Legislative Newsletter - October 28, 2009

Number 14

First Quarter State Revenues Trail Estimates
       State general fund revenue collections fell 7.5% in September compared withSeptember, 2008. All major revenue sources except payroll withholding (which grew 4%) fell from last September. On a year-to-date basis, total state revenues have declined 7.4%, trailing the annual forecast of a 1.6% decline. All major revenue sources are trailing their respective forecasts through the first quarter of FY10.
       The Governor’s Advisory Board of Economists (GABE) met in mid-October to assess changes in the economy since its July meeting. A late November meeting of the Governor’s Advisory Council on Revenue Estimates (GACRE) will evaluate both the GABE recommendations and revenue collections through October, with this analysis helping shape the governor’s revenue forecast and budget proposal to be released in mid-December.

Transportation Dollars Continue to Plunge
       More reductions are on the way for the state’s six-year transportation program. The Commonwealth Transportation Board (CTB) was told earlier this month that further weakening of gas, retail sales and vehicle sales tax collections are driving the gloomy outlook. The CTB reduced the six-year program by about $1.5 billion this past summer; it currently totals about $5.5 billion for highway construction, down from $8.6 billion two years ago. A revised program will be presented to the Board next month based on the lower-than-expected revenues, and it is anticipated that current year reductions could total close to $900 million, forcing VDOT to cancel more projects and borrow less money for other projects.  
       VDOT recently released its “Biennial Report on the Condition of and Investment Needed to Maintain and Operate the Existing Surface Transportation Infrastructure for FY 2011 and FY 2012.”  It estimates the annual investment needed to maintain and operate the state’s transportation network at $3.784 billion over the FY11/FY12 biennium. The gap between this estimated need and currently available funds for FY11/FY12 is more than $920 million.

More Chances to Comment on Stormwater Regulation Revisions
       Early this month, the Virginia Soil and Water Conservation Board (SWCB) adopted an amended version of the Virginia Stormwater Management Permit (VSMP) Program regulations. Due to the many changes made to the original version of the regulations (as endorsed last year), an additional 30-day public comment period is underway. The new public comment period began Monday; comments are being accepted only on the changes made between the proposed regulations and the final regulations adopted by the board on October 5.
       After reviewing the public comments, the SWCB is expected to vote on final adoption of the regulations at its December meeting. Recall that the General Assembly this past year approved legislation that prohibits the new rules from taking effect until July 1, 2010. 

  
VRS Board Certifies Teacher Rates
       At its meeting in mid-October, the Virginia Retirement System (VRS) agreed to an accounting change to inflate the value of the pension fund in an effort to avoid big rate increases to pay future retirement costs of state employees, teachers, and other public employees. The VRS Board suspended an accounting rule that requires the state to fund the plan within 20% of its fair market value. As a result, state and local governments will face smaller increases in required contribution rates to fully fund the plan. Without the change, the state contribution rate for state employees and teachers would have increased by 50%. Even with the change, rates will still have to increase from 20% to 30% over the next two years. The teacher rate certified by the VRS is 12.91% (not including the 5% member contribution), with rates of 1.11% for group life and 1.08% for the retiree health insurance credit. Local rates will be considered next month. Rates certified by VRS are subject to legislative approval.

Commission on Energy and Environment Mulls Potential Legislation
       The Virginia Commission on Energy and Environment, established in 2008 as a legislative branch commission to review and recommend steps to implement the Virginia Energy Plan,recently discussed possible legislative initiatives for the next General Assembly session, some of which are of particular interest to localities. One would codify provisions contained in Executive Order 82, issued by the governor in June, to require certain public buildings to conform to LEED silver or Green Globes two-globe standards. During the 2009 session, SB 1252 would have required public buildings to be built to LEED standards; the bill did not pass. In response to some concern about the potential costs of this new requirement, the Commission chairman suggested that the Department of General Services report on whether, and to what extent, costs increase when building new construction to LEED standards.
       The Commission also discussed supporting a Constitutional amendment that would authorize the General Assembly to allow localities to exempt or partially exempt property from taxation that meets “green” criteria. The change would encourage the installation of energy and natural resource efficient devices. The measure, SJR 332, passed the General Assembly overwhelmingly this past year; such amendments must be approved in two subsequent years of the legislature, with an election in between, and then placed on the ballot for approval by the voters.

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)