Legislative Newsletter - February 13, 2008

Number 5

Calendar for 2008 General Assembly Session

February 17     House and Senate budgets released

February 21     Deadline for House/Senate action on their respective budgets

March 8           Scheduled adjournment

BUDGET OVERVIEW

            On Tuesday, Governor Kaine announced that the state’s expected revenue shortfall for the next 28 months totals nearly $1.4 billion. The shortfall for the remainder of this fiscal year is projected to be $339 million, with the FY09 figure being $520 million and $532 million in FY10. Accordingly, estimated revenue growth for the reminder of FY08 has been reduced from 3.3% to 1.2%, from 3.3% to 2.2% in FY09 and increased from 6.7% to 6.8% in FY10 (but this is a smaller dollar increase due to reductions in the previous year).

            The governor has proposed numerous actions to address the revenue slide. They include a 5.4% reduction in state funding to local governments, a total of $130 million over the next biennium. Under the governor’s plan, localities would be given a dollar amount to reduce and an accompanying menu of programs from which to take the dollars. This list of programs would include the likes of financial assistance for Constitutional officers and local/regional jails and jail per diems, aid to public libraries, the Comprehensive Services Act and numerous others.

            Governor Kaine proposes no additional reductions in direct aid to localities in the current fiscal year, and he would exclude state funding for the Standards of Quality and the personal property tax relief (car tax) act from reductions over the next biennium. However, state funding for school capital costs is virtually eliminated under the proposal, as 1) the remaining $55 million in school construction grants is diverted, and 2) approximately half, or $165 million of lottery proceeds sent to local school divisions for school construction, is shifted pay state K-12 basic aid costs. The plan also reduces funding for the governor’s proposed pre-school initiative.

            The Kaine plan also includes further reductions to state agencies and higher education, slices 1% of proposed salary increases for state employees and teachers (FY10), and suggests an additional $162 million withdrawal from the state’s revenue stabilization fund (on top of the $261 million proposed in his introduced budget). While the plan proposes to change the retirement amortization period from 24 to 30 years, VRS rates remain unchanged.

            This plan is a proposal. The General Assembly’s money committees will use the revised forecast numbers and this proposed budget reduction plan as they develop their respective budgets, which are slated to be reported this coming Sunday. Specific, line item details of those plans should then be available next Tuesday.

LEGISLATION for the homestretch

            “Crossover day” at the General Assembly has come and gone. The House made quick work of its calendar on Tuesday, while the Senate spent the better part of the day voting on the remaining Senate bills before it. From now until the session’s end, the House considers only Senate bills and the Senate considers on House bills.

            The Senate passed SB 768 by a narrow 21 to 19 margin on Tuesday. The substitute version of the bill still repeals local authority to accept voluntary cash proffers from new residential projects. It also limits the ability to accept off-site non-cash proffers and limits the amount of impact fees a locality can impose to an unscientific $7,500 per unit. As currently written, the bill will leave many localities with inadequate funding for schools and roads, thus increasing pressure on localities to increase tax rates to fund capital needs. The bill had been handily approved by the Senate Finance Committee prior to the floor vote. The battle now shifts to the House, where the bill likely will be referred to the Counties, Cities and Towns Committee. As this bill poses such a drastic shift in policy by attempting to undo 30 years of proffer authority in a mere 30 days, local governments are asking that legislators defeat the bill or carry it over for the year so that local governments can have an opportunity to fully analyze its implications. Please communicate with your delegates about the harmful effects of this bill. And also thanks go to our members of the Senate (Senators Deeds, Hanger and Houck) who voted against SB 768 on the Senate floor.

            The past two years, the General Assembly has changed state law to require more information on tax bills and to move back the time for advertising the tax rate. This year, a new crop of proposals to cap property tax rates or increases and to require additional information to be included on bills and forms was submitted. The Senate Finance Committee sent its bills on these topics to a special subcommittee to meet in the offseason to study the implications of the Senate measures. No action was taken on most of the House measures with the exception of HB 1009, which requires localities to establish a deferral program for real estate taxes on primary residences of taxpayers, and to provide additional information on both real and personal property tax bills about the tax rate and assessed values. Local governments will be looking to steer this bill to the Senate special subcommittee as well.

