Legislative Newsletter - November 22, 2005

State Budget Issues

Members of the House and Senate money committees have gotten a first official peak at budget issues they will have to tackle during the upcoming session. The House Appropriations and Senate Finance Committees held separate retreats last week to receive the news from their respective staffs. State revenue for the remainder of FY06 is projected to exceed estimates by about $1 billion, but the overwhelming majority of that amount comes from what staff terms the "volatile" revenue sources of non-withholding, corporate and recordation taxes. These sources also produced most of the FY05 surplus of $544 million.

General fund revenue growth is projected to be 6% in FY07 and 6.6%% in FY08. Dollars carried forward from FY06 and the revenue growth should yield an additional $3.9 billion over the next biennium. However, mandatory spending requirements and traditional high priority funding items total about $3.4 billion, thus leaving around $500 million available to legislators' discretion in shaping the next two-year budget. Senate Finance Committee staff is recommending that at least 10% of projected revenue from the three volatile sources mentioned above (or roughly $360 million), be treated as one-time revenues and set aside for use on non-recurring items such as capital projects, Chesapeake Bay clean-up or transportation. Mandated and high-priority funding items to which additional dollars likely will be targeted include "rebenchmarking" of public education costs (an additional $1.2 billion needed), Medicaid ($560 million), state employee benefits ($160 million), Comprehensive Services Act ($48 million), HB 599 funding ($36.2 million), and jail per diems ($12 million). In addition, car tax relief will cost the state an additional $200 million in each year of the next biennium. If pay hikes are awarded, they will require $300 million state dollars for each 1% salary increase for state employees, state-supported local employees teachers and college faculty.

Governor Warner is slated to submit his budget proposal to the General Assembly December 16. Public hearings on that proposed spending plan once again will be held by the two money committees. The closest ones to our area will be held on Thursday, January 5, 2006, at Central Virginia Community College in Lynchburg beginning at 12 noon, and on Monday, January 16 at 1 p.m. in the General Assembly Building in Richmond. During the legislative session that begins January 11, legislators will shape amendments to the current fiscal year budget and craft a spending plan for the next biennium.

"START" Group Focuses on Principles, Mulls Legislation

The Senate's Statewide Transportation Analysis and Recommendation Task Force (START) is inching toward some decisions on legislative initiatives to be proposed in the next session. The panel of state senators and citizens spent several hours at a meeting last week discussing "issues and principles" that will provide a framework for its recommendations. Those issues were grouped under the following six categories: 1) need for a statewide strategic plan, 2) spending priorities and conditions, 3) meeting funding needs, 4) link land use decisions to transportation decisions, 5) governance/organization of resources, and 6) rail and public transit. The group seems united that general funds not be used for transportation, except possibly for limited, one-time expenditures. More focus also is being put on the land use/transportation link, a topic advanced by Governor-elect Kaine during his recent campaign and in several town hall meetings held since the election two weeks ago. On that note, Senator Edd Houck noted at the START meeting the difficulty in creating a statewide transportation plan when in the most recent year, 200 lanes miles were added to the state road system, largely as the result of new development.

The group hopes to shape its recommendations at its next meeting December 16. Senate Transportation Committee Chairman Martin Williams also has indicated he'll propose legislation related to VDOT operations and Commonwealth Transportation Board appointments.

On a related note, the Commission on Transportation in Urbanized Areas, recently formed by Governor Warner and which met for the first time in late October, is recommending an infusion of state dollars, primarily from revenue surpluses, for transit capital needs. That panel holds its second meeting next Wednesday.

Housing Panel Backs Eminent Domain Bill

The Virginia Housing Commission has endorsed proposed legislation to clarify what constitutes a "public use" when a local government needs to condemn land. The bill, previously endorsed by a Commission workgroup and drafted by local government and realtor lobbyists, carves out limited exceptions for which condemnations where a private entity ultimately receives the property are not prohibited. The revised definition would protect the use of eminent domain as an element in redevelopment efforts to fight blight. The Commission's action responds to this summer's Supreme Court ruling in Kelo v New London that affirmed local government authority to take private property for economic development purposes. Following that decision, numerous state legislators vowed to limit local condemnation powers. Reportedly, several dozen requests for such legislation have been made to General Assembly researchers.

In Washington, the House of Representatives recently approved a measure to limit state and local government ability to take private property for economic development, stipulating that any violation would result in forfeiture of federal economic development funds for two years. No action has been taken in the Senate, where several bills are in its Finance and Judiciary committees.

Environmental Panel Pledges Water Cleanup Funds

The joint subcommittee charged with examining Virginia's polluted waterways and studying options for a long-term funding source to clean them up has vowed to pursue a dedicated source of funding to pay for the state's share of Chesapeake Bay cleanup costs. No specifics were decided at the panel's latest meeting, but proposals for bonds, recordation fees and electric bill surcharges all surfaced as possible solutions. State environmental officials have estimated the cost to the state government for cleaning up the Chesapeake Bay and other polluted waterways across Virginia to be $2.34 billion using current cost-sharing methods. Of this amount, about one-half billion in state funds is estimated to be needed for the state share of sewage plant upgrades (the state currently funds about 50% of such plants' capital costs), $580 million for the agriculture initiatives, and another $660 million for best management practices on non-agricultural lands.

Moped Group to Craft Legislation

A special subcommittee of the House Transportation Committee hopes to submit legislation that would alter current laws dealing with mopeds and other similar vehicles in response to safety complaints from law enforcement and citizens. The subcommittee met last week and focused its discussions on a proposal from the City of Charlottesville, which recommended changes to draw distinctions between mopeds and moped-like vehicles and pocket bikes/mini motorcycles, and also related to operational and noise regulations. The group wants to shape much of the City proposals in a draft bill when it gathers again in mid-December. During this past General Assembly, at least a dozen bills were submitted to address current laws dealing with mopeds.

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)