

09-1

2-01

2010

-07-

0120

11-0

2-01

2011

-09-

0120

12-0

4-01

2012

-11-

0120

13-0

6-01

2014

-01-

0120

14-0

8-01

2015

-03-

0120

15-1

0-01

2016

-05-

0120

16-1

2-01

2017

-07-

0120

18-0

2-01

2018

-09-

0120

19-0

4-01

Percent Growth Year-Over-Year

Virginia

U.S.

20

How Low Can It Go? Only 4 States Have Lower Unemployment than VA

2.7%

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2007

-01-

01

2007

-05-

01

2007

-09-

01

2008

-01-

01

2008

-05-

01

2008

-09-

01

2009

-01-

01

2009

-05-

01

2009

-09-

01

2010

-01-

01

2010

-05-

01

2010

-09-

01

2011

-01-

01

2011

-05-

01

2011

-09-

01

2012

-01-

01

2012

-05-

01

2012

-09-

01

2013

-01-

01

2013

-05-

01

2013

-09-

01

2014

-01-

01

2014

-05-

01

2014

-09-

01

2015

-01-

01

2015

-05-

01

2015

-09-

01

2016

-01-

01

2016

-05-

01

2016

-09-

01

2017

-01-

01

2017

-05-

01

2017

-09-

01

2018

-01-

01

2018

-05-

01

2018

-09-

01

2019

-01-

01

2019

-05-

01

2019

-09-

01

Percent

21

Employment Situation Has Returned ToPre-Recession Levels

0.91.00.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2008

-01-

0120

08-0

7-01

2009

-01-

0120

09-0

7-01

2010

-01-

0120

10-0

7-01

2011

-01-

0120

11-0

7-01

2012

-01-

0120

12-0

7-01

2013

-01-

0120

13-0

7-01

2014

-01-

0120

14-0

7-01

2015

-01-

0120

15-0

7-01

2016

-01-

0120

16-0

7-01

2017

-01-

0120

17-0

7-01

2018

-01-

0120

18-0

7-01

2019

-01-

01

Total Unemployed 15 Weeks or Longer(As a percent – 4-quarter moving average)

6.56.4

3.0

5.0

7.0

9.0

11.0

13.0

15.0

2008

-01-

0120

08-0

7-01

2009

-01-

0120

09-0

7-01

2010

-01-

0120

10-0

7-01

2011

-01-

0120

11-0

7-01

2012

-01-

0120

12-0

7-01

2013

-01-

0120

13-0

7-01

2014

-01-

0120

14-0

7-01

2015

-01-

0120

15-0

7-01

2016

-01-

0120

16-0

7-01

2017

-01-

0120

17-0

7-01

2018

-01-

0120

18-0

7-01

2019

-01-

01

Unemployed, Plus Marginally Attached, Plus Part-time(As a percent - 4-quarter Moving average)

22

Virginia Employment Grew 0.9% from June 2018-2019, Adding 36,400 Jobs. Was Performance

Consistent With The Economic Forecast?

• Withholding taxes represents 63% of total general fund tax collections• Job growth and average wages and salaries serve as the proxy for withholding

• In FY 2019, Virginia payroll withholding grew 3.6%, 0.2% ($26 million) behind the 3.8% annual forecast• However, timing of deposits can impact collections. June 2019 withholding

collections grew only 0.7%, while July growth (which was in FY 2020) was 19.3%, $172 million above the prior July’s collections. Had even 15% of these revenues been deposited in June, the forecast would have been met

• So why is there a disconnect between economic inputs and actual payroll withholding?

• Are payroll tax collections driven more by where job growth occurs, the industry mix, and wages paid?

23

Northern Virginia Continues To Grow, Accounting for 65.3% of Total Average Job Growth In Virginia

• Growth in the total number of jobs statewide was 0.9% in FY 2019, below the official forecast of 1.7%• Preliminary data suggests job growth

will be revised upward to 1.2% • Job growth was strongest in

Northern Virginia• High salaried Professional and

Business Services jobs accounted for 37.6% of job gains

• Construction and manufacturing accounted for 26.4% of job gains

36.4

23.8

7.3

3.51.8

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

Virginia NoVa Richmond Hampton Roads Rest of State

June Year-Over-Year Job Changes By Region(Jobs in Thousands)

24

Job Gains Were Widespread By Industry, But Professional and Business Services Accounted for 37.6% of the Total

13.7

7.0

2.6

7.7

-3.4

0.4

6.0

4.1

-6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

PBS

Manufacturing

Construction

Ed. & Health

Trade, Trans & Util.

Financial

Leisure & Hosp.

All Government

Fiscal Year 2019 Average Payroll Growth(Jobs in Thousands)

25

NOVA Average Weekly Wages Are Significantly Higher Than All Other Regions of the State

• Northern Virginia accounted for 65.3% of the job growth in FY 2019 and have average wages 32% and 47% greater than Richmond, and Hampton Roads respectively

• NoVa accounts for 37.3% of all Virginia jobs, followed by Hampton Roads at 19.8% and Richmond at 17%

• NoVa’s share of total employment has grown nearly 1% since FY 2014

$1,219

$926

$827

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

NoVa Richmond Hampton Roads

Average Weekly Wages FY 2019

26

Manufacturing and Construction Sector Accounts for 11% of All Jobs

• Construction and manufacturing accounted for 26.4% of job gains in FY 2019

• Average wages are approximately 4% higher than state average wages

27

$1,024

$1,047

$999

$600

$650

$700

$750

$800

$850

$900

$950

$1,000

$1,050

$1,100

Manufacturing Construction Virginia

Professional & Business Services Sector Equals 19% of Total Jobs, and 28% of NoVa Jobs

• 86% of all PBS jobs are in NoVa, Richmond and Hampton Roads• 45.7% of FY 2019 PBS job

gains were in NoVa• Within the PBS Sector, 58%

are in the Professional and Technical Services Sector, of which NoVa has 68% of the state total

• Professional and Business Services have among the highest weekly wages

755

418

116 114

0

100

200

300

400

500

600

700

800

Virginia NoVa Richmond Hampton Roads

Total Professional and Business Services Jobs(Jobs in Thousands)

28

Professional and Business Services Average Wages Are 44% Greater than the Statewide Average Pay

• PBS is the largest job sector in NoVa. Within that category is the Professional, Scientific and Technical Services sector which accounts for 80% of NoVa’sPBS employment

• Average weekly wages are over 200% higher than the statewide average and over 54% greater than the average wages for Professional and Business Services

• Contributing to the increase in jobs has been an increase in federal procurement in the Washington region

$2,212

$1,434

$999

$0

$500

$1,000

$1,500

$2,000

$2,500

NoVa Prof, Scientific &Tech. Serv

PBS Average Wage Statewide Average Wages

Average Weekly Wages

29

25

35

45

55

65

75

85

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

After Peaking in 2010, Federal Procurement Spending Dropped For 3 Years, Before Increasing Again Since 2014

Source: US Census, Consolidated Federal Funds Report and USASpending.gov, The Stephen S. Fuller Institute at the Schar School, GMU

($ in Billions)

30

Fall Revenue Forecasting Process and Fiscal Year 2020 First Quarter Employment

31

Fall Reforecasting Process• The Code-required Fall reforecasting process is currently underway• Joint Advisory Board of Economists (JABE) met on October 17 to review

the latest economic assumptions and revised methodologies• Board includes economists from both private sector and academia; input from IHS

Markit and Moody’s Analytics• Department of Taxation and Secretary of Finance develop a revised forecast based

on input received• Governor’s Advisory Council on Revenue Estimates (GACRE) will meet

November 25• Cross section of leaders from Virginia business and industry, General Assembly

leadership• Members react to forecast developed by the Tax Department, based on JABE

recommendations, and provide input on the proposed forecast and predicted economic climate

• Revisions to the Official forecast will be submitted with the Governor’sproposed amendments to Chapter 854 and his proposed budget for the FY2020-22 biennium• Governor will present to Joint Money Committees on December 17

32

Revenue Forecast ProcessForecasting is Both an Art and a Science

• Core economic indicators serve as proxies for the two largest revenue sources• Individual Withholding: employment growth and average wage and salaries• Sales Tax: Personal income

• While personal income was a good gauge, it has performed less well in recent years

