Legislative Newsletter - February 23, 2010

Number 5

Calendar for 2010 General Assembly Session

February 25    House and Senate floor votes on their budget plans
March  8         Last day for committee action on bills
March 9          Deadline for budget conferees to agree on a compromise spending plan
March 13        Scheduled adjournment

House, Senate Budgets Slash Spending

     The House and Senate money committees on Sunday released competing versions of a proposed state spending plan for 2010-2012, as well as amendments to the current, FY10 budget. As expected, both committees’ plans make deep reductions in state programs and services, to public education and in state aid to localities. Due to the severity of the state budget gap, the number and complexity of the budget amendments is greater than in recent years. Details are still being released and analyzed, but here is an overview of major components of the plans; look for additional details forthcoming later this week from the staffs at VACo and VML.

     Both budgets restore the car tax relief ($950 million each year) reimbursements to localities.

     Both set aside dollars for future Rainy Day fund payments. The House uses $165 million of the estimated $200 million additional revenues in FY10 for deposit into the Rainy Day fund in FY12. The Senate sets aside $40 million for an FY12 deposit.

     The House budget eliminates all fees proposed by Tim Kaine in the introduced budget (about $145 million), while the Senate largely maintains those fee increases in its plan.

     Both plans undo the proposal in the introduced  budget that would have frozen the local composite index (LCI) of ability to pay. The House proposes $91.6 million to fund a ‘hold-harmless’ payment to the school divisions losing money in FY11 due to the LCI update, which will restore about 80% of what they will otherwise lose. The Senate proposes a full hold harmless for all school divisions in both years (nearly $232 million over biennium).

     Both proposals grab significant dollars through savings in the Virginia Retirement System (VRS). Both plans propose lower contribution rates for state employees and teachers that would save hundreds of millions over the two years for state and localities. A House-proposed language amendment gives school boards and localities the option to require current employees to pay a portion of the 5% employee retirement contribution, and to offer an early retirement program.

     Both plans propose restorations to public safety and constitutional officers. The House restores roughly two-thirds of reductions contained in the introduced budget, including using over $20 million each year from the communications sales and use tax fund, which is distributed to local governments. The restorations include $24.7 million to restore 1:1,500 deputies ratio; the Senate proposes a 1:1,650 ratio. The Senate recommends a restoration of $182.3 million to public safety and constitutional officers, funding $51 million of this with increased district and circuit court fees. Both plans reduce HB599 payments to localities with police departments from the current level of approximately $180 million—the House proposes a $20 million reduction over the two years, while the Senate reduction totals about half that.

     Also in the area of public safety, Senate amendments 1) adjust the definition of state-responsible offenders from felons with sentences of one year or more to felons with sentences of two years or more (per diems stay the same for the extra year); 2) direct the Board of Corrections to measure the capacity of each local and regional jail based on double-bunking; and 3) allow localities to increase the courthouse construction and maintenance fee from $2 to $10.

     Additional items affecting public education include reliance in both plans on savings in VRS contribution rates to cushion reductions to public education, and signaling the intent that local savings related to the funded rates for public school teachers be used to help maintain local school funding levels. The House plan allows for an increase in class sizes by one student in kindergarten through grade seven and waives certain staffing ratios; the Senate allows for temporary staffing ratio increases. The House would suspend the state mandate for a secondary planning period that was approved in 2004, saving about $185 million each year; localities also would realize about $150 each year in savings to the local required match. The House proposes a lottery block grant totaling $263 million that would combine funding from various at-risk programs, summer remediation and early reading intervention programs, as well as the school construction and operating costs fund (the Senate shifts $70 million from this last fund). Both plans provide funds for an FY12 Virginia Public School Authority educational technology equipment grants program.

     Other important items include the following: Both plans contain significant reductions in the health and human services area, many in the area of Medicaid. Reductions are proposed in both plans to VJCCCA, the auxiliary grant rate, local departments of social services, and the Healthy Families program. Both eliminate language included in the introduced budget that would have allowed localities to establish local offices of finance.

     The House would eliminate nearly $3 million each year in drug court funding and further reduce funding for registrars and electoral boards and for local health departments. The Senate plan would eliminate funding of $3.6 million for planning district commissions. The Senate also captures $50 in savings in state aid to localities in FY11; this provision was part of the 2008-2010 biennial budget, and was proposed for elimination in the introduced budget. Both plans allow up to 20% of the transit capital funds to operating support.

     Both chambers will discuss, debate and vote on their version of the budget on Thursday. By the middle of next week, a conference committee of senior budget writers will be appointed to try to agree on a compromise spending plan. This may prove to be a challenging task, given the size of the budget gap and the areas of disagreement that must be overcome.

Legislation

     As we start the second half of the session, committees are busy dealing with legislation approved by the opposite chamber. First, though some action from this past week. HB 613 was defeated on the House floor on two separate votes, despite pleas from the bills patron and supporters that the bill was necessary to make Virginia friendlier to manufacturing jobs in these tight economic times. The bill was first defeated on a 51 to 48 vote. A second vote of 50 to 48 defeated the bill for the session. HB 613 would phase-out the machinery and tools (M & T) tax by reclassifying M & T used in manufacturing, mining, water well drilling, processing or reprocessing, and radio and television broadcasting as intangible personal property exempt from state and local taxation.

     HB 57 has been defeated in the Senate Finance Committee. The bill would have prohibited any new BPOL taxes or increases in existing BPOL tax rates.

     SB 35  and HB 350 have been amended to grant all localities the power to prohibit and/or regulate the distribution of handbills, solicitation of contributions, and sale of merchandise and services on highways, roadways and medians within their boundaries.

     There was an attempt on the Senate floor to amend SB 551 to delay the Chapter 527 regulation (traffic impact analysis) until 2014. Supporters cited the costs and delay in moving projects forward that have come as a result of the regulations. The floor amendment failed on a 21 to 19 vote, and the bill was recommitted to committee, effectively defeating it for the year.

Here’s an update on locally-requested legislation:

     HB 436, which authorizes donations by localities to non-profit entities that promote energy efficiency or that provide energy efficiency services, was approved by the Senate Local Government Committee on Tuesday. The Senate companion, SB 291, has been approved by the House. The bills were requested by Charlottesville and Albemarle.

     HB 751, which revises the City of Charlottesville charter to eliminate the requirement that the clerk of council reside in the city, was approved by the Senate Local Government Committee on Tuesday. The identical Senate counterpart, SB 292, has been approved by the House.

     SB 172 , which adds Nelson County to the list of counties where the unposted maximum speed limit on nonsurface treated highways (gravel roads) is 35 miles per hour, has been approved by the House.

     The House Transportation Committee narrowly defeated an amended version of SB 285. This bill requested by Albemarle would have lessened the penalty on localities that use unpaved road funds for other secondary road improvement projects.

General Assembly Contact Numbers for David Blount, TJPD Legislative Liaison

PHONE: 434-979-7310 x350
EMAIL: dblount@tjpdc.org (preferred) or dblount64@hotmail.com (alternate)