Legislative Newsletter No. 9 — April 3, 2004

Some Activity In The State Budget Impasse

At the conclusion Friday of 80 days of legislative business, including 17 in a special session called by the governor, the General Assembly remained at odds over the breadth and scope of a state spending plan for the next two fiscal years. However, there were media reports late week that some moderate members of the House of Delegates would be willing to consider and possibly approve a half cent increase in the state sales tax in order to generate additional revenues for core services. House Speaker William Howell challenged those members to bring a proposal forward and move it to a vote, so it is possible that such a measure could be introduced and considered in the House next week. One of the House budget negotiators, Delegate Phil Hamilton, also is said to be preparing a package that would combine a local option sales tax increase, the repeal of some sales tax exemptions and increases in various user fees and surcharges.

Earlier this past week, the House Appropriations Committee proposed a $13 billion general fund spending plan for the next fiscal year that likely will be debated on the House floor on Tuesday evening. House leaders said the measure was "a sincere effort on the part of the House to provide assurance to our local governments and state agencies that government will not shut down." During the past two weeks, legislators have heard loudly from local governments and education groups that the state's failure to enact a budget was creating many difficulties for the local budgeting process. The measure provides the same amount of funding for public education as had been proposed by the governor in December, but level funds many other programs at FY04 levels. There would be no new budget language to offer direction to state agencies or program. Also it appears that HB 599 funding would remain frozen at the FY03 level, while ABC and wine tax distributions would be frozen at the FY04 level. Jail per diems would be at the level in the introduced budget, which carries forward the reductions from the FY03-04 budget. There also would be no salary increases for public employees. This proposal was denounced by both the governor and Senate leaders, who said it took away all the urgency to get the job done and did nothing to achieve greater fairness in the tax code.

The Senate met briefly Friday, but took no action. It has scheduled another session for Monday. Recall that the Senate previously had 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.