• The remaining revenue sources do not have similar proxies, however, several factors can influence revenue collections:• Nonwithholding or estimated payments: Includes small businesses/self employed and individuals

with substantial investment/dividend income• Investment returns (i.e., stock market) have a strong correlation to nonwithholding taxes and

business earnings• Employment growth does not adequately capture contract or self employed individuals

• Corporate income taxes: The most volatile of major tax sources and does not lend itself to an easily discernible growth trend

• Recordation Taxes: Housing starts, interest rates and housing values• Insurance Premium Taxes: Claims experience and interest rates can impact insurance premiums

• While the proxies serve as a gauge in measuring revenue growth, they don’t always pick up the inflection points during an economic slowdown, recovery or expansion

33

Fiscal Year 2020 Outlook• Economic outlook remains largely unchanged since last year• Magnitude of the changes to the forecast variables since last year (Chapter

854) is quite modest, especially after adjusting for the alternate forecasts• Chapter 854 originally assumed revenue growth of 5.0% for FY 2020

PercentChange

JobGrowth

AvgWage/Salary Growth

Jobs +AvgWage/ Salary Growth

Total Personal Income Growth

ProprietorIncome Growth

Dividends Interest &

Rent Growth

S&P 500 Prior CYGrowth

Chapter 854 / Official 1.1% 3.0% 4.1% 4.8% (2.5%) 6.8% 14.3%

Oct 2019 Standard 1.5% 3.0% 4.5% 4.9% 4.4% 4.0% 12.1%

Oct 2019Pessimistic 1.3% 2.9% 4.3% 4.7% 4.1% 3.9% 12.1%

Oct 2019 Moody’s 0.9% 2.7% 3.7% 3.4% 0.6% 1.4% 12.1%

34

Wage and Salary and Personal Income

• Wage and salary and personal income serve as proxies for withholding and sales taxes

• Through the second quarter of calendar year 2019, growth in wage and salaries and personal income were performing consistent with the FY 2020 forecast

35

3.4

3.9

4.4

4.9

5.4

5.9

2017

-04-

0120

17-0

5-01

2017

-06-

0120

17-0

7-01

2017

-08-

0120

17-0

9-01

2017

-10-

0120

17-1

1-01

2017

-12-

0120

18-0

1-01

2018

-02-

0120

18-0

3-01

2018

-04-

0120

18-0

5-01

2018

-06-

0120

18-0

7-01

2018

-08-

0120

18-0

9-01

2018

-10-

0120

18-1

1-01

2018

-12-

0120

19-0

1-01

2019

-02-

0120

19-0

3-01

2019

-04-

01

Wage and Salary Personal Income

Percent Change from Year Ago, QuarterlySeasonally Adjusted Annual Rate

Virginia’s Revenue Outlook:Turning to the 2020-22 Biennium

• Job growth is anticipated to slow over the upcoming biennium while wage and income growth are expected to continue increasing as we reach full employment

• Baseline forecast is given a 55% probability while the Pessimistic alternative is given a 35% likelihood and the alternative optimistic forecast is rated at only 10% likelihood

Projected Economic Variables(National Forecast, adjusted for Virginia specific data)

PercentChange

JobGrowth

Avg Wage/Salary Growth

Jobs +AvgWage/

Growth

ProprietorIncome Growth

Dividends, Int. & Rent

Growth

S&P 500 Prior CYGrowth

Personal Income Growth

FY 2021 Oct Stand.

0.8% 3.8% 4.6% 3.3% 3.9% 3.4% 4.4%

FY 2021 Oct Pess.

-0.7% 3.2% 2.5% -3.0% -0.9% -0.7% 2.2%

FY 2022 Oct Stand.

0.4% 3.6% 4.0% 1.1% 4.4% 2.2% 4.3%

FY 2022 Oct Pess.

-0.9% 2.8% 1.8% 10.3% -0.2% -7.5% 1.9%

36

Virginia’s Year-Over Job Gains Remain Positive Through September, But September Monthly Growth Fell

• Through the first quarter of Fiscal Year 2020, job growth has averaged 0.8%, below the current forecast of 1.1%• Job gains have averaged

31,400 in the first quarter of FY 2020

• September’s monthly job numbers declined 14,700 from August• Job losses were concentrated

in Professional and Business Services, Construction, and Leisure and Hospitality

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

Month Over

Year Over

Virginia’s Monthly Versus Year-Over Job Numbers

37

First Quarter Job Gains Of 31,400 Reflect Strength in All But 1 Industry Sector

-10.0 -5.0 0.0 5.0 10.0 15.0

PBS

Manufacturing

Construction

Ed. & Health

Trade, Trans & Util.

Financial

Leisure & Hosp.

All Government

FY 2020 Q1 over FY 2019 Q1

38

Northern Virginia Continues To Lead, But 25% of Job Gains Were Outside the Urban Crescent

31.4

13.7

5 4.9

7.8

0

5

10

15

20

25

30

35

Virginia NoVa Richmond Hampton Roads Rest of State

Year-Over First Quarter FY 2020 Average Job Gains By Region(Jobs in Thousands)

39

Unemployment Claims Are At a 30-Year Low• Continued claims for

unemployment benefits were down over 15% in FY 2019 over FY 2018• 20,243 average claims in FY 2019• 23,861 average claims in FY 2018

• For the first 4 months of FY 2020, claims are down 9%

• Not since November 1989 have continued claims been lower

16,000

18,000

20,000

22,000

24,000

26,000

28,000

30,000FY 2018 FY 2019

FY 2020YTD

40

Over the Last 9 Months Virginia’s Growth Outlook Has Lagged the Nation, but the Gap is Declining

The leading index for each state predicts the six-month growth rate of the state’s coincident index. In addition to the coincident index, the models include other variables that lead the economy: state-level housing permits (1 to 4 units), state initial unemployment insurance claims, delivery times from the Institute for Supply Management (ISM) manufacturing survey, and the interest rate spread between the 10-year Treasury bond and the 3-month Treasury bill

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

2.20Leading Index

U.S. Virginia

41

FY 2019 Revenue Performance

42

-1.2%

1.9% 2.7%

4.5% 3.4%

1.5%

1.3%3.5% 3.0%

6.2%7.9% 7.2%

-8%

-4%

0%

4%

8%

12%

16%

20%

24%

28%

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Growth in Total General Fund Revenue CollectionsFY19 Monthly and Year-to-Date

Monthly Year-to-Date

Forecast: 3.3%

Monthly Growth: -1.2% 4.5% 4.0% 10.2% -1.3% -5.7% 0.4% 26.6% -1.4% 27.4% 22.5% 1.7%

Forecast Needed for

Taxpayer Relief Fund: 5.5%

FY 2019 Recap: GF Revenues Exceeded Forecast by $798 Million

Source: Virginia Department of Taxation

43

FY 2019 Revenue Surplus Fully Committed

Activity/Fund Amount ($ in millions)Taxpayer Relief Fund (used for TY 2018 refund checks) $455.0FY 2021 Reserve for Revenue Stabilization Fund Deposit $73.6Additional Deposit to Revenue Reserve Fund $270.8Part A Water Quality Improvement Fund $32.4

44

FY 2020 Revenue Forecast

45

FY 2020 Performance Through October• Chapter 854 assumed a GF growth rate of 5.0% in FY 2020• Because FY 2019 actual collections exceeded the revenue forecast by

approximately $798 million, increasing the base against which growth is calculated

• We can now meet the budget forecast – the revenue numbers needed to support appropriations in Ch. 854 – with a growth rate of 1.2% (excluding transfers)

• Through the first third of the current fiscal year, revenues have increased 8.5% and are exceeding the revised forecast by fully 7.3 percentage points

• Year-to-date strengths are widespread – no single source is underperforming the forecast

• We could meet the current forecast for FY 2020 even if revenues contract 1.7% over the remaining 8 months of the fiscal year

46

FY 2020 Year-to-Date Performance General Fund Revenue Forecast for Fiscal Year 2020

SourceGrowth Rates

Assumed in Ch. 854 Forecast

Growth Required to Meet Ch. 854

Revenue Forecast

ActualPerformance

Through October

Nov-June Required to

Meet Forecast

Withholding 4.0% 4.2% 5.7% 3.6%

Nonwithholding 12.2% (3.5%) 20.7% (8.3%)Refunds 5.2% 21.7% 15.0% 22.6%

Net Individual 5.8% 0.2% 7.5% (2.8%)

