Legislative Newsletter No. 8 — March 25, 2004

State Budget Impasse Continues

Ten days after the scheduled end of the 2004 General Assembly, the legislature still has not produced a state spending plan for the next two fiscal years. After convening in a special session a week ago, the House and Senate again have produced vastly differing budget plans and charged their budget negotiators (the same ones previously appointed) with attempting to reach a compromise.

The Senate has reduced its spending plan by $1.6 billion by removing a gasoline tax increase that that would have pumped additional revenue into the state's transportation program, while the House continues to emphasize repealing sales tax exemptions for certain businesses and corporations to generate additional revenue. On Wednesday, the Senate adopted its own version of the House's sales tax exemption bill. This version removes sales tax exemptions for public service corporations and telecommunications and telephone companies, while further reducing the sales tax on food. Part of the net revenue gain from this plan would be put toward various public safety items, including an increase in compensation for sheriffs, restoring funding for jail per diem payments and funding for localities with police departments. This bill is similar to the plan approved by the Senate this past weekend, but then ruled not germane in the House.

Meanwhile, the Senate soon could be entertaining another measure that would simply provide funding levels in the current state budget for FY05, with no recognition of required cost increases. This new measure calls for a continuing appropriation provision (similar to the federal government's "continuing resolution") to take effect if there is no new budget by July 1, thereby allowing state government to continue collecting revenue as it does now and appropriating it at the state level, averting a possible government shutdown.

State Budget Forum Draws 100 Speakers

On Wednesday night at the Albemarle County Office Building, Senator Creigh Deeds hosted a forum on the state budget situation. Delegate Mitch Van Yahres also attended the event, where nearly 100 people from throughout the region signed up to speak. Several other legislators from the area were invited, but unable to attend.

Speakers included representatives of local governments, public schools, law enforcement, higher education and community agencies. One by one, they urged the lawmakers to do their job and produce a state budget that provides increased funding for localities, the services they provide in partnership with the state and for various other programs. Many endorsed the Senate budget, which enriches public education with an additional $1.7 billion over the two-year period. Others chided legislators for their failure to enact a budget on time. Only a few speakers urged the legislators to stick with the House budget. This forum was just one of at least a dozen being held in different parts of the state this week by legislators who are back and forth to Richmond during the special session called by the governor to address the state budget. Other forums held thus far also have seen a majority of those in attendance supporting the Senate's budget package.

Finally, next Wednesday, Governor Warner will be in Charlottesville to meet with local officials dealing with budget challenges in the face of inaction by the state. This "coffee shop" style meeting is slated for 10 a.m. at the Nook Restaurant on the Downtown Mall.