Legislative Newsletter No. 6— February 28, 2005

Delayed approval for an AMENDED BIENNIAL BUDGET

Despite widespread thinking that this year’s General Assembly would adjourn on time, the legislature staggered into overtime to reconcile differences over House and Senate versions of amendments to the two-year state budget. Finally, an agreement was reached early Saturday, setting the stage for budget votes and adjournment on Sunday, just one day past the scheduled adjournment. The legislature returns to Richmond on April 6 for its annual reconvened session, at which time it will consider amendments and vetoes recommended by Governor Warner.

The compromise budget increases spending above the introduced budget by about $120 million, thanks in part to a revised forecast this month that increased expected revenues for the remainder of the fiscal year. Following are highlights of approved amendments to the FY05/FY06 state budget. Additional details will be forthcoming from VACo and VML:

TJPD ACTION ITEMS:

Car Tax Reimbursement

Though budget amendments were proposed in both the House and Senate to restore $223 million for reimbursements to localities in FY06 under the Personal Property Tax Relief Act (PPTRA), the approved budget does not contain funding for this purpose. It does retain language included in the introduced budget to address program transition problems in a way to minimize financial disruption to localities, and to provide clarifications and technical changes to facilitate implementation in moving the program to a fiscal, rather than calendar, year basis. 

Transportation

The revised spending plan provides just over $848 million in additional general and nongeneral funds for the Transportation Initiative of 2005. This includes nearly $350 million from the general fund. The plan includes major elements contained in the introduced budget to promote public-private road-building projects, encourage localities to manage their own highway construction and improve rail service.

Specifically, the plan includes the following:

· $107.5 million for Priority Transportation Fund projects, from insurance premium tax revenues derived from automobile insurance premiums

· $256.4 million to fully pay off project deficits

· $50 million for the Transportation Partnership Opportunity Fund to support public/private transportation projects

· $23.2 million for the Rail Enhancement Fund created by HB 2596.

· The local revenue sharing program for counties is expanded to include cities and towns and funding for the program is increased to $50 million. $40.0 million also is provided to encourage increased local participation in construction projects. $20 million is earmarked for improving welcome centers and rest areas along Interstates 95 and 64.

· $97.4 million from federal highway funds to be used for highway maintenance.

· $75 million for various transit projects.

            Budget language amendments related to transportation include 1) the General Assembly’s support for development of a Trans Dominion Rail Pilot Project to demonstrate the capability of passenger rail service to enhance economic development and connectivity among the communities served between Bristol and Richmond; 2) requiring VDOT to work with local governments, among others, to revise the definition of businesses and industry that qualify for access road funding, and to work with counties to develop legislative recommendations on the process for any county, at their request, to assume responsibility for their secondary construction program; and 3) from ground transportation system planning and research funds, for metropolitan areas east of or adjacent to Route 29, priority shall be given to those local governments that complete a build-out analysis of their comprehensive plans and zoning.

Education

The approved budget increases education funding by about $42 million over the biennium, slightly less than proposed by the governor. Most significantly, funds are added for the state share of a three percent teacher salary increase, effective December 1. The plan also restores half of the 2002 reduction to the at-risk add-on funding and provides an additional $10 million to the Literary Fund. The introduced budget transferred $20 million from the Literary Fund for the interest rate subsidy program for school construction loans. Finally, the plan eliminates the proposed increase of $1.6 million for a state payment of 5 cents per breakfast for the school breakfast program. Local school divisions soon should receive detailed information about their state funding amounts; local governments typically receive a copy of this information as well.

Comprehensive Services Act

The compromise spending plan provides no additional funding for CSA (just as the introduced budget did not provide an increase). It does include language to update the base year from 1994 to 1997 used in the CSA program to calculate local administrative costs; a $60,000 adjustment is made to the funding allocated for administrative costs to reflect the change back to the 1997 base year. It also extends for one additional year, the study of reasons leading to parents relinquishing custody of their children to obtain mental health services (being conducted by the State Executive Council), adding an additional requirement to recommend changes that strengthen child advocacy in the state.