Sales 3.9% 4.2% 8.0% 2.7%Corporate 1.8% 9.3% 15.9% 7.0%

Wills (Recordation) 0.0% (4.6%) 25.8% (20.2%)Insurance 3.8% 7.4% -- --

Total GF Revenues 5.0% 1.2% 8.5% (1.7%)

47

Source: Virginia Department of Taxation

Impact of Tax Policy Changes on GF Revenues • HAC projected growth rates for FY 2020 will appear out of sync with the

underlying economics as we adjust to the changes resulting from the TCJA – which impacted FY 2019 - as well as the changes to Virginia’s tax laws implemented by the 2019 General Assembly – which impact FY 2020 collections

• The TCJA resulted in a one-time windfall in FY 2019• FY 2019 nonwithholding payments increased 14.5%, well ahead of the

assumed 1.5% contraction• FY 2019 final payments included a larger than usual share of payments

from “withholders” because they no longer itemized at the state level because of the higher standard deduction at the federal level• Final payments, which typically comprise about 40% of nonwithholding, made up

47% of nonwithholding in FY 2019

• Similarly, refunds fell 8.9% because another portion of the “switchers” now owed at the State level• Virginia adopted tax policy changes in the 2019 Session but the adjustments do not

apply until the TY 2019 tax filing season

48

Impact of Tax Policy Changes on HAC FY 2020 Forecast

• Sales Tax: Chapter 854 assumed the additional revenues generated by the Wayfair legislation would total $145 million • FIS assumed approximately $13 million a month (11 months in first year) yet to date, we have

been generating $26 million a month• Sales tax growth in FY 2020 will be substantially higher the proxies would indicate• This will be a one-time growth bump, with rates reverting to typical levels in FY 2021 when we

have a full-year of remittance from all internet dealers is included in the base

• Refunds: Expect growth in refunds as a result of the increased state standard deduction in contrast to the reduced refunds last year• Similarly, deconformity from the SALT limitation will decrease tax liabilities, especially in

areas like Northern Virginia with high home values

• Nonwithholding: Forecast will be far lower than economic factors and YTD market performance would suggest• Nonwitholding made up 18.1% of total revenues in FY 2019 – the 10 year average is 16.14%• FY 19 nonwithholding growth driven in part by “switchers” but also high wealth individuals• Nonwithholding has grown 20.7% in first third of the year, and grew 35% in October, a settle-

up month• We have projected growth off a base excluding an estimate of what were one-time final

payments, and then applied the 1% collar to that figure

49

Greatest Risk to the FY 2020 Forecast is Nonwithholding Tax Collections

50

• The September payment often a “safe harbor” payment than a reflection of current year wage and non-wage income.

Number of Total Amount Number of Total AmountPayments of Payments M$ Payments of Payments M$

FY07 149 $37.7 930 $330.8FY08 162 $38.1 924 $344.2FY09 144 $37.6 511 $257.9FY10 81 $19.0 328 $112.5FY11 79 $18.6 547 $204.7FY12 119 $48.9 521 $184.4FY13 115 $41.5 884 $327.5FY14 118 $34.9 427 $141.5FY15 139 $40.0 606 $215.5FY16 171 $50.1 687 $220.2FY17 159 $54.0 645 $178.7FY18 165 $52.5 646 $201.8FY19 212 $62.4 1,195 $463.8FY20 237 $79.3 ? ?

Large Individual Payments

September April - May

Source: Secretary of Finance’s October 2019 Revenue Report

large payments A-M brekadown

Large Individual PaymentsLarge Individual Estimated PaymentsLarge Individual Final Payments

April - MayApril - MayApril - May

Number ofTotal $ AmtNumber ofTotal $ AmtNumber ofTotal $ Amt

Paymentsof Payments Paymentsof Payments Paymentsof Payments

(in millions)(in millions)(in millions)

FY99341$122.8FY99341$122.8FY99341$122.8

FY00299$84.0-32%FY0032$8.7-93%FY00268$75.3-39%

FY01174$53.1-37%FY0125$5.2-40%FY01151$47.9-36%

FY02205$51.1-4%FY0220$3.0-43%FY02188$48.11%

FY03195$56.410%FY0331$7.3145%FY03164$49.12%

FY04343$93.666%FY0438$6.6-10%FY04311$87.077%

FY05596$163.174%FY0568$13.9111%FY05538$149.271%

FY06876$274.368%FY0665$13.5-2%FY06825$260.875%

FY07930$330.821%FY0760$12.0-11%FY07890$318.822%

FY08924$344.24%FY0852$11.8-2%FY08897$332.34%

FY09502$257.9-25%FY0934$7.4-37%FY09477$250.5-25%

FY10326$112.5-56%FY1043$12.568%FY10286$99.9-60%

FY11543$204.782%FY1149$11.7-6%FY11498$193.093%

FY12521$184.4-10%FY1253$13.717%FY12469$170.7-12%

Large Individual Estimated Payments

April - May

Number ofTotal $ Amt

Paymentsof Payments

(in millions)

FY99341$122.8

FY0032$8.7-93%

FY0125$5.2-40%

FY0220$3.0-43%

FY0331$7.3145%

FY0438$6.6-10%

FY0568$13.9111%

FY0665$13.5-2%

FY0760$12.0-11%

FY0852$11.8-2%

FY0934$7.4-37%

FY1043$12.568%

FY1149$11.7-6%

FY1253$13.717%

Large Individual Final Payments

April - May


Paymentsof Payments

(in millions)

FY99341$122.8

FY00268$75.3-39%

FY01151$47.9-36%

FY02188$48.11%

FY03164$49.12%

FY04311$87.077%

FY05538$149.271%

FY06825$260.875%

FY07890$318.822%

FY08897$332.34%

FY09477$250.5-25%

FY10286$99.9-60%

FY11498$193.093%

FY12469$170.7-12%


April - May

% Final% Total $ Amt

PaymentsFinal Payments

(in millions)

FY99341$122.8

FY0090%90%-99%

FY0187%90%1%

FY0292%94%4%

FY0384%87%-8%

FY0491%93%7%

FY0590%92%-2%

FY0694%95%4%

FY0796%96%1%

FY0897%97%0%

FY0995%97%1%

FY1088%89%-8%

FY1192%94%6%

FY1290%93%-2%

large payments D-J



Paymentsof Payments

(in millions)

FY99728$236.4

FY00832$266.213%

FY01885$270.92%

FY02639$168.8-38%

FY03617$177.55%

FY04864$242.336%

FY051,320$394.863%

FY061,749$523.132%

FY071,929$638.522%

FY081,858$657.93%

FY091,258$483.3-27%

FY10825$263.8-45%

FY111,153$422.360%Of the 860 taxpayers who made a large payment in FY12, 235 of them made a large payment in FY11, 168 made a large payment in FY10, 173 made a payment in FY09 and 182 made a large payment in FY08. In addition, of these 860 taxpayers, 118 of them made a large payment in both FY11 and FY10, while only 79 made a large payment in each of the last three fiscal years (FY11, FY10 and FY09).

FY121,177$401.6-5%


Dec. - Jan.


Paymentsof Payments

(in millions)

FY99341$122.8

FY00260$116.2-5%

FY01319$123.26%

FY02240$62.0-50%

FY03239$79.328%

FY04297$89.713%

FY05399$144.962%

FY06425$145.81%

FY07493$179.123%

FY08469$177.1-1%Of the 327 taxpayers who made a large payment in Dec. or Jan. of FY12, 61 of them made a large payment during this same time period in FY11, 52 made a large payment in FY10, 50 made a large payment in Dec. or Jan. in FY09 and 51 made a large payment in FY08. In addition, of these 327 taxpayers, 30 of them made a large payment in both FY11 and FY10, while only 15 made a large payment in each of the last three fiscal years (FY11, FY10 and FY09).

