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The Virginia General Assembly’s fiscal committees presented their proposed amendments to the state budget Sunday, setting the stage for what could be a challenging negotiation process between the two chambers.

The two budget versions differ on a variety of spending priorities, most notably the expansion of Medicaid under the federal Affordable Care Act.

The chairs of both committees expressed concern that Virginia’s economy is not out of the woods just yet. Under revised fiscal forecasts, Secretary of Finance Ric Brown and Gov. Terry McAuliffe (D) last week recommended a $125 million spending reduction for the current fiscal year and $15 million for the next fiscal year.

Sen. Charles Colgan (D-Dist. 29) said the change could primarily be absorbed by the use of reserve funds, according to a published version of his remarks to the Senate Finance Committee.

“Nevertheless, a significant mid-session reforecast reminds us that our economy is not yet where we would like it to be,” Colgan said. As we heard in November, we are seeing job growth — just not in the high-paying jobs that we have seen over the years.”

The House Appropriations Committee did not include the Medicaid expansion or the associated federal funds while the Senate version would accept some of the federal dollars to support a new private insurance program for uninsured Virginians, referred to as Marketplace Virginia.

McAuliffe favored expanding the existing Medicaid program, something that many Republicans in the state legislature would not accept. Republicans have said that Medicaid needs to be reformed before it is expanded.

“If we are willing to dial down the rhetoric on this issue long enough to have an informed discussion and debate, I believe the numbers easily make the business case for providing health care coverage to some 250,000 uninsured Virginians,” said Sen. Walter Stosch (R-Dist. 12), co-chair of the Senate Finance Committee, according to his prepared remarks to the committee.

The Senate must come to a somewhat bipartisan agreement on the budget, as it is evenly split between both parties and Lt. Gov. Ralph Northam (D) cannot cast a tie-breaking vote on budget bills.

The House version of the budget instead provides increased funding for hospitals and free clinics.

“Adequate funding for our hospitals and nursing homes is not only important for the delivery of quality health care to the aging and disabled, but it also recognizes that our health care providers are major employers,” said Del. Chris Jones (R-Dist. 76), chairman of the House Appropriations Committee, according to the published version of his remarks to the committee.

Both budgets increase spending on K-12 and higher eductation, including partially restoring the “cost of competing” funding to supplement school employee salaries in Northern Virginia districts. This amendment amounts to about $1.8 million for Fairfax County.

There were some slight differences in where additional funds were targeted, reflecting the different policy priorities of the two chambers.

Both chambers also proposed increased compensation for state employees, although they took different approaches.

The House Appropriations budget holds funding for employee compensation in reserve until it is clear it won’t be needed to account for another downturn in the economy. Then, position classes with the highest turnover would be targeted with a 2 percent pay increase while other employees would receive a one-time bonus.

The Senate Finance Committee proposes giving state employees a 1 percent cost of living increase across the board, starting this December.

Mental health services received the same level of attention in the budget as they did in legislation, with both the House and Senate committees proposing additional funding, particularly for emergency services.

The amended budget bills were awaiting a vote in the full House of Delegates and Senate as of Tuesday evening. They have until Feb. 26 to act on the bills.