Legislative Newsletter - March 4, 2009

Number 6

Assembly adjourns; final act addresses budget

      The General Assembly adjourned as scheduled on Saturday, after approving changes to the current, two-year state budget. Given that details of the federal stimulus package (the American Recovery and Reinvestment Act, or ARRA) are forthcoming, it is expected that Governor Kaine will propose extensive amendments to the adopted budget based on new details that are received in the coming weeks. His proposed changes to the budget and to bills passed during the session will be considered when lawmakers return to Richmond on April 8 for the annual reconvened session.

      The proposed, compromise amendments to the biennial budget introduced by the governor in December were made available Saturday, after senior lawmakers reached an agreement around midnight Friday. Thus, legislators had only a matter of hours to be briefed and vote on changes to the plan introduced by Governor Kaine. Following are highlights of those approved amendments to the introduced FY08/FY10 state budget:

TJPD Action Items:

Local and State Funding Obligations:

      The compromise budget restores dollars for reductions of seven to 10 percent, proposed in the introduced budget, for commissioners of revenue/directors of finance ($1.7 million), court clerks ($2.7 million), Commonwealth attorneys ($3.5 million), treasurers ($1.1 million) and sheriffs ($5.3 million). The plan also restores $6.6 million in FY10 for state aid to localities with police departments (HB 599 funding), which keeps funding level with the previously-reduced FY09 amount.

      The budget adds $2 million to the Compensation Board budget to reimburse two-thirds of the fringe benefit costs for court clerks. Presently, two-thirds of excess court fees are returned to localities with the state retaining one-third.  The introduced budget reversed that, thus depleting local budgets of $6 million and increasing state revenue by that amount. However, the State must pay the same percentage of fringe benefits as excess fees retained, so the $2 million is for its reimbursement of two-thirds of the cost of fringe benefits.

Transportation Funding:

Budget language details how the Virginia Department of Transportation (VDOT) will allocate $575 million in reductions, pursuant to the reductions plan presented last month by the VDOT Commissioner.

      The budget allows local transit properties to request a one-year transfer from the Mass Transit Capital Fund to Operating Funds in order to maintain current operating fund levels.

      Finally, the Secretary of Transportation is required, within seven days after enactment of the budget, to compile a prioritized statewide list of transportation projects ready to be advertised for bid, if funding becomes available from the ARRA. The State expects to receive more than $800 million for roads and transit capital from federal stimulus funds.

Comprehensive Services Act (CSA):

      The approved budget includes an additional $3 million reduction in funding for CSA, due to slower-than-anticipated caseload growth. This is on top of the $13 million reduction included in the introduced budget ($6.2 million in FY09 and $6.8 million in FY10).

      Several language amendments are included in the compromise plan. One would require local CPMTs and CSBs to collaborate on local plans for intensive care coordination. The Office of Comprehensive Services is required to develop a plan for conducting training sessions for CPMT and FAPT members, as well as for local fiscal agents and chief administrative officers. Finally, the State Executive Council is directed to work with the Department of Education to ensure that funding is sufficient to pay for educational services for children placed in state or privately operated facilities.

Education:

      The General Assembly accepted many of Gov. Kaine’s proposed policy changes, including the use of a cap on the number of support positions to be funded by the State (FY10 only). School divisions are to have discretion in how to adjust to the decreased state funding. The Board of Education is directed to compile two rebenchmarking calculations for the next biennial budget, one based on this capped support position methodology and one not. The Board also is to review the current Standards of Quality (SOQ) to evaluate the appropriateness of the existing staffing standards for instructional positions and the appropriateness of establishing ratio standards for support positions, and to review state laws, regulations and procedures that could be modified, reduced or eliminated in an effort to minimize administrative burdens.

