Legislative Newsletter - March 29, 2006

Number 8

BUDGET TALKS

The General Assembly convened Monday for a special session on the state budget, which was called after the legislature could not reach agreement on a new biennial, state spending plan prior to adjourning the 2006 regular session March 11. The day was more about process than product, given the need to organize and commence the session’s work. The House of Delegates did approve HB 5001, which modifies the existing FY06 budget that will cover the final three months of the fiscal year. The House then adjourned at the end of the day, to return on Thursday for a “pro forma” session at which no business will be transacted. Meanwhile, the Senate Finance Committee held a public hearing yesterday designed to garner support for its transportation initiative and for protecting core state services funded by general fund dollars, such as education and human services.

Budget bills for the next biennium have been introduced in both the House and Senate as well. HB 5002 is one House version, patroned by Appropriations Committee chairman Vince Callahan, which awaits action in committee. Governor Tim Kaine also has introduced HB 5004 and SB 5002, which are biennial budgets for 2006-2008. These bills are a mesh of the introduced budget (Warner budget), Governor Kaine's amendments submitted in mid-January (including his transportation proposal and additional dollars for teacher salaries, HB 599 funding and local purchase of development rights programs), and several new amendments that include the following:

• $3 million in increased ABC profits to be distributed to localities. These distributions have been frozen at $4.1 million the past two years.
• $16.4 million toward the costs of a new state requirement that cities and counties include sheriffs’ deputies in the Law Enforcement Officers retirement system (under current law, the sheriff is automatically included in LEOs and the city or county decides whether to extend that coverage to deputies). The budget amendment requires the state to pay the additional costs for deputies who are funded by the Compensation Board, at the salary level authorized by the Board. Despite the state funding, localities affected by this bill would incur additional local costs if they hire more deputies than funded by the state, or offer salary supplements. In our region, the impacted localities are Fluvanna and Greene counties.
• $12 million for one-time grants to localities to support firefighting activities. This proposal was included in the Warner budget, but not in the House and Senate budget plans released in mid-February.

Meanwhile, Secretary of Transportation Pierce Homer told the Commonwealth Transportation Board at its mid-March meeting that the lack of a budget deal could put the brakes on some of the state’s highway projects. That means VDOT would be forced, as it was two years ago when a budget agreement was not reached until early May, to base its next six-year transportation plan on last year's (November 2005) state revenue estimates when planning for the next six years.  Under this scenario, Homer said FY07 state revenues for the primary, secondary and urban systems would be reduced by nearly $135 million. VDOT’s overall budget is just under $4 billion, with about $1.1 billion of that planned to be spent on road building and $1.4 billion on highway maintenance.

Finally, the latest state revenue report showed a 4.5% increase in February. Through the first eight months of the current fiscal year, state revenues have grown 10.6% over the same period 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)