FY09346$113.3-36%

FY10242$81.5-28%

FY11303$100.523%

FY12327$115.014%


Dec. - Jan. as a % of Total


Paymentsof Payments*

FY9947%52%

FY0031%44%

FY0136%45%

FY0238%37%

FY0339%45%

FY0434%37%

FY0530%37%

FY0624%28%

FY0726%28%

FY0825%27%

FY0928%23%

FY1029%31%

FY1126%24%

FY1228%29%

large payments A-M



Paymentsof Payments

(in millions)

FY99728$236.4

FY00832$266.213%

FY01885$270.92%

FY02639$168.8-38%

FY03617$177.55%

FY04864$242.336%

FY051,320$394.863%

FY061,749$523.132%

FY071,929$638.522%

FY081,858$657.93%

FY091,258$483.3-27%

FY10825$263.8-45%

FY111,153$422.360%Of the 860 taxpayers who made a large payment in FY12, 235 of them made a large payment in FY11, 168 made a large payment in FY10, 173 made a payment in FY09 and 182 made a large payment in FY08. In addition, of these 860 taxpayers, 118 of them made a large payment in both FY11 and FY10, while only 79 made a large payment in each of the last three fiscal years (FY11, FY10 and FY09).

FY121,177$401.6-5%


SeptemberApril - May

Number ofTotal AmountNumber ofTotal Amount

Paymentsof Payments M$Paymentsof Payments M$

FY07149$37.7930$330.8ERROR:#REF!

FY08162$38.1924$344.24%Of the 510 taxpayers who made a large payment in April or May of FY12, 101 of them made a large payment during this same time period in FY11, 55 made a large payment in FY10, 61 made a large payment in FY09 and 88 made a large payment in April or May of FY08. In addition, of these 510 taxpayers, 32 of them made a large payment in both FY11 and FY10, while only 15 made a large payment in each of the last three fiscal years (FY11, FY10 and FY09).

FY09144$37.6511$257.9-25%

FY1081$19.0328$112.5-56%

FY1179$18.6547$204.782%

FY12119$48.9521$184.4-10%

FY13115$41.5884$327.5

FY14118$34.9427$141.5

FY15139$40.0606$215.5

FY16171$50.1687$220.2

FY17159$54.0645$178.7

FY18165$52.5646$201.8

FY19212$62.41,195$463.8

FY20237$79.3??


April - May as a % of Total


Paymentsof Payments*

FY99ERROR:#REF!ERROR:#REF!








FY0748%52%

FY0850%52%

FY0941%53%

FY1040%43%

FY1147%48%

FY1244%46%

HAC Estimate: FY 2020 Revised Forecast • Adjustments to the current year forecast are expected to generate about $429 million

above assumed revenues in Ch. 854, a collared growth rate of 3.1% (exclusive of transfers)

Source($ in millions)

HAC Forecast Growth

$ in millions above Ch 854 Forecast

HAC Revised Forecast

Withholding 4.4% $19.6 $13,559.3 Nonwithholding (2.6%) 36.6 3,874.5 Refunds 15.0% 116.2 (1,998.9)Net Individual Income 1.4% $172.3 $15,434.8

Sales 4.5% 157.0 3,886.5 Corporate 9.0% (2.5) 1,028.3 Recordation 6.5% 43.0 411.6

Insurance 5.0% (9.4) 400.9 All Other 2.0% 49.6 804.6 Transfers (0.5%) 18.6 654.4

Total GF Revenue Growth 3.0% $428.7 $22,621.2

51

Caboose Bill Requests• Agencies were asked to identify additional spending needs beyond those provided

for in Chapter 854• Agency decision packages for the caboose bill generally focus on items that are “mandatory”

in nature – i.e. forecast changes or Code requirements – and typically include few “nice to do’s”

• Agency submitted FY 2020 budget requests total $89.6 million GF, as follows:• $42.2 million for increased K-12 SOQ updates• $13.0 million increase for the Housing Trust Fund• $11.4 million for DOC health care - $10.4 million related to Hepatitis C treatment• $4.9 million for increased contracts for Lawrenceville private prison• $6.3 million for Social Services for IT improvements and child welfare• $6.0 million for Department of Health legal fees• $5.8 million for costs of 2020 Presidential primary

• Based on our reforecast estimates, we will have $428.7 million in additional revenues to address $89.6 million of identified Caboose bill budgetary needs• We would recommend that revenue amounts not needed for current fiscal year needs to be

appropriated to the Reserve Fund• These amounts are measured solely against revenue adjustments and exclude budgetary

savings outlined on the next slide

52

Known FY 2020 Savings Items Total $430.4 m.• In addition to the revenue forecast adjustments, substantial resources have become

available from FY 2019 discretionary balances and reduced appropriation needs for Medicaid and the Rainy Day Fund in FY 2020

• FY 2019 finished with approximately $130 million of discretionary balances – we assume at least $60 million will revert and be available to carry forward into the next biennium

• The items are outlined on the table below, and are assumed to be available as a starting balance in FY 2021 as part of the new biennial budget

FY 2020 Savings/Carry Forwards ($ in millions)Chapter 854 Unappropriated Balance $7.6GF Medicaid Forecast Adjustment for FY 2020 211.7Virginia Health Care Fund FY 19 Balance – offsets GF Medicaid costs 53.1

Amount Set Aside for FY 2020 RDF Deposit – No longer needed because of high revenue growth in FY 19

97.5

Assumed Reversion FY 2019 Discretionary Balances (Medicaid and Compensation Board Per Diem payments)

60.5

TOTAL $430.4

53

FY 2020-22 Biennial Revenue Forecast

54

Beyond FY 2020 Risks to the Outlook Skewed to the Downside

• Standard forecast assumes continued growth, albeit at slower rates• Outlook incorporates a number of downside risks, including:

• Assumed GDP growth below 2% in CY 2020• Trade policy uncertainty• Rise in protectionism• Slower global growth• Contraction of business investment • Cooling of housing market

• Fact that we’re in longest expansionary period leads to fear of a downturn but as one economist noted, “expansions don’t die of old age, something has to happen to cause them to end”

• Positive components of outlook buoyed by fact that the consumer remains engaged and the low unemployment rate continues to push up wages

• In total, this results in assumed modest growth in the 3.0%-3.5% over the biennium

55

Sales Tax Growth Has Been Propped Up by Internet Sales

• The Department of Taxation reports that all the year-to-date growth in sales tax revenue in FY 2020 has been attributable to internet sales & use tax dealers• Part of this relates to the Wayfair legislation, but it also reflects rapid growth in

the broader E-commerce arena

• Nationally, E-commerce sales grew 13.3% last year and now make up almost 11% of all sales

• During the same period, brick-and-mortar sales increased only 2.1%• After the first year bump, the Wayfair amounts will be in the base and we

can expect to see far slower growth moving into the next biennium in line with slower growth of in-store sales

• While internet sales continue to show strong growth, and we are now fully capturing those sales, the total sales tax base continues to decline as a share of personal income due to the increased share of personal consumption expenditures on non-taxable services

56

Personal Income Has Become Less Reliable Proxy for Sales Tax Growth Rates

• 71% of all personal consumption expenditures now are directed to services• Demographic shifts • Cost of exemptions

57

0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

Virginia Personal Consumption Expenditures for Goods vs. Services

Goods Services

Spending on services has increased 173% over the last 20 years while spending on durable and nondurable goods has grown only 86%

Anticipate More Modest Growth in Major Sources for FY 2021 and FY 2022

($ in Millions) HACFY 2021FY 2021 Growth

HACFY 2022

FY 2022Growth

Net Individual Income Tax $15,933.7 3.2% $16,515.2 3.6%.

Sales 3,995.3 2.8% 4,091.2 2.4%Corporate 1,090.0 6.0% 1,177.2 8.0%

Recordation 415.7 1.0% 407.4 (2.0%)Insurance 412.9 3.0% 429.5 4.0%

Total Major Sources $21,847.7 3.2% $22,620.6 3.5%

Transfers & Other Revenue 1,480.1 1.4% 1,495.7 1.1%

Total GF Resources $23,327.8 3.1% $24,116.2 3.4%

58

Budget Outlook: FY 2020-2022 Biennium

59

Budget Outlook:FY 2020-2022 Biennium

• What is our base budget?• What are the known budget drivers?• Does our projected revenue growth fully support these

drivers?• How can we hedge against the higher than average

potential for revenue volatility?

