Legislative Newsletter - August 23, 2007

Number 11

Lagging State Revenues Could Impact Localities

Governor Kaine briefed the General Assembly money committees on the official end-of-the-fiscal-year (FY07) revenue picture earlier this week. For the year, revenue growth was about one-and-a-half percent lower than predicted, translating into a $234 million shortfall. The governor cited a struggling housing sector as one cause of the shortfall, as recordation tax revenues dropped 16 percent from last year. In addition, income tax refunds were higher and there was increased utilization of the land preservation tax credits program.

A revised FY08 revenue forecast of 3.2 percent growth (down from the official estimate of 4.4 percent growth), combined with the FY07 shortfall, leaves a $641 state revenue gap that must be addressed before the close of the biennium next June. Accordingly, the governor is directing state agencies to reduce their operating budgets by five percent and to obtain approval from their respective Secretary before hiring new employees or initiating new consulting contracts. Reductions are expected to be known by the first part of October. Exempted from the reductions are constitutional officer salary and benefits, Standards of Quality education programs, jail per diems and mandated services under the Comprehensive Services Act. However, other direct aid to localities could be affected. All FY08 non-state agency grants also will be reduced five percent. The governor also said he would consider recommending a withdrawal from the “Rainy Day” fund to help alleviate the shortfall, an idea that was not well received by legislators.

As this shortfall is expected to have a rippling effect into the next biennial budget for FY09 and FY10 that lawmakers will craft during the General Assembly session that begins in January, the governor said he intends to “closely examine programs to see if there are any that should be changed or discontinued” and that  “no government program should be funded simply because it has always been funded before.”

State Education Funding Examined

A special subcommittee examining what drives the state’s share of education costs held its first meeting this week. The meeting was dominated by background presentations on current state efforts in funding K-12 education. Rising expenditures for public education led the General Assembly to establish the two-person subcommittee, composed of one House member and one Senate member. Delegate Bob Tata said that convincing the General Assembly to fully fund the next rebenchmarking would not be easy. Senator Edd Houck suggested that the committee consider a multi-year endeavor in its examination of education funding, and that education funding formulas needed to be simplified in order to be understood. A preliminary price tag of $1.1 billion on updating state education costs through the biennial rebenchmarking process was presented to the Board of Education late last month. The number reflects costs of continuing current programs and does not proposed any funding policy changes. The subcommittee is supposed to submit its recommendations to the General Assembly the middle of next month.

Guidelines for Wastewater Treatment Grants Released

 Legislation approved during the 2007 General Assembly directed the Department of Environmental Quality (DEQ) to identify and evaluate options to ensure the efficient use of grants awarded from the Water Quality Improvement Fund (WQIF). Grants authorized through HB 1710 and SB 771 will be targeted for nutrient removal technology at local wastewater treatment plants designated as significant dischargers or as eligible nonsignificant dischargers. DEQ has prepared a draft report, and now is seeking comments on the proposed recommendations. Existing WQIF cost control measures have been revised to incorporate changes, which, among other things, will mean cost-effectiveness, will be an important consideration in prioritizing applications and determining grant awards. A technical advisory group that included local government representatives helped shape the report. Comments can be sent to DEQ ( Attention: John Kennedy, DEQ-Chesapeake Bay Program, P.O. Box 1105, Richmond, VA 23218; or email to jmkennedy@deq.virginia.gov) through September 14.

Draft Access Management Standards Developed

HB 2228 and SB 1312, as approved by the 2007 General Assembly, required VDOT to develop and implement highway access management standards for the location, spacing and design of various entrances and intersections. Draft standards are being released, and though not required to go through the state’s formal rulemaking process, the regulations will be subject to a public comment period next month. They are slated to be published the middle of next month, with an official public comment period from September 17 through 28. You are urged to have your staff review these proposed regulations for possible impact on your locality.

The new requirements will apply to new commercial entrances and any single entrance that will serve three or more residences onto all state arterials and collector roads. They will not apply to local subdivision streets and private driveways, and generally will not supersede current local access management standards unless they are more stringent than the local requirements. These new regulations are scheduled to take effect July 1, 2008.

Traffic Impact Analysis Briefings Scheduled

The Virginia Department of Transportation (VDOT) will hold briefings in the Culpeper District next month on new Traffic Impact Analysis Regulations. The 2006 General Assembly approved HB 1513 and SB 699 to link state transportation and local land use planning by requiring comprehensive plans, rezonings and subdivision plats to be submitted to VDOT for review and comment on transportation impacts. The new regulations establish uniform statewide standards for traffic impact analyses of land-use proposals substantially impacting the state’s transportation network. Implementation of the new regulations is being phased in across the state, taking effect next January 1 in the Culpeper District and next July 1 in the Lynchburg District. The information sessions for local government officials, those involved in the land development process and others in the Culpeper District are slated for September 10 at VDOT’s Culpeper offices from 2 p.m. to 5 p.m., and the following day, September 11, at the Albemarle County Office Building-South, from 9 a.m. to 12 noon.

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)