Public Safety

The budget maintains the introduced budget provision that increases the amount of HB 599 funds to be distributed in FY06 by $4.2 million. The compromise budget adds $500,000 for local community corrections and pre-trial release programs for local-responsible offenders. A $370,000 increase for PAPIS that was included in the introduced budget is retained. The plan also defers the proposed $1,566,744 increase in FY06 jail per diems pending completion of actual inmate population counts through the first quarter of FY06.

Other Budget Items Affecting Local Governments:

· Provides additional funds for a 4.4% salary increase, effective December 1, for state-supported local employees.

· Provides $1.3 million as the first step in a three-year plan to fund Compensation Board staffing standards for Commonwealth’s Attorneys. The governor is directed to include necessary funding in the 2006-2008 budget.

· Provides just over $511,000 in additional dollars for Planning District Commissions to restore reductions of the past several years and to ensure each PDC receives $90,000 in state funding.

· Provides $850,000 to support homeless shelters and transitional housing and $440,000 for homeless children’s coordinators in emergency shelters and for developing single room occupancy housing for homeless adults. Most of these funds are redirected from a new program proposed in the introduced budget that would have provided housing supplements for disabled people in mental health facilities to live in more integrated settings.

· Provides nearly $11 million in general and nongeneral funds to increase Medicaid and FAMIS dental service rates by an additional 20% (the introduced budget contained a 10% increase). Also, the budget adds $25,000 in FY06 for the Charlottesville Area Dental Access to establish a dental clinic serving about 10,000 low-income children each year.

· Provides an additional $500,000 in general funds for Healthy Families for offsetting the loss of Title IV-E funding and an additional $250,000 for Community Action Agencies.

· Maintains the introduced budget provision that adds $500,000 in FY06 to the funding available to serve children and adolescents with serious emotional disturbances and related disorders who are not mandated for services under the Comprehensive Services Act (CSA). 

· Provides $50 million in FY06 to the Water Quality Improvement Fund for grants to publicly owned wastewater treatment plants to support costs of improving the nutrient removal capabilities of such plants.

· Reduces by $50,000 the amount in FY06 for water supply planning grants to localities.

· Provides $10 million to the Virginia Land Conservation Fund for grants to secure parks, natural areas, farms and historic sites.

· Provides $50,000 for the Oakland Museum in Nelson County, $25,000 for the Trevillian Station Battlefield Foundation and $250,000 for the Paramount Theater.

Budget Language amendments:

· Language directs the Compensation Board and the Auditor of Public Accounts to develop options for a revised cost recovery methodology to recover all costs reimbursed by the state, including capital costs, associated with housing federal inmates or inmates from other states.

· Language directs the Secretary of Health and Human Resources to examine the demand for housing services for persons with disabilities and the specific housing options that should be considered by the General Assembly.

· Language stipulates that $4.65 million shall be provided to local social services departments to enhance child welfare services under the federal Performance Improvement Plan.

· Language directs the Governor to include litter control and recycling funds in his 2006-2008 budget submission. The budget all of the formula grants for localities and nonprofit organizations.

LEGISLATION update

Several bills of note received some close scrutiny last week in committee and on the House and Senate floors. The Senate Local Government Committee on Monday reduced the scope of HB 2282, which stipulated that operation of a sport shooting range in any county or city cannot be denied if it meets a state-imposed noise standard of 64db when averaged over a 60-minute period. In its amended form, the bill provides that no local ordinance regulating any noise shall subject a sport shooting range to noise control standards more stringent than those in effect at the time the construction or operation of the range initially was approved, or at the time any application was submitted for the construction or operation of the range. The bill later passed the full Senate, and the changes subsequently were accepted by the House. 

The Committee also reported, and the full Senate approved, HB 2456, which in its amended form, states that localities may not require cash proffers to be paid before application for a building permit, but may accept voluntary proffers from developers to pay them earlier. The bill also states that the inflation factor applied to a cash proffer must be either the CPI or the Marshall/Swift construction cost index.  HB 2888, as amended, provides for forfeiture of proffers (to the CTB, for addition to the secondary or urban allocation, but not used to offset any amount

the locality would otherwise be allocated) seven years following collection of all cash proffers in a rezoning in question. Forfeiture can be avoided by starting construction, site work, engineering, surveying, design or land acquisition within that period. Localities would be permitted to transfer proffers whose original intended use is no longer valid for another in the same vicinity.

