Legislative Newsletter - July 26, 2006

Number 15

State Budget and Revenue Issues

            The state’s new biennial budget, approved just last month, overstated the estimate of sales tax dedicated to public education by about $130 million for FY07. State officials found the error last week. The overstatement resulted when revenues were not adjusted to account for a previous decision to speed-up the decrease in the state sales tax on food (accordingly, the portion of sales tax going into the state’s general fund was understated).

Governor Kaine will propose a budget amendment to correct the sales tax estimate in both years of the budget and also will propose additional funding of about $57 million in the current fiscal year to make up the difference between what a school division was expected to receive and the new amount being received. This supplemental payment would be treated as a credit toward each school division’s required local effort in FY07. The General Assembly could take up the governor’s amendments early next month.

Transportation discussions remain at a standstill in the continuing special session on the budget and transportation. It now appears it could be September before legislators resume action. On Monday of this week, the House Finance Committee tabled (for a second time) a group of Senate-approved bills that provide a framework for various statewide and regional transportation funding initiatives.

The governor will brief the General Assembly money committees on the official end-of-the-fiscal-year (FY06) revenue picture at a joint meeting on August 28^th.  Last month, state officials said they expected total general fund revenues to be within 1% (or less than $147 million) of the forecast, which is 7.4% revenue growth for the year. 

Farmland Preservation Panel to Meet

            The joint subcommittee studying long-term funding for the purchase of development rights to preserve open-space and farmlands has scheduled a meeting for late August. The panel was created by HJR 133 and SJR 94 approved by the 2006 General Assembly. The group is charged with examining the future needs of the Commonwealth for open-space land, the cost of such needs and long-term funding sources to pay the costs. It also is to explore other strategies to enhance citizens’ ability to preserve their farmland, including but not limited to, technical and financial assistance for promotion of purchase of development rights programs. Recall that the biennial budget agreement reached late last month included just over $300,000 for the Office of Farmland Preservation to assist localities in implementing local purchase of development rights programs. Legislative action also resulted in some new limits on current land preservation tax credit provisions. Under HB 5019 and SB 5019, the credit value is reduced from 50% of easement value to 40%, and the statewide amount of credits is capped at $50 million for CY2007 and $75 million per year thereafter. Governor Kaine has proposed amendments to those bills that would change the total annual cap on credits to $100 million, adjustable annually by the Consumer Price Index. Those amendments are awaiting action by the General Assembly. The Kaine administration has set a goal of protecting 400,000 acres of open land in Virginia by 2010.

Dirty Waters Report Released

A new state report says nearly 9,000 miles of Virginia's rivers and streams are polluted, an increase of 61% over the 2004 report. The Department of Environmental Quality (DEQ) prepares its so-called "dirty-water list" every other year. The polluted stretches are called impaired waters, and once a stretch gets on the dirty-water list, the state must make cleanup plans and put them in place (and it can take years to get a stream off the list). The main sources of problems found were fecal bacteria, from such things as animal waste; PCBs, which can stem from decades-old industrial pollution; and low dissolved oxygen, which can be caused by an overabundance of algae in waters enriched by fertilizer and waste. For information about the report, including lists of impaired stretches of water, see 2006 Water Quality Report.

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)