Legislative Newsletter No. 14 — July 23, 2004

State Ends Fiscal Year with Revenue Surplus

Preliminary estimates indicate the state ended the just-completed fiscal year with a healthy revenue surplus of nearly $324 million, the largest dollar surplus in Virginia history according to state finance officials. All but $13 million is earmarked for existing, high priority commitments. Much of the surplus ($147.5 million) will be deposited into the revenue stabilization fund, as required by law, and Governor Warner is targeting another $30 million to this so-called "rainy day" account. State law requires 10% of the revenue surplus ($32.4 million) to be deposited into the Water Quality Improvement Fund. Over $50 million is needed to compensate for a delay (from August 1 to September 1) in the effective date of tax increases approved by the legislature in early May (this also will free up additional funds for state building maintenance). Another $26 million will pay for costs associated with cleanup from Hurricane Isabel last September, and nearly $24 million is targeted for the Transportation Trust Fund.

Governor Warner attributed the big surplus to a rebounding economy and continued strength in the housing market. Revenue from the state sales and individual and corporate income taxes all exceeded projections by tens of millions of dollars. The governor will brief the General Assembly's money committees on the state's financial picture at a late August meeting.

VRS Study Underway

The joint subcommittee established this past session through HJR 34 to study the Virginia Retirement System (VRS) held its initial meeting this week. The subcommittee is charged with examining, among other things, the current VRS benefit structure, the blending of contribution rates between and among retirement systems, and existing benefits to public safety officers injured in the line of duty. At this first meeting, Delegate Lacey Putney was elected chairman and Senator Walter Stosch was chosen vice-chairman, and informational presentations were made on the funding and benefits of VRS programs. The market value of VRS assets through the first quarter of 2004 stood at around $40 billion, with return on investments running about 17% this year. The fund continues to have expenses that exceed contributions, and in recent years, has relied on investment returns to make up the difference. The HJR 34 panel plans to hold at least three additional meetings prior to the 2005 General Assembly session. Delegates Steve Landes and Watkins Abbitt serve as members of this joint subcommittee.

Housing Study Commission to Tackle Housing Policy

The work to establish a statewide housing policy is being undertaken this summer by several workgroups of the Virginia Housing Commission, which met in early July to receive a synopsis of past housing policy documents and to set its workplan for the year. Essentially, the workgroups will be looking at current housing stock and regulatory and state law changes that can make housing more affordable. Specifically, one workgroup will examine various financial and regulatory issues, with an eye toward lessening obstacles to establishing and maintaining affordable housing. This group will tackle topics of interest to local governments such as comprehensive plans, zoning and incentives. A second group will study issues related to local revitalization and blight removal. A third group will be examining eminent domain issues and this also will affect development of a housing policy.

Public Hearing Scheduled for Roadside Management Regulations

VDOT is asking for public comment on new standards that would guide localities to improve the appearance of roadsides in their communities. Regulations have been drafted for the roadside maintenance program stipulated in SB 260 that was approved by the 2004 General Assembly. The regulations will allow local governments and private entities to beautify sections of state right-of-way that complement existing and future road systems, traffic patterns and land use, and to support community pride, economic development and tourism. The state is encouraging localities to participate in time for the Jamestown 2007 celebration. The public hearing on the draft regulations will be held July 26 from 1 to 4 p.m. in the VDOT Auditorium on Broad Street in Richmond.