Legislative Newsletter - November 22, 2006

Number 19

Budget Outlook Detailed for Money Committees

Members of the House and Senate money committees have gotten their annual “first look” at budget issues they expect to tackle during the upcoming General Assembly 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 FY07 is projected to exceed estimates by about 6%, with most of the increases attributable to growth in corporate income taxes and estimated tax payments. Growth in FY08 is expected to be weaker as corporate taxes flatten and the housing market continues to slow. Staff projects general fund revenue growth to be around 6% in FY07 and 4.6% in FY08.

Coupled with unappropriated balances of just over $100 million, there should more than $500 million in additional state revenue available for lawmakers to appropriate over the biennial budget. Money committee chairmen urged their members to not be tempted to funnel these dollars for expanding existing or establishing new programs that will require ongoing funding, but rather to make required budget adjustments and one-time investments. Mandated and high priority funding items for the remainder of the biennium could total over $250 million. This includes additional dollars for the Rainy Day fund ($82.5 million), the Comprehensive Services Act ($16 to $24 million), for TANF reauthorization ($38 million, most for child care and employment services) and public safety ($22 million for new deputies and jail per diem payments). Another $1.7 million will be required for the HB599 program. Continuing to assist localities with water treatment plant upgrades could cost the state $125 million. In an election year, legislators also will consider sweetening pay raises for public employees.

State agencies submitted requests to the Department of Planning and Budget for additional funding of more than $1 billion for the remainder of the biennium. Requests for new dollars for PDR programs ($15 million in FY08), economic development initiatives, home –delivered meals, social service eligibility workers, additional staff for Constitutional officers, auxiliary grant rate increases and fuel and utility rate increases were made.

Governor Kaine is slated to submit his budget proposal to the money committees on December 15, with January public hearings on that proposal again planned by those two committees. Hearings on January 4, 2007, are being scheduled in Abingdon, Danville, Loudoun County and Williamsburg. A final hearing will take place on January 15 at 1 p.m. in the General Assembly Building in Richmond. During the legislative session that begins January 10, legislators will be shaping amendments to the current biennial budget.

House Committee Considers Road Bills

A special subcommittee of the House Counties, Cities and Towns Committee is examining a pair of bills that stalled during the legislature’s September transportation session. Specifically, those bills would allow counties to create transportation service districts and then assume responsibility for maintaining all secondary roads (HB 5093), and would require the comprehensive plan to include at least one proposed urban development area to satisfy 10 years of projected residential growth (HB 5094). At the group’s first meeting, the patrons of the two measures presented their bills, fielded questions from members and received public comment about the concepts contained in the bills. At the conclusion, the subcommittee chairman identified a handful of issues identified for further discussion, including subdivision roads and connectivity of subdivisions, incentives for localities, new funding mechanisms, and purchase of development rights programs. He also said that the state not maintaining secondary roads is not “the” answer to the state’s transportation woes, but rather there needs to be a comprehensive package.

Also in the mix to be considered, is a re-write of HB 5094, spearheaded by VML, that requires counties to create “urban development areas” in the comprehensive plan to identify land to accommodate growth (as noted above) at a density of three or more units per acre. The areas are to be located near existing urban areas and transportation facilities. This draft also adds a provision that if the zoning ordinance is accordingly amended, then impact fees for a variety of public facilities, including roads, public buildings (including schools), parks, water supply production, wastewater treatment and storm water control, may be charged by the locality.

The panel plans to meet again next Monday afternoon to continue its discussions.

Farm Winery Issues being Examined

The state Secretary of Agriculture and Forestry’s office is leading a study of the relationship between farm wineries and the communities in which they operate, including an assessment of local land use regulations as they relate to efforts to market Virginia wines through activities. The study was created by hotly debated legislation from this past year (HB 1435) that initially sought to drastically limit local authority over farm winery activities. A group of interested stakeholders has met several times in recent weeks to discuss economic viability and health, safety, welfare and community issues associated with such activities. At a meeting yesterday, the group spent most of its time mulling specific language changes to HB 1435, specifically looking at possible Code provisions that stipulate what localities could and could not regulate concerning activities at licensed farm wineries. However, major topics such as an actual definition of activities, distinction between indoor and outdoor events and between large/medium/small impacts, and the hours of such activities, remain largely unaddressed and unresolved at this point. The workgroup yesterday also considered items that would provide more information about winery activities to citizens and neighbors, and a model ordinance for regulating wineries (further discussion of this was deferred until later). The group will continue its work next month.

CSA Study Committee Begins Work

The 2006 General Assembly approved SJR 96 which established a joint subcommittee to study the cost effectiveness of the Comprehensive Services Act (CSA) and to collaborate with the Joint Legislative and Audit Review Commission (JLARC) regarding its current CSA study. The study committee held its initial meeting several weeks ago and received several overviews of the CSA and the JLARC work.

CSA officials reported that state CSA expenditures increased steadily from 1994 to 2005, from $104 million to $273 million, and noted that CSA costs are difficult to forecast because of the multiple factors involved, including number of mandated children, severity of problems and availability of services and funding. About 70% of CSA services use up just over one-third of CSA pool funds, while 19% of services (residential care) account for about half of total costs. The report says that while residential care is an important care component, many localities report some children being placed in more restrictive, out-of-community care than necessary, thus resulting in higher costs. Finally, a number of challenges were noted in the report, including returning children from, or preventing residential placements; creating one system of care for mandated and nonmandated children; and improving CSA results and performance accountability, including strengthening the role of community policy and management teams and increasing CSA administrative funds for localities.

The subcommittee has planned a second meeting for Wednesday. The JLARC report on CSA is scheduled to be presented December 11.

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)