      The General Assembly also agreed to eliminate the $27.5 million school construction grants fund, and only partially restored the school divisions’ portion of lottery profits, using most of the lottery dollars to supplant state general fund dollars for education. The budget makes up for the reductions in state aid that would have resulted from these policy changes with funds from the ARRA (approximately $365 million). It also directs that those funds be used in FY11.

      The compromise plan also redistributes nearly $61 million from the Lottery Proceeds Fund's Funding Loss Cap account into the Additional Support for School Construction and Other Operating Costs account. It includes language that localities are not to reduce instructional positions below the number of positions required by the SOQ as a result of the support cap, and that they shall meet the required local effort amount to fund state funded instructional positions as defined in this item. Additional language encourages localities to allow school boards to carry over any unspent local allocations into the next fiscal year, and to provide increased flexibility to school boards by appropriating state and local funds for public education in a lump sum.

Other Budget Items Affecting Local Governments:

In the health and human services area:

      The budget reflects additional revenue from the stimulus package for Medicaid, increasing the federal share of Medicaid from 50% to 56.85% in FY09 and 60.19% in FY10, allowing the State to reduce its share of Medicaid spending by more than $960 million. The budget also adds an additional 200 mental retardation (MR) waiver slots, effective January 1, 2010.

In the public safety area:

      The budget specifies that the distribution of $23.3 million from Virginia's allocation from the Byrne Grant program is to be used for sheriffs' offices and local and regional jails, to the extent such funds are made available as part of the ARRA. Accordingly, and as noted above, the budget provides these dollars and $5.3 million in general fund dollars to restore funding reduced in the introduced budget to sheriffs' offices. It also captures savings of $2.2 million from the general fund each year resulting from a re-estimate of per diem payments for inmates in local and regional jails.

      The plan provides a $1.5 million increase in FY10 for local community corrections and pretrial release programs, down from the $3 million increase proposed in the introduced budget. It restores $1 million of a reduction contained in the introduced budget to the Rescue Squad Assistance Fund.

      The budget compromise slightly expands the existing federal inmate cost recovery methodology to recoup the entire costs borne by the State for federal inmates housed in local and regional jails, generating just over $250,000. However, the plan maintains an exemption from overhead cost recovery for four jails, including the Central Virginia Regional Jail, as a result of housing federal prisoners.

      Budget language creates a joint subcommittee to review state policies regarding the oversight, approval and financing of local and regional jail capital projects and operational expenses. Additional language authorizes the Department of Juvenile Justice to more quickly reprogram unobligated funds in the Virginia Juvenile Community Crime Control Act (from grants returned by localities) to localities showing effectiveness in juvenile crime prevention. 

In the environmental area:

      The budget provides $17.2 million from the ARRA to supplant general fund support for agricultural best management practices and land conservation. The budget restores $216,000 for Citizen Water Quality Monitoring grants, and budget language adds two members to the Advisory Committee on Sewage Handling and Disposal, to include one system installer and the Association of Onsite Soil Engineers; this committee advises the Health Commissioner on regulations and policies.

Budget language amendments:

·  The Joint Legislative Audit and Review Commission (JLARC) is directed to study funding of circuit and district courts.

·  JLARC is directed to study the funding of courthouse construction, operation and maintenance, including the extent to which the current fee structure provides an equitable, efficient and sufficient source of revenues.

·  The Compensation Board is to convene a workgroup to update the staffing standards for the constitutional officers' offices.

·  The Tax Department is to convene a working group to examine the basis on which recordation and grantor taxes are calculated.

·  The Tax Department shall secure and utilize software based on GPS data in allocating the 1% local option sales and use tax to localities, and to provide localities with increased computer access to data in to facilitate local input in error identification.