60

Virginia Will Enter New Biennium With Strong Structural Balance

• The Committee has resolved many of the structural imbalances implemented to weather the Great Recession• Fully repaid the deferred contributions to the VRS and expedited the phase-in of

funding 100% of Board certified rates• Eliminated the requirement that all but the largest retailers accelerate their June

sales tax payments• Reduced reliance on transfers of nongeneral funds to support GF spending• Created the Revenue Reserve Fund

• These actions address many of the key concerns of the bond rating agencies which relate to structural balance, pension liabilities and liquidity

61

Virginia Will Enter New Biennium With Strong Structural Balance

• FY 2020 revenues fully support current levels of on-going spending• As is often the case in the second year of the biennium, in FY 2020 spending exceeds

same-year GF revenues by $222.3 million• Caused by uneven growth where drivers grow at faster rate than overall revenues

• However, appropriated deposits to the Revenue Reserve Fund total $222.8 million (exclusive of deposits made from the FY 2019 surplus) – more than offsetting that imbalance

• In addition, $97.5 million was set aside for an assumed mandatory deposit to the Rainy Day Fund based on FY 2020 revenue growth

• An additional $79.4 million in one-time spending was identified and removed during the base budget adjustment exercise

• In total, this means there is a net excess of $177.4 million annually of existing base revenues available to offset increased spending requirements in each year of the next biennium

• So instead of starting the biennium with base expenditures exceeding base revenues, we are positioned to address a portion of increased spending requirements even without revenue growth

62

Adjusted Base Budget for FY 2020-2022(GF Dollars in Millions)

FY 2021 FY 2022Chapter 854 (FY 2020 GF Appropriation) $22,747.8 $22,747.8

Remove One-Time Spending ($707.4) ($727.6)

Annualize Partially Funded Costs/Restore One-Time Savings $55.1 $55.1

HAC Estimated Base Budget $22,095.5 $22,075.3

63

Range of Resources Available for Budget Drivers

64

$’s in millions FY 2021 FY 2022Assumed FY 2020 Carry Forward $430.4

Estimated Transfers $675.5 $687.9

HAC Revenue Forecast $22,652.3 $23,428.4

Total GF Resources (including FY 20 carryforward) $23,758.2 $24,116.2

HAC Base Budget $22,095.5 $22,075.3

Net Resources Above Base Budget (including transfers)

$1,662.7 $2,040.9

For purposes of budget development, not assuming any additional revenue in FY 2020 beyond Ch. 854. Revenue carry-forward includes only known adjustments of Ch. 854 appropriations.

Compare to Layman

UPDATED

FY 19 ForecastFY 19 ActualFY 20 OffOffic Growth854 GrowthFY 20 HAC HAC AssumptionsFinal Hac

Major SourcesAdj. for CollarDELTA

Withholding13,013.912,987.813,539.74.2%4.0%13,559.3104.4%19.56

Nonwithholding3,419.23,976.83,837.9-3.5%12.2%3,874.5110.0%Core growth of 10% then collaring-2.6%36.580.010

Refunds(2,011.5)(1,738.2)(2,115.1)21.7%5.2%(1,998.9)115.0%116.17

Net Individual14,421.615,226.415,262.50.2%5.8%15,434.8101.4%172.31

- 0

Sales 3,591.13,580.43,729.54.2%3.9%3,886.5104.5%Assumes add'l wayfair growth only157.02

Corporate1,012.2943.41,030.89.3%1.8%1,028.3109.0%(2.49)

Recordation368.6386.5368.6-4.6%0.0%411.6106.5%Based on pricing, sales and increased re-fis43.02

Insurance395.3382.0410.37.4%3.8%400.9103.8%Last year's rate plus $$ reduced to trans from missing 19(9.38)

All Other Revenue739.9788.8755.0-4.3%2.0%804.6102.0%Official assumption49.58

- 0

Total Revenue20,528.721,307.521,556.71.2%5.0%21,966.83.1%5.0%410.05

- 0

- 0

- 0

ABC Profits115.6130.7120.1-8.1%3.9%135.8103.9%15.70

Sales Tax (0.375%)389.9392.6409.34.3%5.0%412.2105.0%2.93

Transfers133.6134.7106.4-21.0%-20.4%106.479.8%- 0

Total Transfers639.1658.0635.8-3.4%-0.5%654.499.5%18.63

- 0

Total GF Resources21,167.821,965.522,192.51.0%4.8%22,621.23.0%428.68

126.061/3 of actual511.68

130.4491/3 of forecast

4.389assume 3.8% plus the 4.4 million add'l bc amount to trans reduced by 19 actuals-10.85%

3,545.4

Collar would be 16.14%

21 22 calc

FY 20FY 21FY 21FY 22FY 22FY 22Base ChangeFY 22

Actual FY 2015Official 16Offic GrwthHACLaymanOff GrowthHACHAC GrowthDELTAHACHAC GrowthDELTAOfficialOff GrowthHAC BaseDELTAHACHAC Growth

Major Sources

Withholding11,044.311,275.13.4%13,559.314,040.6103.6%481.414,532.0103.5%12,037.4ERROR:#DIV/0!14,518.02,480.6103.0%

Nonwithholding3,041.62,785.22.2%3,874.53,952.0102.0%77.54,110.0104.0%3,280.8ERROR:#DIV/0!4,276.0995.2

Refunds(1,757.3)(1,840.6)1.5%(1,998.9)(2,058.9)104.0%(60.0)(2,126.8)103.3%(1,968.2)ERROR:#DIV/0!(2,139.2)(171.0)

Net Individual12,328.712,219.73.4%15,434.815,933.73.2%498.916,515.23.6%13,350.0ERROR:#DIV/0!16,654.83,304.8

Sales 3,235.43,323.13.3%3,886.53,995.3102.8%108.84,091.2102.4%3,481.4ERROR:#DIV/0!4,111.2629.8103.1%

Corporate831.9820.7-2.4%1,028.31,090.0106.0%61.71,177.2108.0%724.0ERROR:#DIV/0!1,063.8339.8

Recordation346.3318.30.0%411.6415.7101.0%4.1407.498.0%389.4ERROR:#DIV/0!415.726.3

Insurance300.6326.82.0%400.9412.9103.0%12.0429.5104.0%354.5ERROR:#DIV/0!426.271.7

All Other Revenue692.7712.15.9%804.6804.6100.0%- 0807.8100.4%701.1ERROR:#DIV/0!810.2109.1

Total Revenue17,735.617,720.73.1%21,966.822,652.3685.523,428.4103.4%19,000.4ERROR:#DIV/0!23,482.04,481.6

Major Sources Only17,042.921,162.221,847.73.2%685.522,620.6103.5%18,299.3ERROR:#DIV/0!22,671.84,372.5

0.0

Total - Trans Other1,459.01,480.11.4%21.11,495.71.1%1,276.3ERROR:#DIV/0!1,446.9170.6

ABC Profits83.380.2-3.7%135.8141.2104.0%5.4144.8102.5%89.1ERROR:#DIV/0!150.661.5

Sales Tax (0.375%)352.4362.93.6%412.2422.5102.5%10.3431.4102.1%376.8ERROR:#DIV/0!376.8- 0

Transfers198.2121.4-42.6%106.4111.7105.0%5.3111.7100.0%109.3ERROR:#DIV/0!109.3- 0

Total Transfers633.9564.5-12.5%654.4675.521.1687.91.8%575.2ERROR:#DIV/0!636.761.5

- 0

Total GF Resources18,369.518,285.22.5%22,621.223,327.83.1%706.624,116.23.4%19,575.6ERROR:#DIV/0!24,118.64,543.0

22,109.1Layman23,314.4024,149.30

512.1Delta13.4(33.1)492.40

Layman 21 22

Major SourcesFY 2017FY 2017FY 2017FY 2018FY 2018FY 2018

12/15 Standard15-DecHACNew Layman StandNew Layman Pess12/15 Standard15-DecHACNew Layman StandNew Layman Pess

Pess. +Pess. +

Withholding4.7%4.3%4.0%4.0%3.3%4.5%4.2%3.6%3.5%3.1%

Nonwithholding3.8%3.3%3.8%2.2%-8.6%3.9%3.6%3.9%7.0%7.8%

Refunds3.8%3.8%4.5%6.6%6.6%4.2%4.2%4.0%3.9%3.9%

Net Individual4.6%4.2%3.9%3.2%-0.1%4.4%4.1%3.6%4.3%4.0%

Sales 3.1%2.4%3.1%4.9%3.9%4.3%4.0%3.8%3.5%2.6%

Corporate1.5%1.1%1.5%1.0%-1.9%-1.6%-1.7%-1.6%-0.9%-0.5%

Recordation0.0%0.0%2.0%1.7%3.9%0.0%0.0%2.0%0.0%4.5%

Insurance6.9%6.9%5.0%4.0%4.0%5.2%5.2%5.0%4.5%1.0%

Resources PPT table

$’s in millionsFY 2021FY 2022

Assumed FY 2020 Carry Forward$430.4

Estimated Transfers$675.5$687.9

HAC Revenue Forecast$22,652.3$23,428.4

Total GF Resources (including FY 20 carryforward)$23,758.2$24,116.2

HAC Base Budget $22,095.5$22,075.3

Net Resources Above Base Budget (including transfers)$1,662.7$2,040.9

ppt on drivers vs $$

$’s in millionsFY 2021FY 2022Biennium

Net Resources for Budget Drivers $23,758.18$24,116.25ERROR:#REF!

