Senate Republicans on Thursday night used their new majority to pass a two-year budget that eliminates any opportunity for Gov. Terry McAuliffe or a year-old legislative commission to expand Medicaid or a private insurance alternative.
They were backed by House Republicans who said they would not approve the budget -- even though Senate Democrats and moderate Republicans had removed an insurance marketplace -- unless it included language to prevent any expansion without the approval of the full General Assembly.
The Senate passed the budget on a 21-18 vote. Sen. Lynwood W. Lewis Jr. of Accomack County was the only Democrat who backed the spending plan.
Just before midnight the House of Delegates voted 69-31 to adopt the budget, as lawmakers sought to end a three-month stalemate and address a $1.55 billion revenue shortfall.
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Gov. Terry McAuliffe issued a defiant statement that ripped the legislature's Republicans and he said he is considering his options on the budget.
“This evening’s actions demonstrated how deeply committed Republicans in the General Assembly are to denying 400,000 Virginians access to life saving health care," he said.
"Instead of moving forward on a plan to close the coverage gap, the Senate of Virginia moved our commonwealth backward by violating the terms of the bipartisan agreement they reached in last year’s budget.
“Virginians deserve better than representatives who put narrow ideology ahead of what is best for our families, economy and budget."
McAuliffe said that when the budget reaches his desk he will "take the actions that I deem necessary, but this fight is far from over. "
As for Medicaid expansion, McAuliffe said: "This is the right thing to do for Virginia, and I will not rest until we get it done.”
The Senate vote on the budget came after it voted 21-19 along party lines to approve a floor amendment that blocked funding of health care expansion without legislative approval.
Senate Democrats reacted to the decision as a betrayal, by Republicans opposed to expansion and by three moderate Republicans who had led the effort to establish a private insurance marketplace that would use federal funds to extend health coverage to up to 400,000 uninsured Virginians.
“This is immoral,” said Sen. A. Donald McEachin, D-Henrico. “We can afford to do this. We have the ability to do this. We have the moral obligation to do this.”
During a passionate debate on the amendment, McEachin told the story of his diagnosis of rectal cancer last fall and his return to health thanks to the coverage he received through his part-time status as a state lawmaker.
“Oh it's fine for us,” McEachin said of the health care coverage. “But we would deny that to people who work every day... How dare we?”
McEachin and others said the amendments “kill Medicaid expansion” for the next two years at least. He called the action “immoral.”
Sen. John Watkins, R-Powhatan, one of the three Republicans who supported expansion through the Marketplace Virginia private option, said he was not happy or proud of his decision to support the floor amendment on health coverage.
He said he agreed in order to adopt a budget in the face of a $1.55 billion revenue shortfall. “We will find ourselves in a much more critical situation if we don't have a budget,” Watkins said.
In approving the floor amendment on a party-line vote, the Republican majority took advantage of Monday’s surprise resignation of Sen. Phillip P. Puckett, D-Russell, which cleared the way for his daughter to receive a judgeship through the approval of Republicans who now control the chamber.
On Thursday, House Minority Leader David J. Toscano, D-Charlottesville, called on the state Inspector General’s office to investigate the circumstances surrounding Puckett’s resignation following reports that Puckett had discussed taking a high-level job on the staff of the state Tobacco Commission.
Senate Republican Leader Thomas W. Norment Jr., R-James City County, defended the amendment and accused Democrats of budget brinksmanship by refusing to act on the House budget without expanded insurance coverage in it.
Norment said the Assembly still has the ability to allow expansion of insurance coverage through legislation introduced Thursday night by Sen. Emmett W. Hanger Jr., R-Augusta. It would allow expansion to proceed with additional reforms under the review of the Medicaid Innovation and Reform Commission that the legislature created last year in a last-minute compromise.
But Sen. John Edwards, D-Roanoke, said the budget amendment “completely undoes the compromise we all agreed upon last year.”
The decision by Republican backers of health care expansion to sign the budget amendment angered Senate Democrats.
“Our choice is to figure out something like this or not pass the budget,” Sen. Walter A. Stosch, R-Henrico, told angry Senate Democrats in an informal meeting outside the Senate chamber that also included administration officials. “It’s a stark choice.”