Legislation Update

Several issues of note received some close scrutiny last week in committees and on the House and Senate floors:

      The bills addressing alternative on-site sewage systems were the subject of much discussion in the session’s final week, with numerous floor amendments proposed in both the House and Senate chambers. HB 1788 and SB 1276, as approved, would bar localities from prohibiting the installation of alternative systems (where no sewers or sewerage disposal systems are available) approved by the Board of Health for use in the situation for which it is proposed. Local bans on installation may continue in place until approval of regulations governing licensing of installers of such systems (expected by July 1, 2009). Local maintenance standards may continue until the Board of Health adopts final regulations for maintenance of such systems (not expected until July 1, 2010 or later). Property owners must record an instrument identifying by reference the applicable maintenance regulations, which are to transfer with the property. Additional language directs the Board of Health to require system manufacturers to provide operation and maintenance instructions for such system for the Board’s approval.

HB 2472 and SB 1419 divide the daily rental tax into two categories. One pertains to rentals covered by present law, such as movies, hand tools and power equipment. The second category is new and designed to benefit the heavy equipment rental businesses that requested the legislation. These businesses will remit a daily rental tax of 1.5%, as long as at least 60% of their rentals are for periods of 270 days or less. The compromise also brings the daily rental tax under the local business tax appeals process.

HB 1655 and SB 1513 addressed attorney fees for successful actions challenging a locality’s authority to regulate firearms. The House wanted a requirement that such fees be awarded, while the Senate endorsed discretion on the part of the court. The Senate position prevailed.

SB 1416 allows a local governing body to include in ordinances establishing areas of known historical or archaeological significance, that an applicant proposing any development submit documentation that the development will preserve or accommodate the historical or archaeological resources.

SB 1551, as introduced by unanimous consent in the session’s final week, was an attempt to clarify that a local governing body could require nonsalaried citizen members of any board, commission or council it created, to file a disclosure of the member's personal interests as a condition of assuming office and to then annually file such disclosure. However, the House changed the bill to require disclosure by members of such entities that advise the local governing body on land use policies. Ultimately the bill failed to pass on the session’s final day.

Local legislation:

      Numerous bills introduced at the request of or of particular interest to PDC localities were approved. Unless otherwise noted, the bills are awaiting signature by Governor Kaine. Thanks to our legislators who patroned these bills!

HB 1837 provides that the unposted maximum speed limit on nonsurface treated highways (dirt roads) in Albemarle County will be 35 miles per hour; this bill has been signed by the governor and takes effect July 1.

HB 2158 authorizes establishment of a regional transit authority in Charlottesville and Albemarle.

SB 1212 allows localities to provide loans for the initial acquisition and installation of clean energy/energy efficient improvements. This bill, originally requested by Charlottesville, was expanded statewide. The purpose of the program is to make these improvements affordable,

      by providing low-interest rates, longer terms and easy application. Such programs would be eligible to receive federal funding through Energy Efficiency and Conservation Block Grants (EECBG) that were bolstered by the ARRA.

SB 1213 designates as agents of the ABC Board (thus allowing on-site sales) any licensed distiller who blends alcoholic beverages on his licensed premises, provided at least 51% of the agricultural products used to manufacture the beverages are grown on the licensee's land or on land he leases in Virginia. This bill was requested by Eades Distillery in Nelson County.

SB 957 expands the scenic river designation for the Rivanna River almost 10 miles, to include the portion from the South Fork Rivanna reservoir to the Woolen Mills dam (where the designation now begins and then continues to the junction of the Rivanna with the James River).

SB 1025 authorizes Greene County to impose a transient occupancy tax up to five percent, with additional revenue generated by the portion of the tax over two percent to be used for tourism or marketing of tourism.

SB 1506 was introduced as a result of discussions between legislators and Greene County officials. Ultimately, the approved bill provides that in cases of judicial assignment of services for children under the Comprehensive Services Act, where a party requests a level of service not identified or recommended in the FAPT report, the court shall request the CPMT to submit a second report characterizing comparable levels of service to that which was requested.

SJ 379 designates August 20, 2009, as a day of remembrance of the 40^th anniversary of Hurricane Camille, which caused widespread damage and loss of life in Nelson County.

** 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)