Mandatory/Statutory Spending Drivers$847.7$1,093.2$1,940.9

High Priority Drivers$206.6$254.5$461.1

Total – HAC Identified Drivers$1,054.3$1,347.7$2,402.0

Add’l Available Resources($297.3) - ($17.9)$70.7 - $342.3($208.6) - $324.4

($279.30)$70.70($208.60)

($17.90)$342.30$324.40

FY 21 and 22

FY 2021FY 2022

JobsTotal IncomeWagesAvg WagesJobsTotal IncomeWagesAvg Wages

14 JABE Pess +1.8%4.8%4.6%2.8%4.6%1.2%5.0%4.2%3.0%4.2%

Oct 14 Standard1.6%5.5%4.8%3.2%4.8%1.0%5.2%4.5%3.4%4.4%

October 15 Standard1.4%4.3%4.5%3.1%4.5%1.1%4.5%4.2%3.1%4.2%

Withholding4.5%4.2%

Sales4.0%4.0%

17.0%

Major SourcesSTANDARDPESS +NEWSTANDARDPESS +NEW

Withholding4.7%4.3%4.4%4.5%4.2%4.2%

Nonwithholding3.8%3.3%3.8%3.9%3.6%3.9%

Refunds3.8%3.8%3.8%4.2%4.2%4.0%

Net Individual4.6%4.2%4.4%4.1%

Sales 3.1%2.4%3.1%4.3%4.0%4.0%

Corporate1.5%1.1%1.5%-1.6%-1.7%-1.6%

Recordation0.0%0.0%0.0%0.0%0.0%2.0%

Insurance6.9%6.9%5.0%5.2%5.2%5.0%

Major Tax Sources4.2%3.7%4.1%3.8%

4.1%4.2%

All Other Revenue.-3.5%0.0%0.0%

Total Revenue3.9%3.4%4.0%3.7%

ABC Profits

Sales Tax (0.375%)

Transfers12000.0%

Total Transfers

Total GF Resources

FINAL COMP TO GACRE

FY 20 HAC - CollFY 20 HAC - No Coll.FY 20 GACREFY 20 PESSFY21 HAC - CollFY 21 HAC - No Coll.FY 21 GACREFY 21PESSFY22 HAC - CollFY 22 HAC - No Coll.FY 22 GACREFY 22 PESS

Major Sources

Withholding11,475.011,475.011,536.611,509.611,934.011,968.511,993.611,888.211,934.012,363.612,410.212,254.0

Nonwithholding2,972.23,224.13,280.93,160.53,085.13,346.63,354.42,887.53,346.63,477.13,588.43,111.5

Refunds(1,801.2)(1,801.2)(1,822.6)(1,822.6)(1,882.3)(1,882.3)(1,942.3)(1,942.3)(1,882.3)(1,957.6)(2,018.4)(2,018.4)

Net Individual12,646.012,897.912,994.9012,847.5013,136.913,432.813,405.7012,833.4013,398.313,883.213,980.2013,347.10

4.6%

Sales 3,377.83,377.83,397.73,388.03,482.53,482.53,565.23,521.13,482.53,614.83,688.63,611.6

Corporate732.1732.1817.1795.1743.1810.6825.5779.9743.1731.2818.2775.9

Recordation363.6363.6373.0358.3370.9370.9379.4337.4370.9378.3379.4337.4

Insurance309.6309.6317.7317.7325.1325.1330.6330.6325.1341.4345.3345.3

All Other Revenue733.6733.6733.3733.3696.9696.9694.8694.8696.9696.9699.3699.3

Total Revenue18,162.618,414.518,633.7018,439.9018,755.319,118.819,201.2018,497.2019,016.819,645.719,911.0019,116.60

2.4%3.8%5.1%4.0%1805839.1%3.8%3.0%0.3%1831985.9%1894882.7%3.7%3.3%

0.00.0

1,284.2

ABC Profits86.586.586.586.586.586.5

Sales Tax (0.375%)367.9367.9380.8380.8380.8395.2

Transfers121.4121.4120.0120.0120.0120.0

Total Transfers575.8575.8587.3587.3587.3601.7

Total GF Resources18,738.418,990.319,206.319,011.519,342.619,706.019,788.219,084.219,604.020,247.520,512.219,717.8

Compared to Standard(467.90)(216.01)(194.80)(445.64)(82.16)(704.0)(908.17)(264.74)(794.40)

Agency Budget Requests• As part of the annual budget development process, agencies are asked to

submit “decision packages” outlining their budget requests for the next biennium

• To date, agencies have submitted preliminary general fund budget requests totaling $1.6 billion in FY 2021 and $1.9 billion in FY 2022 for a total of $3.6 billion over the biennium• This includes caseload adjustments, unavoidable cost increases, technical adjustments,

information technology requests and other spending for new or expanded initiatives• Not limited to mandatory spending – includes agency wishes

• As is typical, the two largest requests are for the Medicaid forecast and K-12 rebenchmarking, which alone cost $1.5 billion

• The Governor has requested all agencies to submit plans outlining how they could either reduce expenditures by 5% or generate a like amount of new revenue to offset 5% of their budgets to balance any new initiatives against existing operations• However, based on revenue estimates, the reductions would not be needed to sustain

ongoing services or mandatory cost increases but rather to support new initiatives and priorities

65

Major Mandatory Spending Items Total $2.15 billion

66

FY 2021 FY 2022

$174,400,000 $500,500,000

DBHDS - Fund STEP VA Crisis, Outpatient Services and Oversight $24,960,801 $29,027,401

$18,349,764 $29,124,714

$10,750,000 $22,250,000

$9,345,066 $10,376,278

$9,255,816 $16,169,014

$4,063,456 $14,684,986

$9,242,724 $5,799,367

$2,502,818 $2,577,903

$3,368,116 $510,240

DSS - Annualize Cost of Foster Care Omnibus Bill $482,943 $482,943

$405,200,000 $438,700,000 $24,000,000 $24,000,000

Direct Aid - Preliminary Rebenchmarking costs as of Nov. 2019School Counselors per 2019 Legislation

General Fund $Health and Human Resources

DMAS Medicaid Forecast of Utilization and Inflation

DMAS - DOJ DD Waiver Slots

CSA – Fund Expenditure Growth

Public Education

DBHDS - O and M for 56 beds at Catawba Hospital

DMAS - Continue funding for MMIS until system certifiedDMAS - TDO Fund forecast

DSS - Federally Required SNAP Eligibility Improvements

DSS - Adoption and Foster Care Forecast & COLADBHDS - Fund VCBR expansion and increased admissions

Mandatory

General Fund $FY 2021FY 2022

Health and Human Resources

DMAS Medicaid Forecast of Utilization and Inflation$174,400,000$500,500,000

DBHDS - Fund STEP VA Crisis, Outpatient Services and Oversight$24,960,801$29,027,401

DMAS - DOJ DD Waiver Slots$18,349,764$29,124,714

CSA – Fund Expenditure Growth$10,750,000$22,250,000

DBHDS - O and M for 56 beds at Catawba Hospital$9,345,066$10,376,278

DSS - Adoption and Foster Care Forecast & COLA$9,255,816$16,169,014

DBHDS - Fund VCBR expansion and increased admissions$4,063,456$14,684,986

DMAS - Continue funding for MMIS until system certified$9,242,724$5,799,367

DMAS - TDO Fund forecast$2,502,818$2,577,903

DSS - Federally Required SNAP Eligibility Improvements$3,368,116$510,240

DSS - Annualize Cost of Foster Care Omnibus Bill$482,943$482,943

Public Education

Direct Aid - Preliminary Rebenchmarking costs as of Nov. 2019$405,200,000$438,700,000