Both chambers approved a pair of eminent domain bills. The Senate adopted amendments to HB 1820 that left award of damages to court discretion and disallowed attorney’s fees and expert witness fees for landowners, unless it was determined there were willful and reckless damages caused by the condemnor. HB 1821 as it passed the House required condemners to pay witness fees if the amount awarded to a landowner was 30% greater than the condemner’s final offer. As approved, the bill is merely a reorganization and restatement of existing procedural requirements.

Other approved legislation

HB 1947 creates the Agricultural Enterprise Act of 2005, directing the Department of Agriculture and Consumer Services to establish agricultural enterprise districts upon application by localities with established agricultural or forestal districts, locally-designated agricultural enterprise districts, or purchase of development rights programs. Certain agricultural and farm businesses located in such districts may apply for assistance in developing a new business plan and grant funding up to $500,00 to implement that plan. The bill is effective January 1, 2007, if funding is provided in the 2006-2008 budget.

            HB 2192 reduces the distance a landfill can be sited from surface water or groundwater supplies from five miles to three miles, and as close as one mile from any existing surface or groundwater supply if the landfill meets certain conditions. 

            HB 2428 requires local policies that give preference to military veterans in the initial hiring decision, provided that such veteran meets all of the knowledge, skills and eligibility requirements for the available position. Current, similar provisions in the Code are optional for local governments.

HB 2679 revises the local tax appeals process, including that there is no requirement to "pay to play" when appealing in court a state Tax Commissioner decision of a local tax determination, except in the case of a frivolous appeal, substantial economic hardship to the locality, or likely flight of the taxpayer. The consumer utility tax on wireless telecommunications services was excluded from this process.  

HB 2777/SB 810/SB 1235 establish the mechanism for awarding grants (ranging from 35% to 75% of the costs, based on community financial need determined by comparing the annual sewer charges expended within the service area to the reasonable sewer cost established for the community) for upgrading biological nutrient removal facilities.

HB 2880 directs the Auditor of Public Accounts to review and collect information regarding certain local communications taxes, similar to that which was done this past year.

SB 873 requires police and sheriffs departments with more than 100 law-enforcement employees to calculate overtime based on hours in paid status, rather than hours actually worked.

Local legislation

HB 2249 to authorize Albemarle and Greene counties to regulate distribution of materials to, solicitation of contributions from, and sale of merchandise to the occupants of motor vehicles on public roadways and medians, was approved by both the House and Senate. Two bills (HB 1843 and SB 957) to authorize Charlottesville to limit certain activities by former officers and employees for one year after their service has ended were approved, as was SB 844, which allows a locality to exclude up to $5,000 of permanent or temporary disability benefits of an owner when determining eligibility for its tax deferral programs (requested by Charlottesville).

Resolutions

HJR 640 establishes a seven-member joint subcommittee to study options for a long-term funding source to clean up the state’s polluted waters.

HJR 643 directs the Joint Legislative Audit and Review Commission (JLARC) to study the land application of biosolids

HJR 685 establishes an 11-member joint subcommittee to study private youth and single family group homes.

HJR 713 establishes a joint subcommittee to study the need for greater consolidation or coordination of the workforce development and training resources available in the state. The 15-member panel will include five citizen members, one of which shall be a member of a local Workforce Investment Board.

SJR 393 continues the Game and Inland Fisheries study of local firearms hunting ordinances. The agency was requested to examine how ordinances can be made more uniform.

** Thanks for your interest, assistance and efforts during the General Assembly session.

**Look for a detailed summary of General Assembly action to be distributed following the reconvened session.

General Assembly Contact Numbers for David Blount, TJPDC Legislative Liaison

804-644-3702 (phone)

804-783-8226 (fax)

979-7310 x350 (Charlottesville voicemail)

(Richmond email)