Legislative Newsletter - February 27, 2007

Number 5

Assembly adjourns; final acts address budget and transportation

The General Assembly adjourned as scheduled on Saturday, after unanimously approving changes to the current, two-year state budget and adopting a compromise transportation package that even some supporters said fell far short of what they wanted. Governor Kaine has vowed to perform “major surgery” on the bill in the form of amendments. His proposed changes to this and other legislation will be considered when lawmakers return to Richmond on April 4 for the annual reconvened session.

House and Senate negotiators had unveiled the transportation compromise late Friday afternoon (see below for more information on the transportation plan). The House approved the plan after a short debate on a 64 to 34 vote. Senators discussed the measure for about 1 ½ hours before voting 21 to 19, mostly along party lines, to pass the measure.

Meanwhile, proposed amendments to the current biennial budget were made available on Saturday morning, giving legislators only a matter of hours before voting on more than 200 pages of changes to the plan introduced by Governor Kaine. Following are highlights of the transportation plans and approved amendments to the FY07/FY08 state budget:

TJPD ACTION ITEMS:

Transportation

The compromise transportation package, as contained in HB 3202, has a statewide component and regional plans for both Northern Virginia and Hampton Roads, includes transportation and land use planning components, and addresses VDOT reform.

Concerning transportation and land use, counties will not be required to assume secondary road maintenance, but additional design standards for roads to be accepted into the state system will be developed this coming year through the state’s regulatory process. The requirement for designation of urban development areas (where growth is envisioned to take place) in the local comprehensive plan are only applicable in certain Metropolitan Statistical Areas, but this includes Louisa County as part of the Richmond MSA. Finally, provisions authorizing establishment of urban transportation service districts would impact those over 90,000 in population as of the last census. Only counties that adopt these districts would have impact fee authority. 

On the funding side, the plan includes a one-time general fund allocation of $500 million in FY08. Just over $300 million of this will be used for high priority projects primarily in Northern Virginia and Hampton Roads, while about $65 million will go to the Rail Enhancement Fund. Debt service in the out years on $2.5 billion in bonds also will be supported with general fund revenues, in the form of the recordation tax, totaling $148 to $172 million/year. Another $64 million a year would come from year-end, general fund budget surpluses and be dedicated to the Transportation Trust Fund for road construction, as would approximately $150 million a year from one-third of insurance premiums (currently in the general fund). Bond proceeds would go to transit (15.7%), rail (4.3%) and for highway projects selected by the Commonwealth Transportation Board.

Similar to previous plans, motor vehicle registration fees would increase (by $10) and new revenue also would be generated through abusive driver fees and heavy truck registration fees. These would fund highway maintenance to the tune of about $150 million in FY08, increasing to just over $200 million in FY13. Total funding for the statewide package would be $761 million in FY08, then ranging from $531 million to $623 million in FY09-13.

The plan also requires VDOT, by January 1, 2009, to re-assign roads based upon a functional classification. This had been recommended by a JLARC study several years ago. Budget provisions also provide $20 million to supplement the Local Road Revenue Sharing Program, increasing total dollars available for the program to $35 million.

Education:

A handful of amendments were made in the area of public education. The budget maintains funding for the state share of a 3% salary increase for teacher and state-supported positions, effective December 1. It also adds $11.9 million in the second year for state costs to increase the retiree health care credit from $2.50 to $4.00 per month for each year of creditable VRS service. The cost is based on a rate of 1.16%, an increase of 0.46% over the introduced budget.

The budget maintains an expansion of the Early Reading Intervention program ($4.1 million) proposed by the governor. However, it rejects the proposed SOL Algebra Readiness initiative ($3.9 million). The current program targets 7^th and 8^th graders, and had been proposed to expand to 6^th graders. The spending plan also alters the governor’s $4.6 million proposal for the Virginia Preschool Initiative to establish pre-kindergarten pilot programs. It leaves $2.6 million (captured from the At-Risk Add-On program) for eligible school divisions that have existing partnerships with private, nonprofit providers and elect to participate in the pilot for at-risk preschool students not being served. Funding of $2.8 million for implementing an associated voluntary quality ratings system for child day care preschool programs also was eliminated.

As the legislature faces another SOQ rebenchmarking next year, along with various increased staffing proposals from the Board of Education, budget language directs that a joint subcommittee composed of one member of both the House Appropriations and Senate Finance Committees review K-12 costs drivers and trends, a task that had been tackled this past year by various agency staff.

Local school divisions soon should receive detailed information about their state funding amounts; local governments typically receive a copy of this information as well.

Comprehensive Services Act

The approved budget maintains the $16.3 million included in the introduced budget for reimbursement to localities under the Comprehensive Services Act (CSA), in part to cover declining federal funding. Budget language directs the CSA State Executive Council to examine current funding allocations for non-mandated services to children served through CSA and recommend any changes necessary, including additional funding, to eliminate gaps in the current formula. Language also requires the Office of Comprehensive Services to report on the potential fiscal impact of SB 1332 (see more details below).

