RICHMOND — Gov. Ralph Northam painted a sunny picture of state finances to legislative committees Tuesday, but he warned of a coming economic slowdown because of the trade war with China and other uncertainties in Washington.
The financial speech is an annual affair that lets the governor set the stage for the budget he’ll propose in the fall. This year it carries extra political weight because all 140 seats in the legislature are on the ballot Nov. 5, and Democrats are hoping to take control of both chambers.
Northam said state finances are “in a good place.” Virginia ended its last fiscal year with a surplus of $797 million, he said, and put $344.4 million into reserve funds that shore up the state’s coveted AAA bond rating. Unemployment has held steady at 2.9 percent, and Northam took credit for landing more than $20 billion in business investment.
“This is a record,” he said, adding that the investment — which includes Amazon’s decision to build a second headquarters in Arlington — “is more than any previous administration has announced in a full four-year term, and we have achieved this significant milestone in less than half that time.” (Amazon founder and chief executive Jeff Bezos owns The Washington Post.)
His remarks to a joint meeting of the House Appropriations and Senate Finance committees marked his first appearance before a legislative body since the blackface scandal that emerged in February, involving a racist photo from his 1984 medical school yearbook page. Gone was the humbled contrition that followed the scandal, when most of his fellow Democrats called on him to resign.
But Northam’s language reflected the pledge he has made to devote his remaining time in office to fighting racial inequity. He said his priority “is making sure that every Virginian — no matter who you are or where you live — is able to fully participate in our economic growth.”
In preparing his budget, Northam said he would “prioritize initiatives that level the playing field for small, women- and minority-owned businesses, reduce the unacceptable racial disparity in Virginia’s maternal mortality rate, and ensure equal access to a world-class education.”
Speaking to reporters after the speech, Northam said he wants increased spending on early-childhood education and workforce development and training.
He cautioned lawmakers that while the state’s economy is in its 12th year of expansion, there are signs of a slowdown. “Federal policies continue to affect us,” he said. Tariffs on agricultural products sold to China — brought about by the Trump administration’s trade war — have “hurt our farmers in Virginia,” Northam said.
The state’s agricultural exports to China have lost two-thirds of their value, he said. Northam added that his own family farms land on the Eastern Shore and might have to leave its soybeans in the field for lack of a market.
Northam said the growing federal debt also will be a drag on consumers and the state’s economy. And he noted that the cost of Medicaid — which Virginia expanded last year, enrolling more than 306,000 additional recipients — will continue to grow because of rising health-care costs.
Although Northam praised lawmakers for bipartisan cooperation in reaching agreements on this year’s budget, he said Virginians are looking for similar action on gun control.
Northam called a special session of the legislature last month to take up firearms issues after a May 31 mass shooting in Virginia Beach in which 13 people died, including the gunman.
The state Crime Commission, which is bipartisan but run by Republicans, heard expert testimony Monday and listened on Tuesday to activists, interest groups and lawmakers. GOP leaders have said they will reconvene the legislature Nov. 18 — after the fall elections.
Northam told lawmakers in his speech that the issue is an “opportunity to come together to save lives.”
But speaking with reporters afterward, Northam took a harsher tone.
“We’ve had opportunity after opportunity to come to Richmond and . . . have dialogue and pass common-sense gun legislation, and every time there’s been some excuse,” he said. “They’re not going to act on [anything] until after the election.”
The second day of the commission meeting concluded without a vote after five hours of mostly sedate testimony. The commission’s staff will begin studying the proposals, and the executive committee plans to meet via conference call next week.
Tuesday’s hearing produced a few indications of minds meeting.
Amy Swearer, a senior legal policy analyst at the Heritage Foundation’s Meese Center for Legal and Judicial Studies, rankled a few gun-control advocates by declaring, “We do not find that we are in the midst of a gun violence crisis necessitating sweeping changes.”
Yet after arguing against bans on high-capacity magazines and military-style weapons, she endorsed “red-flag laws” that allow authorities to temporarily take away weapons from someone deemed a risk to himself or others.
“It appears there’s bipartisan support at some level and some advocates for these red-flag laws,” said Marjorie Signer, legislative vice president for the Virginia chapter of the National Organization for Women. “This is extremely heartening.”
Republicans are defending razor-thin majorities in both chambers of the legislature: 20 to 19 in the Senate and 51 to 48 in the House, with a vacancy in each chamber.
GOP leaders accused Northam of playing politics with guns and with much of his financial presentation.
“I think we all need to appreciate that the issue of guns is being driven as a partisan wedge issue . . . and the governor has bought into some of the hysteria,” state Senate Majority Leader Thomas K. Norment Jr. (R-James City) said to reporters.
The Crime Commission process is “very deliberative,” he said, and trying to move any faster “is irresponsible on the administration’s part.”
On the state’s economy, Republican leaders said Northam was trying to hog the credit.
“The Republican leadership this session was responsible for most of what happened,” House Speaker Kirk Cox (R-Colonial Heights) said. Boosting the state’s cash reserves has been a longtime GOP priority, he said, along with action this year to refund excess revenue to taxpayers. “I felt the governor took right much credit for some things that were really key legislative initiatives,” he said.
Northam also overstated the risk of recession, Norment said, noting that U.S. defense spending remains high and is a major driver of Virginia’s economy.
And if there is a downturn, those cash reserves will be a key safety net, said Del. Chris Jones (R-Suffolk), chairman of the Appropriations Committee.
“We feel comfortable we’re in . . . the best spot we’ve been in to deal with a recession,” Jones said.