            The House and Senate have taken different stances on the so-called “homestead” exemption. The House unanimously approved HB 11 and HJR 4, which, if approved by voters in November, would allow the General Assembly to enact legislation to authorize localities to exempt or defer up to 20% of real property taxes a homeowner’s primary residence. Though the Senate failed to approve its version of the Constitutional amendment, it did approve SB 496, legislation to implement the amendment. The Senate version of the Constitutional question was defeated last week on an 8 to 8 vote in Senate Finance Committee.

            Nearly all bills proposing to increase retirement benefits were defeated. Two bills of note that did pass: 1) HB 112 adds county administrators to the list of local government officials who may retire with unreduced benefits upon attaining age 50, if they are involuntarily dismissed or not reappointed; 2) SB 695 permits a retiree to return to work as a school superintendent and retain monthly VRS retirement payments. Such option currently is available to for other school board employees under certain conditions.

Some of the other legislation of interest that will continue to be considered in the second half of the session includes the following:

HB 111           Revises current highway revenue sharing provisions to give first priority to locally-administered projects, second priority when more local funds are committed than state funds requested, and third priority to projects that are accelerated in the state six year or local capital plan (also SB 99).

HB 119           Requires the Attorney General to provide legal representation to soil and water conservation districts, though the districts may request legal advice from local public or private sources.

HB 147           Requires the Statewide Transportation Plan to include regional goals and performance measures for each construction district, and directs the collection and reporting of data regarding the modal share of trips for driving, transit, carpooling, telecommuting, walking, and bicycling in several areas of the state.

HB 371           Requires a locality to pay attorney fees if certain prohibited actions regarding the regulation of firearms are taken.

HB 503           Requires the State Executive Council to develop mandatory uniform guidelines and localities to implement a case management program for residential services

HB 848           Directs the Office of Farmland Preservation to develop model policies and practices to guide establishment a local lease of development rights program.

HB 854           Allows local public bodies to meet electronically to address an emergency when under a Governor-declared state of emergency (also SB 131).

HB 922           Increases the “$4-for-life” fee by 25 cents, with the additional revenues targeted for emergency medical services personnel training.

HB 991           Permits the severance and transfer of development rights from a sending property without requiring those rights to be immediately affixed to a receiving property.

HB 1115         Increases the annual amount a locality pays to the State Forester for forest fire protection, detection, prevention and suppression, from five to seven cents per acre this year, and from seven to nine cents per acre the following year.

HB 1335         Creates a Natural Resources Commitment Fund to fund agricultural best management practices (also SB 470)

HB 1406         Increases from 1,000 to 1,500 vehicles per day the maximum average daily traffic volume for roads to be eligible to participate in the rural rustic road program.

HB 1453         Requires certain localities levying additional transient occupancy taxes to consult with the local tourism agency about spending on tourism initiatives.

SB 49              Provides that zoning ordinances and districts give reasonable consideration to the conservation of environmental resources (also SB 50).

SB 56              Authorizes the Virginia Resources Authority to finance the construction of local government buildings.

SB 121            Establishes the TransDominion Express Commission.

SB 249            Requires foster care plans for children 14 and older include an independent living services plan.

SB 477            Requires that the Office of Farmland Preservation, in developing its policies, procedures and guidelines, to include incentives that recognize and encourage counties and cities participating in use value taxation.

SB 533             Expands requirements for disclosure of real estate interests under the Conflict of Interests Act.

SB 644             Sets out the responsibilities of pedestrians and drivers at marked and unmarked crosswalks, including for motorists to stop for pedestrians in crosswalks.

Locally-Requested Legislation:

SJR 17 has been approved by the Senate. This resolution, introduced at TJPD request, calls on the Office of Comprehensive Services to revise or replace the service fee directory that deals with information about residential services. The resolution was amended to provide for an interim report by OCS in 2009, with a final report due to the 2010 General Assembly. Companion resolutions in the House were not taken up for consideration.

            Meanwhile, both chambers unanimously approved bills to allow the City of Charlottesville to adopt provisions in its zoning ordinance that would provide, in rezoning or special permit cases, for the construction of affordable units or for the payment of cash in lieu of units. The bills are HB 883 and SB 268.

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)