Other Budget Items Affecting Local Governments:

The budget provides funding a four percent salary increase for state employees (effective November 25), and state-supported local employees (effective December 1). It also provides $3.2 million the second year to fund one-half of the outstanding shortfall in the Compensation Board's minimum staffing standards for Commonwealth's Attorneys.

In the health and human services area:

·    The budget increases the auxiliary grant rate for residents of assisted living facilities to $1,061 by July 1. When combined with funding included in the Governor's introduced budget, the auxiliary grant will have increased by five percent from January 1 to July 1.

·    An additional $300,000 in the second year is added (on top of the $700,000 contained in the introduced budget) to increase the number of home-delivered meals provided by local Area Agencies on Aging.

·    The budget provides an additional $2.3 million in the second year to match federal funds to increase services provided under the mental retardation (MR) waiver program by 160 slots. This is in addition to the 170 slots funded in the introduced budget, thus a total of 330 new MR waiver slots are to be phased-in during FY08.

·    About $25 million in general funds is added to help meet new federal work participation requirements associated with reauthorization of the federal TANF program. A federal deficit reduction act last year means more TANF recipients must be in an approved work activity, driving a need for employment support and child care services.

·    General funds for the Comprehensive Health Investment Project (CHIP) are increased by $2.2 million in FY08.

In the public safety area:

·    The budget deletes $11.5 million proposed for incentive grants for localities that provide enhanced retirement benefits to their deputy sheriffs and jail officers under the Law Enforcement Officers Retirement System (LEOs). SB 1166 requires localities to provide these enhanced retirement benefits to their deputy sheriffs by July 1, 2008 (therefore, no state funding is included in the current biennial budget).

·    The spending plan continues distribution of HB 599 funds according to the current formula, eliminating the proposed redistribution of 40% of funding to cities based on violent crime rates. It also holds those localities that would otherwise have lost funding harmless. A language amendment requires localities receiving 599 funds to certify annually to the Department of Criminal Justice Services the total amount of local support for public safety services and that 599 funds were used to supplement, not supplant, local funding.

·    The budget provides $2.6 million the second year for the Virginia Crime Victim-Witness Fund, to cover a projected shortfall in nongeneral fund support from federal and state court fees for locally operated victim-witness programs statewide.

·    The budget includes dollars to increase funding for Court Appointed Special Advocates (CASA) to $1.6 million the second year, which will double the amount of state support provided for each of the 27 local programs, from $20,000 to $40,000 for each program.

·    Language and $100,000 is targeted for evaluation of the effectiveness and efficiency of local drug treatment court programs.

In the environmental area:

·    The budget appropriates $20 million in FY08 for deposit into the Water Quality Improvement Fund (WQIF) to upgrade wastewater treatment plants within the Chesapeake Bay watershed in nutrient removal technology.

·    The budget includes $6.6 million over the two years for land conservation initiatives, including $1 million for the Virginia Land Conservation Foundation, $1 million for the Virginia Outdoors Foundation, and $4.3 million for purchase of development rights. The governor had proposed $20 million in matching grants for natural and open space area protection programs.

·    The budget provides $730,000 the second year to the Department of Environmental Quality (DEQ) for a program to site, permit, enforce and monitor biosolids application on farmland in the state. Another $173,000 is provided for DEQ to review nutrient management plans with particular emphasis on plans including land applications of biosolids. Budget language directs DEQ to convene a panel of experts to evaluate the impact of biosolids application on human health and the environment.

·    The budget provides $300,000 the second year for the state's soil and water conservation districts, and includes new funding and positions for oversight of landfills and to enhance solid waste management compliance.

The compromise plan provides just over $300,000 the second year for establishment of a nonprofit, nonstock corporation to provide wholesale wine distribution services for Virginia local and farm wineries in accordance with HB 2450 and SB 1413.

In the second year, $190,000 is provided for HB 2197 and SB 1393, which require libraries receiving public funding to install technology protection measures to filter or block internet access to certain materials.

Also, the compromise plan deletes the $2 million in additional funding contained in the introduced budget for the Virginia Housing Partnership Revolving Fund.

For grants to non-state agencies, the spending plan earmarks $25,000 for the Pleasant Grove House in Fluvanna County, $15,000 for the Louisa County Historical Society, $35,000 each for the Nelson County Rural Health Outreach Passport, the Oakland Museum in Nelson County, and the Town of Louisa/Downtown Development Corporation. 

Budget language amendments:

· Language directs the Secretary of Health and Human Resources to report on the feasibility of restructuring the auxiliary grant program to make it a portable benefit for disabled consumers who choose housing arrangements other than assisted living facilities.

· Language specifies that funding for mental health services for children and adolescents with serious emotional disturbances and related disorders, which is provided through the Department of Mental Health, Mental Retardation and Substance Abuse Services to Community Services Boards, shall be allocated with priority placed on serving those children who are at-risk for custody relinquishment.

· Language directs the Department of Social Services, in collaboration with various state and local partners, to develop and disseminate clearly defined policies that encourage the use of non-custodial placement agreements to improve access to mental health services to children otherwise at-risk of placement in the state's custody. The department must also disseminate "best practices" information on such agreements and provide training to facilitate the use of non-custodial placement agreements by local departments of social services.

