Legislative Newsletter - October 27, 2005

State Budget Issues

First quarter (July-September) figures released the middle of the month show state revenue collections continuing to exceed projections. Through the first quarter of the current fiscal year, revenue growth has been 14.5%. In September alone, state tax collections jumped 11.2% over the same month a year ago, with nearly all the growth attributed to the three most volatile revenue sources - nonwithholding, corporate income and recordation taxes. The strong surge in collections suggests that Governor Warner will have extra cash to address known spending requirements in the 2006-2008 biennium, including re-benchmarking of the Standards of Quality education funding (at least $1 billion), increased Medicaid costs ($500 million) and higher costs for state employee benefits ($200 million). The governor will release an updated revenue forecast when he submits his proposed two-year budget to the legislature December 16.

Also this month, the Virginia Retirement System Board of Trustees certified teacher retirement contribution rates for the next biennium. The new figures are almost double the current rates. The contribution rate has been set at 11.18% (current rate is 6.02%), while the new rate for the retiree health insurance credit is .98% (current rate is .55%). The Board also set a rate of 1.22% for group life insurance, which has had recent premium holidays. These rates are subject to revision in both the governor's budget and the General Assembly's spending plan it will craft early next year. Individual locality contribution rates will be released later this fall.

"START" Continues Information-Gathering, Seeks Feedback

The Senate's Statewide Transportation Analysis and Recommendation Task Force (START) continues to gather information from a variety of sources as it mulls ways to address the state's transportation challenges. At a meeting last week, the group had primers on state transportation financing, an update on state road maintenance and a refresher on recommendations of a JLARC transportation study from several years ago. The group also heard perspectives on land use decisions and transportation infrastructure from both a local government and a homebuilding industry representative. The homebuilding spokesman recommended that the state require every locality to adopt a cluster-housing subdivision ordinance (the General Assembly approved legislation in 2002 authorizing such clustering, and also stipulated that no local ordinance require a special exception, special use or conditional use permit for such development); that housing redevelopment plans be approved administratively; and that the state take steps to ensure the timely expenditure of cash proffer receipts by localities. The General Assembly approved legislation this past session to provide 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, for seven years following collection of all cash proffers in a particular rezoning.

The START panel also is looking for suggestions and recommendations from citizens, organizations and other interested parties. All suggestions must include a one-page summary sheet and be no more than four pages long. Recommendations can be forwarded to Neal Menkes of the Senate Finance Committee staff (nmenkes@leg.state.va.us) by Monday, October 31.

Two-Year Study Lists Challenges to Social Services System

A two-year review of the operations and performance of Virginia's social services system has found that, although some local departments lack resources and capabilities, they are the strength of the system, having operational flexibility to meet local needs and having developed important working relationships with partners. The recent report by JLARC found a number of challenges to the system, which has had five commissioners since 2000. JLARC staff noted that the local share of administrative costs is growing significantly, and thus recommended that the current prior-year methodology uses to allocate administrative funds be replaced with one based on caseloads and local ability to pay.

The report also highlighted problems with employee retention, noting that nearly 40% of local departments had lost at least one-quarter of their front line staff since January 2004, and foreshadowed the potential loss of expertise and leadership at local departments, finding that more than half of local directors and 80% of supervisors will be eligible for full retirement in 2010. Thus, staff recommended that the state assist local departments experiencing retention and recruiting difficulties and facilitate management of pending retirements.

The report also stated that segmented data collection limits the ability of the state to assess the overall operations and performance of local departments and provide support to those needing it. To address numerous continuing issues faced by the delivery of social services in Virginia, the report suggests the General Assembly consider establishing a commission or task force to examine the report's recommendations and other relevant issues. About 1.6 million Virginians receive social services, with nearly half of those living below the poverty level.

Housing Group Mulls Eminent Domain Bill

The Virginia Housing Commission continues to discuss legislation to address the eminent domain authority of certain public agencies in Virginia. Local government groups have been work with the Virginia Association of Realtors to address concerns raised by a Supreme Court ruling this past summer. The 5-4 ruling in Kelo v New London affirmed local government authority to take private property for economic development purposes. As a result, state legislators have vowed to limit local condemnation powers. The bill presented to a Housing Commission workgroup last week carves out limited exceptions for which condemnations where a private entity ultimately receives the property are not prohibited. The draft legislation was endorsed by the workgroup and will be presented to the full Housing Commission at a mid-November meeting. The panel also received draft language for a possible Constitutional amendment that would define public use, providing that the term not apply to any private property acquired by eminent domain that is to be conveyed to a nongovernmental person or entity, unless authorized by law.

JLARC Conducts Review of Biosolids Use

The Joint Legislative Audit and Review Commission (JLARC), the General Assembly's "watchdog" agency, recently released a report on the land application of biosolids in the state. The review looked at state and local resources available for biosolids program implementation and oversight, as well as programs for training and support of local monitors. The staff study recommended that the Virginia Department of Health (VDH) have a greater inspection presence at application sites, noting that last year, VDH performed only 19 routine inspections for more than 1,100 land applications (it also performed 55 in response to complaints and 71 in conjunction with permit applications). The report noted specifically that, "routine inspections are performed if VDH staff happen to be in the area of a known application and have the opportunity to stop by."

The report also stated that VDH is not maintaining a searchable electronic database of complaints, and that localities are not consistently reporting complaints to VDH. Thus, JLARC staff recommended the database be updated monthly, and that local governments notify VDH of all complaints, as required by law. They also suggested VDH establish a guidance document to address enforcement issues, noting that only eight notices of violation and six consent orders with fines totaling less than $4,000 had been issued since 2001.

It was recommended that VDH offer additional training opportunities and assistance for local monitors to assist them in various monitoring and testing activities, which thus far have been limited. Finally, the report recommends that VDH require appliers of biosolids to post signs about the application for a minimum of 30 days following an application.

Responding to a survey conducted as part of the study, a majority of county administrators in localities permitted for land application of biosolids described their citizens as wary or undecided about biosolids application. About 380,000 acres in 54 Virginia counties are permitted for land application of biosolids, while just over 50,000 of those acres received an application last year.

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)