Legislative Newsletter No. 4 — February 13, 2004

2004 General Assembly Calendar

• February 17 — "Crossover" day—last day for house of origin to act on bills
  
• February 22 — House and Senate budgets released

Money Matters

The chairman of the House Appropriations Committee has outlined his committee's priorities in a floor speech to members. Del. Vince Callahan indicated that the House will replenish the "rainy day" fund, commit dollars to fund the governor's SOQ rebenchmarking proposal, invest more money in higher education and provide funding to meeting projected enrollment demands in the FAMIS program. He said the House will not fund program expansions or new initiatives, will level fund or freeze programs at the FY04 levels, and will not go along with the governor's proposal to transfer part of the insurance premium tax to transportation.

The House is expected to prepare its version of the budget relying only on projected revenue growth and not any tax policy changes, but will include certain user fees in the areas of health care and public safety. This will necessitate state spending reductions that will impact local governments. It has been announced that year-to-date state revenue collections (through the first seven months of the fiscal year) lag slightly behind the 6.7% projected revenue growth for FY04.

Early next week, the Senate Finance Committee is expected to frame the shape of the budget it will release in just over a week, as it plans to vote Tuesday on various revenue-generating measures that it has before it. The Senate is expected to endorse a package that enhances tax collections even more than proposed by Governor Mark Warner in December.

Chairman John Chichester outlined his plan this past Tuesday with the help of approximately a dozen speakers representing business, public and higher education and various citizens, who extolled the virtues of additional revenue for meeting high-priority needs. The House and Senate versions of the budget, which will differ greatly, will be released February 22.

Concerning local finance issues, the House Finance Committee has reported, for a second time, HB 412, the bill that calls for a referendum to increase the meals tax in cities and towns. The bill was defeated on the House floor, then reconsidered, amended on the floor, then sent back to committee. The Finance Committee reported the measure on Wednesday, but legislative staff now is interpreting the amendment to mean that a referendum must be held and approved in order to increase the rate of such tax above 11% (it earlier was thought the bill required a referendum for any increase).

On Thursday, Senate Finance defeated a pair of bills that would have restricted local revenue-raising abilities. SB 147, which would have capped real property taxes if a locality levies or increases taxes on cigarettes, admissions, meals or lodging, was defeated, while SB 140, which would have capped real estate assessments, was stricken by the patron.

Legislation

House and Senate committees have nearly completed work on their bills prior to Tuesday's crossover day, and there's been much debate on the House and Senate floors. In action from this past week:

SB 670, the bill that directs VDOT to construct a bypass around Charlottesville, notwithstanding objections from the metropolitan planning organization, was debated on the Senate floor this week. An attempt by Sen. Deeds to water down the bill with an amendment was narrowly defeated on Wednesday. On Friday, the bill was passed on a largely party-line vote, 23-15, and it now heads to the House Transportation Committee. Meanwhile, HB 1419 was engrossed on second reading on the House floor Friday. This is the lengthy bill authorizing creation of a Charlottesville/Albemarle transportation district, based on model language contained in Title 33.1 of the Code.

The House Finance Committee has approved HB 1174, which outlines the framework for the coming year's work by local government and industry representatives to change the way telecommunications are taxed. Also reported from the committee was HB 549, which would impose a $1 fee on every deed, with the revenue generated to be distributed to the Virginia Outdoors Foundation for the preservation of open space lands. HB 174, which would have provided additional recordation tax funds for purchase of development rights programs, was carried over for the year. Still in the Finance Committee is HB 461, a BPOL bill which would institute a rollback of the rates by a nickel in each category and cap future revenues at the FY2004 level (with a calculated annual growth factor), and a pair of bills, HB 293 and HB 295, that address tax assessment and business license tax appeals and compromises.

The Nature Conservancy's bill to authorize establishment of a Rivanna River Basin Commission, SB 267, was reported from Senate Rules Friday morning. The bill was amended to include as part of the Commission, only the four localities (Albemarle, Charlottesville, Fluvanna and Greene) where more than half of their land area is included in the Rivanna watershed.

The Senate Finance Committee has reported a measure, SB 284, to alter current Line of Duty Act provisions. Currently the Act provides benefits, paid for by the state, to public safety employees, or their survivors, who are disabled or who die in the line of duty. Volunteer fire and rescue squad members are eligible for benefits if the locality recognizes the squad as essential to public safety. The measure retroactively extends eligibility for health insurance benefits under the act to employees (or survivors) who became eligible on or after April 7, 1972. The bill puts benefits administration under VRS and establishes a fund to pay for the benefits, requiring political subdivisions with eligible employees to now pay a contribution rate of .31 percent of payroll to the fund. The state would have to contribute to the fund as well.

SB 58, concerning non-conforming billboards, as it leaves the Senate has been watered down considerably from its original version, primarily with the addition of an amendment that allows the use of pre-existing valuation methods, rather than dictating use of replacement value. However, it is anticipated there will be attempts to remove that amendment on the House side.

HB 1350 and SB 365 are environmental permit fees bills that authorize DEQ to adopt a schedule of annual fees to support Virginia's waste and water permit programs. The increased fees would generate approximately $6 million annually to meet the costs of the state's water and waste permit programs. Included are provisions that provide for a $1,000 annual landfill fee plus an additional amount based on 9 cents/ton. In addition to the annual fee schedules, the legislation requires DEQ to evaluate the efficiency of its waste and water permit programs. The legislation also requires pro-rata reductions in annual fees for water permits based upon availability of general funds. They are being considered on their respective floors.

Other Bills of Interest:

HB 693 and SB 365 are the bills that correspond to the budget provision creating a natural and historic resources fund, to be funded with a $10 recordation fee. The money would be allocated to the Water Quality Improvement Fund and to the Virginia Land Conservation Fund. The bills are in their respective money committees.

HB 1177, the stormwater management bill, has been approved by the House. Several amendments likely are to be offered in the Senate by DCR.

HB 1462 that called for a $5/ton solid waste fee and HB 1418 that added a water fee on properties over $60,000 in value, both were carried over for the year. Look for the House Agriculture Committee to do a study on natural resources funding issues during the offseason.

HJR 227 proposes a study of the system of cash proffers. It is in House Rules and is likely to be rolled into HJR 170, which continues the Commission on Growth and Economic Development.