LEGISLATION update

Several issues of note received some close scrutiny last week in committees and on the House and Senate floors. After two years of different approaches to bills addressing eminent domain and the Kelo decision of the U.S. Supreme Court, the legislature finally approved legislation that allows the acquisition of property by eminent domain only for certain, specific public uses. Approved bills redefine the term “public use” and list the types of projects that are appropriate for the use of eminent domain authority. They also restrict condemnation authority over blighted property by requiring the structure be beyond repair or unfit for habitation or use.  For blight condemnation of unimproved land, the land must be vacant and constitute a public nuisance. While this new language limits redevelopment and housing authorities in their ability to clear blight in declining neighborhoods, an exemption is provided for any property in a redevelopment or conservation plan filed prior to January 1, as long as the property is acquired by July 1, 2010. The new provisions are contained in HB 2954, SB 781 and SB 1296. A proposed Constitutional amendment to restrict eminent domain, HJR 723, was defeated on a 21 to 16 vote in the Senate.

HB 3109 was recommitted to the Senate Courts of Justice Committee, defeating it for the year. This bill, which drew widespread opposition from local governments, would have eliminated the one-half mile buffer allowance for hunting near subdivisions; currently localities are allowed to prohibit hunting in these areas. It also proposed to broaden an exemption to penalties for shooting across a road that now applies only to shooting matches and firing ranges maintained or approved by law enforcement and military personnel. The bill had been reported from the committee on a close vote, but was returned to the committee on a 20-19 floor vote.

After being shot down in a House committee for many years, bills authorizing all localities to install and operate photo red light monitoring systems were approved in both chambers. HB 1778 and SB 829 permit localities to operate traffic light photo-monitoring systems at one intersection for every 10,000 residents. The bills stipulate a number of parameters for the use of such cameras and the images recorded.

SB 1332 proposes to expand the mandated population for CSA to include children who need mental health services. Both the Govenor’s office and the Attorney General supported this measure. A House committee had deleted the most onerous provisions of the bill, required that the measure be approved again next year, and added enactment clauses that required several reports of the Office of Comprehensive Services. Ultimately, the required reports were deleted from the measure and the bill must be approved in 2008 before taking effect. In addition, the legislature approved HJR 774, which provides that these at-risk children be served through appropriate mental health systems and not CSA.

The House and Senate took different stances on several important matters that had to be resolved in the session’s last days. Concerning grants for local water treatment plant upgrades, the approval of HB 1710 and SB 771 allows for the issuance of up to $250 million in revenue bonds by the Virginia Public Building Authority (VPBA) as an additional way for the WQIF to be capitalized. Funding is to be targeted to 89 plants, including facilities of the Rivanna Water and Sewer Authority and Rapidan Service Authority. State reimbursements will be phased in as local shares for the upgrades are expended.  

The two chambers also had proposed different ways of addressing benefits for certain local employees. Both proposed an increase in the monthly heath insurance credit for retired teachers from the current $2.50/month to $4.00/month; however, the two endorsed differing bills and proposed different amounts of money for the initiative in their version of the budget. Ultimately, HB 2370 and SB 1218 were resolved to increase the retired teacher health insurance credit from the current $2.50/month to $4/month for each year of service and removed the current $75/month cap on the amount that could be received.

Meanwhile, the approved version of SB 1166 requires deputy sheriffs to become members of LEOs, effective July 1, 2008. The costs of the enhanced benefits will be phased in over five years beginning in 2008, under a schedule to be developed by the Virginia Retirement System. The bill does not increase the retirement multiplier for sheriffs, but does so for state police officers (to 1.85%) and authorizes localities to likewise increase the multiplier for local public safety officers this same amounts.

SJR 354 is a Constitutional amendment authorizing the General Assembly to enact local homestead exemptions. The resolution allows localities, by ordinance, to exempt or defer from real property taxes up to 20% of the annual value of residential or farm property that is the owner/occupant's primary dwelling and lived in continuously. This amendment must be approved in the same form by the legislature next year, then endorsed by the voters, prior to taking effect.

Local legislation

Several bills introduced at the request of PDC localities were approved. HB 2674 and SB 898 establish a new definition of toy vehicles and, building on legislation from last year, allow some additional regulation of the likes of motorized scooters and skateboards. Numerous interests were involved in shaping HB 2010 and SB 955. While these bills that sought more flexibility and workability for localities using their affordable dwelling unit ordinances were approved, they were largely scaled back from their original intent.

HB 2503 amended transfer of development rights legislation approved last year by revising several definitions and establishing provisions for inter-jurisdictional transfer of rights. Finally, HB 1685 and SB 887 will allow the CTB to allocate primary system construction funds to projects in cities as long as the projects are on roads within the National Highway System, without diminishing state urban construction dollars to the city.

** Thanks for your interest, assistance and efforts during the General Assembly session.

**Look for a detailed summary of General Assembly action to be distributed following the reconvened session.

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)