Legislative Newsletter No. 16— October 29, 2004

State Budget Issues

First quarter (July-September) figures released the middle of the month show state revenue collections are running about 10 ½ percent above last year's pace and more than double the forecasted 4.5% growth for the fiscal year. September's collections alone grew 12%. Last month's figures reflect the increase in cigarette taxes (to 20 cents/pack) and a hike in the recordation tax, both of which took effect September 1. They do not reflect a one-half cent state sales tax increase that also took effect last month, because merchants don't remit their collections until after the close of each month. Still, September sales tax collections grew seven percent.
State officials say the recordation tax increase, higher estate tax collections and an additional withholding day drove the especially-strong revenue growth in September.
The Governor's Advisory Board of Economists began meeting this month to assess the outlook for the state's economy over the coming months. Governor Warner will release a revised revenue forecast when he submits his proposed two-year budget to the legislature December 17. If current trends continue, that proposal could include hundreds of millions in additional revenue.

Money Committees Balking at Car Tax "Glitch"

The General Assembly money committees are attempting to defuse local government calls for more than a quarter billion dollars in state reimbursement to localities for the car tax program. Both have released memos suggesting that problems resulting in early 2006 are cash management, rather than budget or revenue issues, suggesting they will not appropriate the funds in the FY06 budget. Provisions approved by the legislature during the spring special session cap state reimbursement for the program at $950 million beginning in tax year 2006. To save dollars, the legislature budgeted only $680 million for reimbursements in FY06, instead of the necessary $950 million. A memo from Senate Finance Committee chairman John Chichester states that "localities operate under an accrual system of accounting, which enables them to 'book' the state revenue once the taxpayers have paid their share of the bill. Localities can then close out their fiscal years without any budget disruption. It will be necessary for the state to pay its share of these spring bills early in the subsequent fiscal year." The memo goes on to say that some localities may need to manage their cash flow by changing payment dates for some obligations or taking other measures. VACo and VML representatives continue to work with Administration officials to address the changes made this year to the car tax reimbursement program.

JLARC Releases EMS Findings

The Joint Legislative Audit and Review Commission (JLARC), the General Assembly's "watchdog" agency, has released a report on the provision of emergency medical services (EMS) in the state. The review, conducted by JLARC staff and focused on funding, recruitment, retention and training issues, found that Virginia has almost 33,000 certified EMS providers, or about one for every 215 residents.
The report noted the lack of a Code requirement that EMS be offered, and suggested that the legislature consider requiring local governments to ensure the "continuous provision" of emergency service. The report stated this would not necessarily require any changes in current practice, but would direct localities to act if continuity in service is jeopardized, while enhancing the duty of the state Office of Emergency Medical Services (OEMS) to increase the accessibility of EMS to all citizens. The report also noted there is no state definition of response time or response goals and that data reporting requirements have not been enforced. Thus, it recommended the legislature consider a uniform definition of response time, with EMS agencies to then establish response time goals based on that definition.
The report estimated that EMS workers annually contribute 3.6 million volunteer hours and that local government provides $144 million to $360 million in financial support for emergency medial services. State support is less than five percent of the total support of EMS in Virginia. It also noted the Volunteer Firefighters' and Rescue Squad Workers' Service Award Fund, effective in 2001 to provide service awards for eligible workers choosing to become fund members and contribute to it, has been scarcely utilized and has had no state general fund appropriations made to it, despite more than $300,000 in state dollars used to administer it.
The report noted that training/certification requirements had recently been increased and have proven to be costly and sometimes not conveniently accessible. While basic life support courses are readily available, the report recommended OEMS expand availability of advanced life support training, which leads to the highest level of EMS certification (some legislators have suggested relaxing requirements to help enhance citizen accessibility to services). The report also recommended that EMS agencies consider billing patients' health insurance companies for services and transportation provided, a practice now used by just over 100 agencies in the state. Some of the current billers have reported recovering 80% of their costs.

Growth and Economic Development Commission Meets

The Commission on Growth and Economic Development, and its subcommittee examining "adequate public facilities," met earlier this month. The subcommittee, composed of legislators and representatives from local government and homebuilding, real estate and environmental interests, met for the first time this year to continue efforts to devise legislation authorizing localities to adopt adequate public facilities ordinances that would require provision of facilities such as schools and roads when the impacts of development occur. The workgroup's focus previously had narrowed to discussion of school infrastructure and revenues available to pay for new or expanded school buildings. A couple of hours of discussion at this meeting yielded little progress on devising language for an ordinance, and prospects for agreement at this point look slim. Members asked that information about housing costs, where homes are being built and who is buying them in high growth areas be provided. The panel also will examine revenue streams that might be utilized for school facility needs, including local income taxes, meals taxes and proffers and transfer taxes.
The full commission also met to hear from local government representatives about how proffer systems work. Three localities showcased their systems for determining, collecting and expending cash proffers. All three noted that schools and roads are the major costs items impacted by new development and on which proffered dollars are spent. The Commission likely will hold its final meeting of the interim in late November or early December.

Eminent Domain Group Hears Complaints

Complaints about state and local agencies and utility companies dominated a meeting this week of the Eminent Domain workgroup of the Housing Commission. The panel listened as nearly 20 people described what they felt were delaying tactics, low monetary offers for property, rudeness and arrogance by entities looking to condemn property for the likes of housing developments and utility transmission lines. Local housing authorities, VDOT, and gas and telecommunications companies were targeted. The workgroup is one of three subcommittees of the Housing Commission, which has been charged with examining various housing issues and developing a statewide housing policy by the end of next year.
The panel also is looking at a pair of bills for possible introduction at the 2005 General Assembly. The first is a substitute version for SB 301, which was carried over this past year. It required property be put to the public use for which it was condemned within 10 years and if not, to be offered for sale to the person who owned it at the time of condemnation. Language being considered would expand the timeframe to 15 years and the price would be that which was paid, plus interest, on property acquired after next July 1.
The panel also received a draft of a bill that limits housing authority ability to acquire property through condemnation and then transfer it to a private entity or for private purpose, unless the property is blighted and redevelopment or conservation will begin within seven years. That proposal will be discussed at a November meeting.

**For questions or additional information, please contact David Blount, TJPD Legislative Liaison, at 979-7310, x350 or .