Legislative Newsletter - September 29, 2006

Number 17

Legislators Adjourn Special Session Without Transportation Fix

The General Assembly adjourned last night without agreeing on a new state transportation plan. Lawmakers spent much of this past week trying to accomplish what it has been unable to do since the beginning of the year; to agree on a package to address transportation problems and needs across the state. A $2.4 billion package of transportation legislation took shape in the House of Delegates, only to be shot down in the Senate. Meanwhile, Senate bills that provided the framework for both statewide and regional transportation funding plans were defeated in the House Finance Committee. Those measures had been pending in the committee since May, each having been tabled twice in previous meetings. 

Key components of the House plan included a $1.5 billion ($300 million per year over five years) bond package for transportation construction (subject to referendum), with funds to be distributed among the nine VDOT construction districts on the basis of population (meaning the Culpeper District would get about 4% of the total proceeds). To pay off the bonds, it dedicated a portion of revenues from taxes on auto insurance premiums. The compromise budget approved in late June used the same revenues to cover previous transportation debt service. The package also appropriated the $339 million that had been set aside in the June budget for specific transportation projects throughout the state (nearly 2/3 would go to projects in Northern Virginia and Hampton Roads). Other measures directed existing recordation taxes, year-end general fund surpluses and new fees on certain abusive driver convictions (suspended license, DUI, reckless driving) to transportation. Senators had various objections to the measures, centered largely on its desire to avoid using general fund revenues and debt to pay for transportation improvements.

 Efforts to allow localities in Northern Virginia and Hampton Roads to us locally generated revenues to move projects forward also were shot down in the House. Though not approved, both chambers were sympathetic to a bill to amend the current revenue-sharing program to require that $50 million per year be spent on it. The Code currently allows the program to be up to $50 million, but only $15 million has been targeted for it due to a lack of funding………….

Bills touted to more closely connect local land use and transportation planning also were shelved. The Chairman of the House Counties, Cities and Towns Committee will ask a special subcommittee to examine bills that would allow counties to create transportation service districts and assume responsibility for maintaining all secondary roads, and that would require the comprehensive plan to include at least one proposed urban development area to satisfy 10 years of projected residential growth. A third measure that would have prohibited taking additional streets into the state secondary highway system starting next year, was left in the House Transportation Committee.

The only transportation measures to be approved were minor bills 1) providing penalties for attempting to drive oversize vehicles through tunnels; 2) requiring an annual report by the VDOT Commissioner on outsourcing, privatization and downsizing, maximizing revenue generation, and increasing the role of the private sector in the state’s highway program; 3) directing CTB to promote increased private investment in the state’s transportation infrastructure; and 4) clarifying the definition of “maintenance” and requiring the CTB Commissioner to advise the Board as to how maintenance needs are determined.

Sales Tax Glitch Approved

Both houses of the General Assembly adopted amendments to the FY07/FY08 state spending plan to correct sales tax revenue estimates in both years of the budget and to provide a supplemental payment of nearly $60 million to local school divisions in the current fiscal year to hold each locality harmless from the loss of revenue due to the adjustment. Under this plan, local school divisions will receive the same amount of state funding they would have received if the original sales tax estimates had been correct. In mid-July, it was discovered that the budget overstated the estimate of sales tax allocated to public education by more than $130 million for FY07. The overstatement resulted from the state’s failure to account for the effect of changing the sales tax rate on food. This supplemental payment will count as a credit toward the local share of SOQ costs for the purposes of calculating required local effort (RLE) for education spending.

Six-Year Plan Meetings Scheduled

The Commonwealth Transportation Board (CTB) has scheduled meetings around the state for public review and comment on projects and programs to be included in the next six-year transportation program (FY08-FY13). This year, the Culpeper District meeting is slated for Wednesday, October 25, at the Culpeper District office, while the Lynchburg District hearing is being held on Wednesday, November 8, at the Kirkley Hotel (formerly the Radisson) in Lynchburg. Both meetings are slated to begin at 5 p.m. and will include a public officials’ briefing, open house and discussion session. Several years ago, CTB moved traditional springtime hearings to the fall in order to get input from the public in advance of developing the next plan.

August State Revenue Dips Slightly

State general fund revenue fell 4.3% last month compared to August 2005, which was a very strong collection month. Sales tax collections fell 2.1% in August, likely due to the slowdown in the housing market, rising interest rates, and higher energy prices. On a year-to-date basis, however, revenue has grown 8.6%, compared to the annual forecast of 4.2%. September collections will complete the first quarter of FY07 and provide a better assessment of revenue growth.

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)