Va. expecting budget surplus after bracing for big losses; Tourism groups asking for direct aid

Virginia News

RICHMOND, Va. (WRIC)- After initially bracing for major losses during the pandemic, Virginia is now expecting a budget surplus and unprecedented federal relief. 

As state lawmakers decide what to do with a new pot of funds from the American Rescue Plan, Virginia’s hard-hit tourism industry is pushing for a big slice of the pie.

Gov. Ralph Northam announced on Wednesday that the General Assembly will be back in Richmond for an in-person special session starting Aug. 2. On the agenda is figuring out how to distribute more than $4.3 billion in congressional aid. 

“Thanks to the American Rescue Plan, we have a unique opportunity to fund public schools, support small businesses, achieve universal broadband access, and make generational investments in our shared future. I look forward to working with legislators to get it done,” Northam said in a statement. 

Meanwhile, Virginia’s Secretary of Finance Aubrey Layne is expecting a budget surplus of up to $2 billion at the end of the fiscal year, a figure that’s surpassing even his own expectations.

“I don’t think anyone would’ve thought I was a sane person if I would’ve stood up 14 months ago and said ‘don’t worry about the pandemic impacts we are going to be up substantially over the prior year,’” Layne said in an interview on Wednesday. “‘With vaccination rates going up, the economy is reopening quicker than we originally thought.” 

Layne attributes the success to the state’s cautious financial approach. Plus, he said the economy has been buoyed by federal relief.

During a House Appropriations Committee meeting on Wednesday, state budget staff said the cumulative $5.2 trillion awarded to Virginia during the pandemic dwarfs the $830 billion that came to the state in 2009 in response to the Great Recession.   

Despite the state’s good financial standing, some industries are still reeling from prolonged business restrictions–a clear sign that the economic recovery has been uneven, according to Layne.

Virginia Tourism Corporation President Rita D. McClenny told the committee on Wednesday that leisure and hospitality industries account for 45 percent of the state’s pandemic job losses.

“We have a once in a lifetime legacy investment opportunity to assist these devastated tourism, travel and hospitality industry members,” said McClenny.  “We currently find ourselves in competition and at a disadvantage compared to other states.” 

McClenny is asking the General Assembly for $50 million to bolster statewide and local tourism marketing campaigns. She said the funding will also make up for resources slashed during the pandemic.

McCelenny said this will help the state dig out of a $10 billion decline in visitor spending, a 37 percent reduction in expenditures compared to 2019. 

In addition, the Virginia Restaurant, Lodging and Travel Association is requesting $275 million to help various tourism-related sectors rebound, according to spokesperson Robert Melvin.

Layne said the requests are reasonable but the General Assembly will have to make sure the assistance doesn’t unnecessarily overlap with other federal funding avenues. 

“That doesn’t mean they shouldn’t get more money from the state. It just means we need to be good stewards,” Layne said.” I don’t have a specific number in mind but I know it’s probably a large number.”

Thomas Penny is the president of Donohoe Hospitality, which runs six hotels across the state. He said, to date, two rounds of the Paycheck Protection Program have not been enough to make up for revenue shortfalls driven largely by a lack of business travel. 

“Right now we are relying on leisure and that’s still at a fraction of pre-pandemic levels,” Penny said. 

Penny said direct aid will give them the money they need to bring back employees that were previously laid off. 

“The past 15 months have been the most challenging time in my almost 30 years of being in the hotel business,” Penny said.  “Never have we experienced sustained 70-80 percent reductions in revenue. In order to bring our people back, we need help.”

In a recent joint statement, Governor Northam and legislative leaders identified tourism as one of several shared spending priorities: 

  • Public health. Upgrade long-underfunded state and local public health services, boost affordable housing, and help Virginians with the cost of utilities.
  • Small businesses. Fully fund the Rebuild Virginia economic recovery program, invest in Virginia Tourism’s work to recruit visitors back to the Commonwealth, and help the Department Housing and Community Development support Virginia’s main streets, small towns, and industrial revitalization. 
  • Workers. Fund the Unemployment Trust Fund to support workers who lose their jobs and avoid increased costs on Virginia businesses, increase support for the Virginia Employment Commission—historically one of the lowest-funded unemployment systems in the country—to continue upgrading its computer systems and hire necessary staff.
  • Public schools. Modernize public school buildings across Virginia by rehabilitating and upgrading existing facilities, improving air quality and HVAC systems, and improving safety.
  • Broadband. Accelerate a 10-year plan to ensure universal broadband access within the next 18 months.

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