Legislative Newsletter - November 26, 2007

Number 14

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.

Both staffs urged lawmakers to exercise caution in shaping the next state budget. Revenue for the remainder of FY08 is projected to grow about 3%, which is in line with revised growth figures presented to the money committees by the governor in August (revenue growth through the first quarter of the current fiscal year was 3.6%). Continuing housing woes will dampen growth in FY09, with the staffs projecting state general fund revenue growth to remain in the 3% range, with an uptick to 6.6% growth then forecast for FY10.  

In crafting the next biennial state spending plan, both staffs expect FY09 to be the greater challenge, while revenues and spending at this point are projected to be more in sync in FY10 (due to the higher projected growth in state revenues). The Senate Finance staff estimates about $2.1 billion in new revenue for the next biennium, with mandates and traditional, high priority funding items requiring about $2.5 billion (thus a gap of about $400 million). The House Appropriations staff estimates a smaller gap of less than $150 million. Some of the additional demands on state spending in the next biennium include the following:

• “Rebenchmarking” or updating the state’s public education funding requirements is expected to cost $1.1 to $1.2 billion. Student enrollment statewide should increase by about 22,000 students over the next two years.

• Additional funding of $125 to $150 million likely will be required for state costs related to the Comprehensive Services Act ($40 to $50  million in additional CSA dollars also are expected to be needed for the remainder of FY08).

• Medicaid funding demands could total an additional $225 to $350 million over the next two fiscal years.

• Compensation Board funding will require $80 to $110 million more in state funding.

• HB 599 funding to localities should increase $20 to $30 million over the next biennium.

Governor Kaine is slated to submit his budget proposal to the money committees on Monday, December 17.

CSA Recommendations Presented

The Joint Subcommittee Studying the Comprehensive Act (CSA) has received a list of 25 possible recommendations to be considered for action at its final meeting of the interim next month. The panel has been examining various CSA issues for the past two years, especially those raised in the December 2006 Joint Legislative Audit and Review Commission (JLARC) report on CSA. Many of the proposals presented to the committee by staff last week were recommendations of that JLARC study.

State officials told the panel that a number of the recommendations already were being addressed through regulatory action or efforts within the offices of the Secretary of Health and Human Services or Comprehensive Services Act. A recommendation to provide additional CSA administrative funding to localities was viewed favorably (though a funding source was not specified), as was a proposal to require more data collection about residential provider services. These two proposals are priorities of the TJPD legislative program that have been presented to our region’s legislators for introduction in the next legislative session. The panel also reacted favorably to several recommendations to enhance case management and it preliminarily shot down a proposal to eliminate distinction between “mandated” and “non-mandated” categories of children in lieu of providing services to all who demonstrate a need for services.

The subcommittee likely will meet next month to vote on the recommended actions.

Open Space Committee Mulls Recommendations, Takes No Action

The Joint Subcommittee Studying the Preservation of Open Space and Farmlands held its final meeting of the interim last week. The panel received unsettling news to start the meeting, as it was briefed on information revealed the previous week about a miscalculation (back in the year 2000) of the acres of land preserved within Virginia’s Chesapeake Bay watershed. That miscue reduced documentation of the acreage already preserved, meaning the remaining acres to be preserved under the Chesapeake 2000 agreement is about 120,000 acres than earlier thought.

To fund preservation of such lands, the subcommittee reviewed a handful of options, ranging from use of the Virginia Resources Authority (VRA) and grants to localities to new and existing revenues for land conservation. The group endorsed use of VRA borrowing and the concept of a matching grant credit to local governments that have less real property subject to tax, due to utilization of use value taxation. It declined to support the use of or redirection of existing revenues (such as recordation taxes, insurance license taxes, sales tax) and any new revenues (solid waste tipping fee and insurance policy surcharge). Legislators on the panel may seek to continue their work for an additional year, a move which would require approval by the 2008 General Assembly.

JLARC Examines Pre-School Initiative

A recent report by JLARC indicated that the Virginia Preschool Initiative helps students get a jump start on school, but may not be utilized as much as possible. Participation in the preschool initiative varies by locality—more than 12,200 children were in the program, but another 5,200 slots were not used by the participating localities. Localities cited a lack of space and unavailability of funds for the local match as reasons for either not participating or not using all of the allotted slots. The report also found the state has spent $269 million on the program over the last dozen years, with localities paying more than $300 million. The report, which cited national research suggesting quality prekindergarten programs have positive impacts on at-risk children, also said that it was unlikely that the governor’s proposed expansion would serve the additional 17,000 students referenced in the proposal. It presented various options for expanding access to pre-kindergarten, including a sliding scale of parent fees, based on parents income; a half-day versus a full-day program; a five-week summer program immediately before the start of kindergarten; and requiring all school divisions to offer pre-kindergarten programs. This study was directed by HJR 729 approved during the 2007 General Assembly.

Bill Draft Deadline Approaches

State legislators have until next Wednesday, December 5, to request drafts of legislation to be pre-filed for the 2008 General Assembly session. Typically, legislators may submit as many “pre-filed” bills as they desire; such legislation must be introduced on the first day of the legislative session (in this case, Wednesday, January 9, 2008). Afterwards, individual legislators are limited in the number of bills and resolutions they can introduce. If your locality has bills it would like to have introduced, you should contact your legislator(s) immediately.

A few bills already have been introduced, including the second reference of the Constitutional amendment approved last year related to a local option homestead exemption.

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)