Pandemic expenses drive budget increase amendments

Coronavirus-related spending prompted much of the proposed amendments to the Virginia 2020-22 biennial budget, which reflects an increase over the 2020 Acts of Assembly, Special Session 1 HB 5005 for both 2021 and 2022. The amendments were introduced as HB 1800 and SB 1100. The adjustments result in an approximate increase of $1.3 billion in base forecast increases and $43 million in spending reductions.

The proposed budget includes $177.1 million general funds discretionary spending in Health and Human Resources. Of that total, 67 percent is related to the coronavirus pandemic. There is $89.3 million earmarked for a mass vaccination effort and $19.6 million for communication with the public regarding the pandemic.


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The proposed budget amendments also include:

  • $17.9 million for Medicaid utilization and inflation
  • $14.3 for inmate medical care
  • $10.2 for the Department of Health’s Cooperative Health Budget Formula Update
  • $10 million to restore Virginia Commonwealth University’s Massey Center Cancer Center cuts
  • $6.4 million for state psychiatric hospitals COVID-19 surveillance program
  • $5.3 million for pharmacy costs at state psychiatric hospitals
  • $1.2 million for adding doula services to Medicaid

The commonwealth will incur a major savings, in part due to less money used for the Department of Medical Services (DMAS). The Medicaid forecast is $245.3 million less than anticipated thanks to enhanced federal matching savings during the state of emergency, as well as another $59.1 million from the Department of Medical Assistance Service’s health care fund revenue and cash balance. The DMAS’ Children’s Health Insurance Programs and Medicare Premium Savings will save the commonwealth $14.6 million and $7.4 million, respectively.

Overall, the introduced budget proposes a health care-cost net decrease of $373.5 million in the general funds and an increase of $1 billion for the nongeneral funds. Proposed spending of $208.1 million in the general fund is offset by $581.6 million of proposed reductions. The largest savings is a technical one that reflects the $233.8 million in general fund reductions that were adopted in HB 5005, due to revenue as a result of the coronavirus pandemic. The other savings of $208.9 million in the general fund in HHR is a result of an increased federal match rate for Medicaid of 6.2 percentage points from the Families First Coronavirus Response Act. The act provides enhanced federal Medicaid funds for each quarter of the declared federal health emergency.

The mandatory general fund spending of $26.5 million is related to the second year cost of the Medicaid forecast, an increased caseload of Temporary Assistance to Needy Families Unemployed Parent program and funding related to addressing the error rate for the Supplemental Nutrition Assistance Program.