The General Assembly will be considering the Governor’s proposed amendments to the 2022-2024 budget during the 2023 Session.  Virginia’s state budget has a direct impact on the residential land development and construction industry – it sets funding and staffing levels for critical state agencies, like the Department of Environmental Quality, and often establishes new programs and policy priorities for the agencies.

Virginia operates under a two-year (biennial) budget cycle. Each year the Governor prepares the proposed budget bill for introduction by the General Assembly. In odd-numbered years, the Governor and legislature focus on the second half of the two-year budget.

Governor Younkin released his proposed budget amendments in December – and the General Assembly had until last Friday to submit their budget amendments (which will be publicly available this weekend). The HBA of Virginia has also worked with legislators to submit several budget amendments.

Last week, the House Appropriations Committee received a presentation on the economic conditions and revenue forecasts which guided this Administration’s budget. Over the next several weeks, House and Senate “Money Committee” members will debate these proposals and work towards a final budget.

Summary of HBA of Virginia Budget Amendments:

• In-Lieu Fee Fund: Additional $450,000 to the Department of Environmental Quality to assist in obtaining approval from the U.S. Army Corps of Engineers to operate the Fund and one FTE to manage day-to-day operations of the Fund.
• Residential Sites and Structures Locator: Additional $350,000 to the Department of Housing and Community Development to assist in the development and operation of the Residential Sites and Structures Locator
• Land-Use and Housing Policy Clearinghouse: Additional $300,000 to the Department of Housing and Community Development to collect annual reports from localities and create clearinghouse.

Highlights of the Governor’s Proposed Budget

Funding for Local Building Departments to Expedite Permitting: Identifying ways to increase efficiency and address staffing shortages at local building departments has been a top priority for the HBA of Virginia this year. The Governor’s proposed budget included $10M to provide financial assistance to localities to increase capacity for and accelerate the review and issuance of building permits by local building departments. The department shall develop appropriate criteria and guidelines for the deployment and use of the funding for this pilot program.

DEQ Permit Efficiency and Accountability: DEQ Director Mike Rolband has worked over the last year to streamline the Department’s permit review process, creating transparency and accountability for permit review timelines. The Governor’s proposed budget includes $3.5M to continue expansion of that platform, known as Permit Evaluation and Enhancement Program (PEEP)

Economic Development: The Governor’s budget proposes significant investments for site development on top of historic funding levels provided by the General Assembly last year for the Virginia Business Ready Sites Program (VBRSP). Proposed actions include:

• Appropriating $50.0 million GF in FY 2023 for the VBRSP provided contingently last year
• Providing $200.0 million GF in FY 2023 for VBRSP or a new Site Acquisition Pilot program
• Authorizing $250.0 million GF in FY 2024 for either program based on meeting or exceeding FY 2023 revenue estimates

Workforce Development:

• Provides $24.5 million GF in FY 2024 to launch a new GO Virginia talent pathways program to address workforce issues for specific industries through public private partnerships
• Directs $4.5 million to GO Virginia regional councils for program administration
• Stipulates $20.0 million for the GO Virginia Board to invest in the development of up to 3 industry specific talent pathways per GO Virginia region
• Last year, the General Assembly provided $2.5 million for GO Virginia to provide talent pathways planning grants to regional councils