Virginia Gov. Terry McAuliffe is asking lawmakers to increase funding for business incentives and sell off $250 million in unclaimed property to help balance the state’s budget.
When the Democrat delivered the second budget address of his term on Wednesday, he outlined a series of proposals that he claims would eliminate a projected revenue shortfall, despite adding over $175 million in new spending.
“Last fiscal year,” McAuliffe said, “Virginia suffered an unanticipated and significant general fund revenue shortfall totaling $438 million,” on top of a projected $2 billion deficit for FY 2015 and 2016. (RELATED: Virginia Medicaid Expansion Back on the Table; McAuliffe Rejects Ban with Questionable Veto)
McAuliffe blamed the shortfalls on an unexpectedly sluggish economic recovery, coupled with reductions in federal spending. He claimed that Sequestration cuts, for instance, “reduced military contracts in Virginia by $9.8 billion between 2011 and 2013, and threaten to eliminate 154,000 jobs in the commonwealth.”
The General Assembly took action to balance the budget in a special session earlier this year, eliminating most of the shortfall through spending cuts and transfers from a revenue stabilization (a.k.a. “rainy day”) fund, but McAuliffe insisted that additional spending would be necessary “to diversify our economy and reduce our reliance on federal spending.” (RELATED: Virginia House Speaker Gets Primary Challenger over Tax Hikes and Corporate Welfare)
To that end, he requested an increase of $20.7 million over two years for the Governor’s Opportunity Fund, which he called “a critical economic development tool to enable the Commonwealth to compete for major new investments and jobs.” According to the Washington Times, “the governor [currently] has about $7.5 million a year available to spend” on business incentives, meaning his proposed increase would more than double the size of the fund.
McAuliffe pointed out that, “Much of the current fund is already obligated for future projects,” but neglected to mention that this was because he has signed more incentive deals in his first 10 months than has any previous governor. (RELATED: McAuliffe Sets Record for Business Incentive Deals)
To offset the increased incentive spending, McAuliffe also proposed reducing tax preferences for the coal industry, which a state commission recently determined “may not be effectively promoting coal production and employment in Virginia, despite the significant dollars involved.”
McAuliffe’s largest request by far, though, involves “the sale of unclaimed stocks and bonds turned over to the state,” which he said would generate $225 million.
From those proceeds, he wants to commit $150 million toward reducing unfunded liabilities in the state’s teacher retirement fund, as well as another $75 million for school construction.
According to the state’s VA Money Search website, “property becomes unclaimed when the holder has not had contact with the owner of the property for a specified period of time,” which in most cases is five years.
Unclaimed property “includes, but is not limited to, savings and checking accounts, wages or commissions, underlying shares, dividends, customer deposits, refund checks, insurance proceeds, safety deposit boxes, etc.”
Normally, the state holds all monetary property in perpetuity and auctions off other property, holding the proceeds for the property’s owner indefinitely, so the sell-off envisioned by McAuliffe would be highly unusual, and could potentially anger absentee property owners.
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