Senate Democratic Leader Richard L. Saslaw of Fairfax County accused Stosch and two other Republican allies of caving into pressure generated by tea party activists emboldened by the primary defeat of House Majority Leader Eric Cantor on Tuesday night.
“If the three of you do this everything that’s been done up to now will be lost,” Saslaw said of Stosch, Watkins, R-Powhatan, and Sen. Emmett W. Hanger Jr., R-Augusta, the authors of the Marketplace Virginia plan that the Senate had included in its budget until Thursday.
A majority of 22 senators support the plan, but the Senate Finance Committee agreed to leave out the plan and pursue expanded health coverage through separate legislation in order to adopt a budget before the end of this month in the face of a deep revenue shortfall. House Republicans had demanded a “clean budget” without health insurance expansion.
“I thought we had a deal,” Saslaw said. “Apparently, we don’t.”
The Senate floor amendment also divided the House, which approved the budget after a sometimes bitter debate.
Toscano said he was prepared to vote for the budget until Senate Republicans adopted the floor amendment. He accused Republicans in both chambers of reneging on their word in calling for a clean budget that did not include Medicaid expansion or a private option.
"Every step along the way in this session, you all have moved the goal posts," he told House Republicans.
Toscano said the majority party had "ripped the goal posts out of the ground" after the defeat of Cantor. "The tea party has taken over," he said. "There's going to be a lot of pain and suffering before you take it back."
Del. Joseph Morrissey, D-Henrico, urged McAuliffe to veto the budget bill because of the amendment.
House Republicans blamed Senate Democrats for putting the assembly in the position of acting on the budget the final weeks of the fiscal year.
"This budget has been long in coming because it has been held hostage," said Del. Benjamin L. Cline, R-Rockbridge, chairman of the House Conservative Caucus.
Del. David B. Albo, R-Fairfax, suggested that Democrats were overreacting to the Senate amendment, which he said only made clear what already is the law.
"I don't think the amendment really does anything," Albo said. "It says the governor can't use the money in this bill to expand Medicaid under the Patient Protection and Affordable Care Act."
The adopted budget includes $842.5 million in spending cuts that, combined with $707.5 million from the Revenue Stabilization or Rainy Day Fund, would fill the projected $1.55 billion revenue shortfall through the biennium.
Most of the problem occurs in the fiscal year that begins July 1, with a shortfall of about $950 million that has to be closed with cuts and money from the Rainy Day Fund.
“Nobody will be losing money,” said Betsey Daley, staff director of Senate Finance. “They’re just not getting additional funding.”
But that’s not to say there aren’t winners and losers.
State employees, teachers, higher education employees and other state-supported workers won’t get the pay raises that had been included in the proposed Senate and House budgets if revenue was sufficient to support them.
The budget eliminates $3.1 million to increase the number of sheriff’s deputies. John Jones, executive director of the Virginia Sheriffs Association, took the cuts in stride and praised the legislature for making the decisions now instead of waiting for official new revenue estimates in mid-August.
The deal protects about $50 million in additional funding for mental health services, including 24 new secure drop-off centers for emergency psychiatric evaluations, additional teams for assertive community treatment, and creation of a Web-based psychiatric bed registry.
The budget also protects additional funding for foster care children after they turn 18 and expanded mental health services for children and adolescents.
The budget eliminates all funding for the embattled Opportunity Educational Institution — about $600,000 a year for the fledgling effort by the state to take over low-performing public schools. But it includes $600,000 for a proposed cooperative agreement between Petersburg and Chesterfield County to allow the county school system to help the city’s low-performing schools.
Overall, the budget cuts new spending for public education by $166.6 million, but it still increases direct aid for K-12 by $404.2 million by updating the aid formula.
Hospitals and nursing homes were hit with cuts to reimbursement rates that were supposed to increase for inflation, and the state cut $15 million for indigent care at Virginia Commonwealth University and University of Virginia medical centers, which bear the biggest burden of serving uninsured people and Medicaid recipients.
