Legislative Newsletter - May 24, 2006

Number 12

Senate approves budget minus transportation taxes

       The Senate yesterday passed a biennial budget for 2006-2008 that removes most of the proposed transportation dollars it has advocated since the legislative session began in January. It targets the $339 million in one-time general funds (contained in former governor Mark Warner’s introduced budget) for transportation, contingent on General Assembly adoption of a sustainable, long-term statewide transportation plan by November 1. In absence of that, the Senate’s budget language directs that money to other needs, including local school construction, state construction needs, and general tax relief.

       The Senate plan (contained in HB 5002) also transfers about $228 million in auto insurance premium taxes to support previous transportation debt. It also appears to include additional funds toward the costs of a new state requirement that cities and counties include sheriffs’ deputies in the Law Enforcement Officers retirement system (as included in earlier Senate plans). Finally, the budget assumes revenue adjustments through April that produce nearly $130 million more dollars.

       The House of Delegates approved a budget plan in April that set aside, in a reserve fund, just over $1 billion in general fund dollars to pay for a transportation plan, to be dealt with as a separate item. The House meets in full session tomorrow to take up the plan. If the House rejects the Senate plan, the stage will be set for budget negotiators to try to craft a compromise spending plan for 2006-2008 that can be voted on in the coming weeks.

       Also on the budget front, VML and VACo yesterday convened a meeting of local officials to discuss the fallout of having no state budget in place July 1. In addition to concerns about the flow of state dollars to local programs, questions were raised about federal pass through funding, VRS payments, taxes collected by the state for localities, reimbursement by the state for local money spent up front, and local bond ratings. The associations plan to meet with the executive branch to brief them on the local concerns and questions raised at this meeting.

Governor takes final action on bills

       Governor Kaine, facing a May 19 deadline, took final action on bills returned to him from the legislature’s April reconvened session. The governor vetoed HB 1290 and SB 260, which added new language to define idle machinery and tools and exempt it from local taxation. In his veto message, the governor expressed concerns that this change would impact local revenues. He did commit to convening a working group (also called for in the two bills) of local government officials and the manufacturing community to address this and other related issues.

       The governor also rejected HB 370, which would have restricted existing local authority to regulate firearms along public highways, citing no demonstrated problem with the existing law. Finally, he vetoed HB 1185, which would have changed current provisions for protecting riparian rights.

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)