School Counselors per 2019 Legislation$24,000,000$24,000,000


Finance

Treasury Board: Increased Debt Service PaymentsTreasury Bd.: Debt Service Requirements$54,000,000$114,000,000

Public Safety

Supreme Court - Increase Criminal Fund Appropriation$4,545,000$4,590,450

DOC - Inmate Medical Cost Increases$2,752,980$6,852,673

Indigent Defense - Annualize FY 2020 Paralegal Position Costs$1,273,950$1,273,950

Commerce and Trade

Economic Devel. Incentive Payment CommitmentsEconomic Development Incentive Payments Commitments$70,900,000$42,900,000

VRS Contribution Rates

State Employee Retirement Plans$25,589,500$25,589,500

Teacher Retirmement Plan$47,888,500$47,888,500

Administration

Comp Board - Annualize Ch. 854 Commitments$2,759,370$2,818,896

Grand Total$905,630,804$1,340,116,815

$2,245,747,619

High Priority

Agency / Program Expenditure Description FY 2021FY 2022


DSS – Child Welfare Improvement - Family First, Child Protective Svs.$22,914,233$24,726,213

DMAS – Children’s health insurance federal match rate changes$77,400,000$77,400,000

DBHDS – Fund STEP-VA$49,111,850$72,574,850

DMAS – Increase nursing services rates$4,433,727$4,433,727

DBHDS – Add community transition support to address census at state MH hospitals $7,600,800$8,100,800

DBHDS – Support enhancements for data warehouse, data analytics & cloud capabilities $4,496,366$5,918,830

DMAS – Behavioral health redesign$8,284,919$16,862,512

DBHDS – Other DOJ Costs for licensing, quality mgmt. and other$7,084,387$6,786,774

DMAS – Increase rates licensed mental health professional rates$2,374,698$2,458,479

DSS – SNAP Error Rate Payment$3,368,116$510,240

DBHDS – Add staffing at Commonwealth Center for Children & Adolescents$765,428$765,428

DSS - Child Welfare IT System Improvements$2,002,905$9,747,506

Public Education

DOE - Tchr Licensure IT Sys: add Educator Prep Prg & Prof Dev & 1.0 FTE$486,514$236,514

DOE - Comply with Exec Order #19 - Cloud Migration$1,400,000$0

DOE -IT Online Mgmt of Education Grant Awards (OMEGA) Replacement$600,000$200,000

DOE -2.0 FTEs for IT Security Compliance & Consultant in Budget/Finance$399,243$399,243

DOE -Supplant for 2.0 FTEs that Support State Operated Programs$182,198$182,198

DOE – New - 11.0 FTEs and Creating Va Learner Equitable Access Platform$7,131,000$6,103,000

Higher Education

Tuition Moderation$30,000,000$30,000,000

Targeted Undergraduate Financial Aid$15,000,000$15,000,000

Tech Talent$16,000,000$16,000,000

Va Tuition Assistance Grant (for every $50.00 increase)$1,000,000$1,000,000

VMSDEP$800,000$1,100,000

Virtual Library of Virginia$800,000$1,000,000

Administration

Comp. Board: Fund Commonwealth Attorney's Staffing Standards$6,500,000$6,500,000

Comp. Board: Provide Funding to Restore Staff Position Funding $119,775$119,775

DHRM: Funding for Annual Salary Equity Analaysis$200,000$200,000

Elections: Additional Security Positions$526,045$526,045

Finance

Tax: Funding for Taxpayer Relief Fund Consultant $175,000$175,000

Tax: Funding for Security Enhancements$469,068$95,471

Public Safety

DOC: Implement Electronic Health Records at all Facilities$17,113,445$12,935,649

DOC: Increased Provision of Hepatitis C Treatment$12,637,518$14,921,449

DOC: UVA & VCU Medical Pilots at DOC Facilities$6,543,970$6,469,385

Judiciary: Additional Deputy Clerk Positions$3,728,031$7,456,062

DOC: Staffing Support for New VCU Outpatient Clinic$485,078$970,156

Forensic Science: Increased Laboratory Equipment Costs$248,000$368,000

Commerce and Trade

VEDP Business-Ready Sites Program$4,500,000$9,500,000

VEDP Custom Workforce Development Prog. (Projected $9.7m annual)$0$4,700,000

Housing Trust Fund$7,000,000$7,000,000

Broadband Initiative$19,000,000$19,000,000

Ag and Natural Resources

Ag and Forestry: Implement WIP-3 Requirements$673,037$673,037

DCR: VA Land Conservation Fund Deposits$15,500,000$15,500,000

DCR: Water Quality Improvement Fund DepositsTBDTBD

DCR: Natural Bridge State Park Operations$413,990$413,990

DEQ: Update Permitting Capacity$1,839,500$1,839,500

DEQ: Update Air and Water Monitoring and Compliance Activities$8,816,000$8,816,000

GRAND TOTAL:$370,124,841$419,685,833

$3,035,558,293

Sheet1

289.6306.1595.7Judicial$15,359,995$19,133,476

62.664.8127.4Administration$33,465,720$43,324,099

49.172.6121.7Agriculture and Forestry$3,232,289$2,373,148

86.535121.5Commerce and Trade$177,833,878$162,368,241

38.851.990.8K-12$299,973,955$313,355,955

31.831.863.5Higher Ed and Other Education$280,767,608$273,672,251

233356Finance$3,743,427$7,195,374

18.329.147.5HHR (Excludes Medicaid forecast)$349,337,836$422,606,611

202040Natural Resources$154,853,072$108,209,058

10.726.136.8Public Safety$82,208,253$77,680,035

10.822.333Veterans/Defense Affairs$21,217,698$26,230,563

15.515.531Independent Agencies$4,815,000$4,815,000

15.215.230.4Grand Total$1,426,808,731$1,460,963,811$2,887,772,542

17.112.9300.571576979

1216.728.7

12.614.927.6

8.316.925.1

13.68.522.1

101222

6.913.820.7

20 - 20

101020

9.310.419.7

6.313.119.4

798852.61650.6

Sheet2

174.4500.5674.9

289.6306.1595.7

62.664.8127.4

49.172.6121.7

86.535121.5

38.851.990.8

31.831.863.5

233356

18.329.147.5

202040

10.726.136.8

10.822.333

15.515.531174.4500.5674.9

15.215.230.4289.6306.1595.7

17.112.93073.573.5147

1216.728.762.664.8127.4

12.614.927.649.172.6121.7

8.316.925.186.535121.5

13.68.522.138.851.990.8

10122231.831.863.5

6.913.820.7233356

20 - 2018.329.147.5

101020202040

9.310.419.7VRS Contribution Rates10.726.136.8

6.313.119.4State Employee Retirement Plans$25,589,500$25,589,50010.822.333

2325.5Teacher Retirmement Plan$47,888,500$47,888,50015.515.531

3500$73,478,000$73,478,000$146,956,00015.215.230.4

0.664428571417.112.930

1216.728.7

12.614.927.6

8.316.925.1

13.68.522.1

101222

6.913.820.7

20 - 20

101020

1030.31403.12433.4

3500

0.6952571429

Major Mandatory Spending Items Total $2.15 billion

67

FY 2021 FY 2022

$54,000,000 $114,000,000

$4,545,000 $4,590,450

$2,752,980 $6,852,673

$1,273,950 $1,273,950

$70,900,000 $42,900,000

State Employee Retirement Plans $25,589,500 $25,589,500

Comp Board - Annualize Ch. 854 Commitments $2,759,370 $2,818,896

$857,742,304 $1,292,228,315


Public SafetySupreme Court - Increase Criminal Fund Appropriation

DOC - Inmate Medical Cost Increases

Indigent Defense - Annualize FY 2020 Paralegal Position CostsCommerce and Trade

FinanceTreasury Board: Increased Debt Service Payments

General Fund $

Grand Total

Economic Devel. Incentive Payment Commitments

Administration

Mandatory




DBHDS - Fund STEP VA Crisis, Outpatient Services and Oversight$24,960,801$29,027,401










