Legislative Newsletter - October 30, 2007

Number 13

FY08 Reductions Announced; State Revenues on Target for Now

On October 1, the governor announced budget reductions totaling $300 million in the current fiscal year to help meet a projected $641 million revenue shortfall for FY08. Of this amount, aid to localities was reduced by just under $20 million, the majority ($10.8 million) being in HB599 law enforcement funding. Other reductions were made to the Compensation Board, local juvenile detention centers, local libraries, the Virginia Juvenile Community Crime Control Act and planning district commissions.

First quarter (July-September) figures released the middle of the month show state revenue collections slightly ahead of revised projections. Through September, revenue growth has been 3.6 percent, ahead of the annual forecast of 3 percent growth. In September alone, state tax collections jumped 4 percent over the same month a year ago. The latest revenue report stated that recent economic indicators suggested that the national economy slowed over the summer as effects from the housing market slowdown continued. The governor’s Advisory Board of Economists met this month to assess the outlook for the state economy. Governor Kaine submits his proposed two-year budget to the legislature December 17. That budget for FY09 and FY10 could propose more cuts, including to items exempted during the current reductions, to address an anticipated $1 billion shortfall over the next two years.

CSA Proposals Presented

Several budget and legislative initiatives focusing on the Comprehensive Services Act (CSA) were presented to our region’s legislators at the annual legislative luncheon recently. Specifically, legislators were requested to sponsor and support the following initiatives: 1) An amendment requesting an additional $2.5 million in each year of the next two-year state budget for CSA administrative costs (statewide figure); 2) A budget language amendment directing the Secretary of Health and Human Resources, in consultation with various stakeholder groups, to review and develop options for revising the funding formula for local administrative costs for the CSA; and 3) A resolution directing the Office of Comprehensive Services to develop a comprehensive information system to replace or revise the Service Fee Directory in order to capture and track key compliance, performance, and financial information, including rates, about residential services.

These initiatives are the result of discussions this year by the “Mayor and Chairs” group, which recommended that CSA be the region’s top priority for the 2008 General Assembly.

Land Preservation Study Group Presented with Funding Options

The Joint Subcommittee Studying Open Space and Farmland Preservation met recently to continue its examination of long-term funding sources for the purchase of development rights. A staff presentation to the group noted various funding considerations for preserving 20% of the Chesapeake Bay watershed by January 1, 2010, a goal not yet met and which would cost tens of millions of dollars more to be realized. The presentation explained possible uses of both existing and new revenues to meet these costs. One of the new revenues suggested was a solid waste tipping fee, which could be expected to generate about $36 million/year if a $3/ton fee were imposed (figure from the Governor’s 2003 Natural Resources Funding Commission). Previous attempts earlier this decade to establish such a fee were unsuccessful. Local governments have strenuously objected to it, citing the precedent of having a state fee imposed on a local service.

It also was reported to the panel that more than 300,000 acres in Virginia have been preserved over the past 10 years, much of that through the state’s land preservation tax credit program. At the local level, 20 localities have created PDR programs and at least another half dozen are considering it.

Mandate Assessment Process Revised

Governor Kaine has signed Executive Order 58, which establishes new policies and procedures for agency assessment of state mandates imposed on local governments. These were developed with assistance from a task force that included representatives from counties, cities and towns throughout the state. The order categorizes mandates on local governments into four areas: compulsory orders, non-discretionary conditions of aid, regulation of optional activities and state fiscal preemption. State agencies assessing local government mandates must file a schedule of those assessment periods that will be published in The Virginia Register. New mandates will not be assessed until they are in effect for two years, and generally, no mandate shall be reassessed more than once every four years. Mandates assessed in the most recent assessment period will be not reviewed again unless requested by the Commission on Local Government.

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)