The governor’s introduced amendments to the biennial budget, carried in House Bill 1600, would add about $4.7 billion in new resources and propose $4.7 billion in additional spending, heavily weighted toward one‑time items in fiscal 2025, staff told the committee at a budget briefing.

Anne Oman, a committee staff member who presented the overview, said the package combines unspent surplus from FY 2024, changes in the revenue forecast and limited transfers to the general fund. "The most important item in the short run is the February 2 budget report‑out day," Oman said, asking members to keep calendars clear for further meetings.

Why it matters: The introduced plan would give the General Assembly a framework for appropriation decisions this session and would lock in several large near‑term commitments. Staff emphasized that most of the newly available funds are one‑time and urged caution about using one‑time revenues for ongoing costs.

Key figures and structure

Staff said about $1.2 billion of the FY 2024 surplus was allocated as contingent spending in Chapter 2 and would require appropriation this year to take effect. Adjustments to the revenue forecast added roughly $3.3 billion in resources (about $2.1 billion in the first year and $1.2 billion in the second year). After transfers and other adjustments, the briefing summarized $4.7 billion in new resources available for HB 1600. Of the $4.7 billion in proposed spending, roughly $3.4 billion are one‑time actions and about $1.3 billion are recurring.

Major proposals highlighted by staff

- Car tax credit: HB 1600 contains language creating a refundable credit based on vehicle personal property taxes paid, effective for taxable years beginning Jan. 1, 2025. The credit would be up to $150 for individual filers and up to $300 for joint filers (the lesser of those amounts or the car tax actually paid). The budget includes a $1.1 billion appropriation in 2025 to capitalize the program and language making those amounts nonreverting so funds are available in the next biennium; staff estimated the program’s annual cost beginning in 2029 would start at about $377 million.

- Medicaid and health and human services: House Bill 1600 would increase Health and Human Resources spending by a net of about $858 million over the biennium, staff said, driven largely by the Medicaid expenditure forecast, backfilling lost Virginia Health Care Fund revenue in year one, and higher Children's Services Act (CSA) caseload and costs. The administration included a small Medicaid reserve fund and several targeted Medicaid policy changes, including a new waiver for serious mental illness to permit longer private acute care stays and a federal waiver to cover pre‑release Medicaid services for justice‑involved youth.

- Children’s Services Act (CSA): The introduced bill would add about $37 million in year one and $68 million in year two for CSA cost increases, on top of prior Chapter 2 funding; staff characterized the two‑year increase as more than $200 million over the biennium and noted private day placements account for a substantial share of growth.

- K‑12 and school construction: The package proposes a $286.5 million general fund increase for K‑12 and early childhood over the biennium and a $290 million increase for school construction grants funded partly by literary fund transfers and casino revenues. Staff said about two‑thirds of K‑12 increases are for policy proposals and roughly one‑third are technical adjustments.

- Higher education and capital: The budget would provide roughly $54 million in higher education spending and $1.4 billion in general‑fund capital cash (including $400 million in debt swap to new cash). Staff highlighted funding for deferred maintenance, a possible replacement state lab project, and planning or construction for several higher‑education projects.

- Commerce, economic development and disaster assistance: The introduced bill includes $1.4 million for the first Micron MEI payment (referencing HB 2358), $50 million for business‑ready sites managed by VEDP, and creation of a permanent disaster assistance fund capitalized with $25 million General Fund and approximately $102 million of remaining RGGI balances (total ~ $127 million), with budget language leaving eligibility parameters to be specified.

- Transportation items: Staff identified a $175 million appropriation for I‑81 (previously earmarked contingent on the FY 2024 surplus), a modification in WMATA operating support that shifts some second‑year support into year one (reducing net support by roughly $11.1 million based on updated projections), and a $1.1 million appropriation for a York River dredging project.

- Public safety and veterans: Notable proposals include increased support for school resource officers, funding for State Police pay step increases in year two, funds for veterans care center startup costs, and targeted corrections and DJJ operating adjustments.

Discussion points and staff clarifications

Staff emphasized that most new resources are one‑time and cautioned against using one‑time funds for ongoing operations. They noted revenues through November were running ahead of prior forecasts (up about 7.3% year to date versus FY 2024 through November) but said the economic outlook shows more growth in the first year than the second.

Committee member Doug Wilder asked about a stalled economic development project involving Blue Star Manufacturing and Wythe County. Staff said the county had already spent about $3.9 million on site upgrades at Progress Park under an incentive agreement and that the state is obligated to reimburse the county; the county may seek recovery from the company under contractual clawback provisions if the company does not proceed.

What this does not yet do

HB 1600 as presented is the governor’s introduced budget; staff presented spending proposals and language but did not record any final votes or enacted changes at the briefing. Appropriation and policy decisions require committee action and final passage by the General Assembly.

Next steps and timing

Staff noted a planned budget report‑out day on Sunday, Feb. 2 at 1 p.m. and additional subcommittee meetings in the week leading up to the report‑out. The presentations will continue with agency and secretarial area briefings and staff said members should be prepared for additional meetings to finalize budget actions.

Ending

The briefing covered agency‑by‑agency line items and language amendments across Health and Human Resources, K‑12, higher education, commerce, agriculture and natural resources, public safety, transportation, and capital projects. Staff repeatedly urged members to distinguish one‑time from ongoing resources when evaluating proposals during the session.