Public Education

Direct Aid - Preliminary Rebenchmarking costs as of Sept. 2019$405,200,000$438,700,000

School Counselors per 2019 Legislation$24,000,000$24,000,000


Finance


Public Safety




Commerce and Trade




Administration


Grand Total$857,742,304$1,292,228,315

$2,149,970,619$2,149,970,619

High Priority

Agency / Program Expenditure Description FY 2021FY 2022



DMAS – Children’s health insurance federal match rate changes$77,400,000$77,400,000

DBHDS – Fund STEP-VA$49,111,850$72,574,850










Public Education

DOE - Tchr Licensure IT Sys: add Educator Prep Prg & Prof Dev & 1.0 FTE$486,514$236,514

DOE - Comply with Exec Order #19 - Cloud Migration$1,400,000$0

DOE -IT Online Mgmt of Education Grant Awards (OMEGA) Replacement$600,000$200,000

DOE -2.0 FTEs for IT Security Compliance & Consultant in Budget/Finance$399,243$399,243

DOE -Supplant for 2.0 FTEs that Support State Operated Programs$182,198$182,198

DOE – New - 11.0 FTEs and Creating Va Learner Equitable Access Platform$7,131,000$6,103,000

Higher Education

Tuition Moderation$30,000,000$30,000,000

Targeted Undergraduate Financial Aid$15,000,000$15,000,000

Tech Talent$16,000,000$16,000,000

Va Tuition Assistance Grant (for every $50.00 increase)$1,000,000$1,000,000

VMSDEP$800,000$1,100,000

Virtual Library of Virginia$800,000$1,000,000

Administration

Comp. Board: Fund Commonwealth Attorney's Staffing Standards$6,500,000$6,500,000

Comp. Board: Provide Funding to Restore Staff Position Funding $119,775$119,775

DHRM: Funding for Annual Salary Equity Analaysis$200,000$200,000

Elections: Additional Security Positions$526,045$526,045

Finance

Tax: Funding for Taxpayer Relief Fund Consultant $175,000$175,000

Tax: Funding for Security Enhancements$469,068$95,471

Public Safety

DOC: Implement Electronic Health Records at all Facilities$17,113,445$12,935,649

DOC: Increased Provision of Hepatitis C Treatment$12,637,518$14,921,449

DOC: UVA & VCU Medical Pilots at DOC Facilities$6,543,970$6,469,385

Judiciary: Additional Deputy Clerk Positions$3,728,031$7,456,062

DOC: Staffing Support for New VCU Outpatient Clinic$485,078$970,156

Forensic Science: Increased Laboratory Equipment Costs$248,000$368,000

Commerce and Trade

VEDP Business-Ready Sites Program$4,500,000$9,500,000

VEDP Custom Workforce Development Prog. (Projected $9.7m annual)$0$4,700,000

Housing Trust Fund$7,000,000$7,000,000

Broadband Initiative$19,000,000$19,000,000

Ag and Natural Resources

Ag and Forestry: Implement WIP-3 Requirements$673,037$673,037

DCR: VA Land Conservation Fund Deposits$15,500,000$15,500,000

DCR: Water Quality Improvement Fund DepositsTBDTBD

DCR: Natural Bridge State Park Operations$413,990$413,990

DEQ: Update Permitting Capacity$1,839,500$1,839,500

DEQ: Update Air and Water Monitoring and Compliance Activities$8,816,000$8,816,000

GRAND TOTAL:$370,124,841$419,685,833

$2,939,781,293

Sheet1

289.6306.1595.7Judicial$15,359,995$19,133,476

62.664.8127.4Administration$33,465,720$43,324,099

49.172.6121.7Agriculture and Forestry$3,232,289$2,373,148

86.535121.5Commerce and Trade$177,833,878$162,368,241

38.851.990.8K-12$299,973,955$313,355,955

31.831.863.5Higher Ed and Other Education$280,767,608$273,672,251

233356Finance$3,743,427$7,195,374

18.329.147.5HHR (Excludes Medicaid forecast)$349,337,836$422,606,611

202040Natural Resources$154,853,072$108,209,058

10.726.136.8Public Safety$82,208,253$77,680,035

10.822.333Veterans/Defense Affairs$21,217,698$26,230,563

15.515.531Independent Agencies$4,815,000$4,815,000

15.215.230.4Grand Total$1,426,808,731$1,460,963,811$2,887,772,542

17.112.9300.571576979

1216.728.7

12.614.927.6

8.316.925.1

13.68.522.1

101222

6.913.820.7

20 - 20

101020

9.310.419.7

6.313.119.4

798852.61650.6

Sheet2

174.4500.5674.9

289.6306.1595.7

62.664.8127.4

49.172.6121.7

86.535121.5

38.851.990.8

31.831.863.5

233356

18.329.147.5

202040

10.726.136.8

10.822.333

15.515.531174.4500.5674.9

15.215.230.4289.6306.1595.7

17.112.93073.573.5147

1216.728.762.664.8127.4

12.614.927.649.172.6121.7

8.316.925.186.535121.5

13.68.522.138.851.990.8

10122231.831.863.5

6.913.820.7233356

20 - 2018.329.147.5

101020202040

9.310.419.7VRS Contribution Rates10.726.136.8

6.313.119.4State Employee Retirement Plans$25,589,500$25,589,50010.822.333

2325.5Teacher Retirmement Plan$47,888,500$47,888,50015.515.531

3500$73,478,000$73,478,000$146,956,00015.215.230.4

0.664428571417.112.930

1216.728.7

12.614.927.6

8.316.925.1

13.68.522.1

101222

6.913.820.7

20 - 20

101020

1030.31403.12433.4

3500

0.6952571429

Major High Priority Spending Items Total $662 million68

FY 2021 FY 2022

DMAS – Children’s health insurance federal match rate changes & forecast $61,546,991 $86,978,406 DSS – Child Welfare Improvement - Family First, Child Protective Svs. $22,914,233 $24,726,213 DMAS – Behavioral health redesign $8,284,919 $16,862,512 DSS - Child Welfare IT System Improvements $2,002,905 $9,747,506 DBHDS – Add community transition support to address census at state MH hospitals $7,600,800 $8,100,800 DBHDS – Other DOJ Costs for licensing, quality mgmt. and other $7,084,387 $6,786,774 DBHDS – Support enhancements for data warehouse, data analytics & cloud capabilities $4,496,366 $5,918,830 DMAS – Increase nursing services rates $4,433,727 $4,433,727 DMAS – Increase rates licensed mental health professional rates $2,374,698 $2,458,479 DBHDS – Add staffing at Commonwealth Center for Children & Adolescents $765,428 $765,428 DSS – SNAP Error Rate Payment $3,368,116 $510,240

DOE – New - 11.0 FTEs and Creating Va Learner Equitable Access Platform $7,131,000 $6,103,000 DOE -2.0 FTEs for IT Security Compliance & Consultant in Budget/Finance $399,243 $399,243 DOE - Tchr Licensure IT Sys: add Educator Prep Prg & Prof Dev & 1.0 FTE $486,514 $236,514 DOE -IT Online Mgmt of Education Grant Awards (OMEGA) Replacement $600,000 $200,000 DOE -Supplant for 2.0 FTEs that Support State Operated Programs $182,198 $182,198 DOE - Comply with Exec Order #19 - Cloud Migration $1,400,000 $0

Tuition Moderation $30,000,000 $30,000,000 Targeted Undergraduate Financial Aid $15,000,000 $15,000,000 Tech Talent $16,000,000 $16,000,000 Va Tuition Assistance Grant (for every $50.00 increase) $1,000,000 $1,000,000 VMSDEP $800,000 $1,100,000 Virtual Library of Virginia $800,000 $1,000,000

General Fund $Health and Human Resources

Public Education

Higher Education

Mandatory













Public Education

Direct Aid - Preliminary Rebenchmarking costs as of Sept. 2019$289,612,289$306,113,074

Finance



Public Safety




Commerce and Trade




Teacher Retirmement Plan$47,888,500$47,888,500

Administration


Grand Total$741,082,292$1,154,502,488

High Priority



DMAS – Children’s health insurance federal match rate changes & forecast$61,546,991$86,978,406











Pu

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