December 20, 2006

Kaine presents mid-term budget amendments

Gov. Timothy M. Kaine presented his proposed amendments to the 2006-2008 budget on Dec. 15 in Richmond.  The state is in the middle of its two-year budget.

Kaine told legislators that even with some uncertainty surrounding particular revenue sources (specifically corporate income taxes and recordation taxes) projected general revenue growth of 6.5 percent in FY07 and 4 percent in FY08, along with certain expense savings, created $690 million in general fund resources above the amounts allocated in the biennial budget.  In addition, there was $339 million left in the budget passed by the 2006 General Assembly.  These funds were set aside to be used if the Assembly came up with a transportation funding plan by Nov. 1.  This did not happen, so the funds were left for allocation to any purpose.  Together, this created just over $1 billion in funding available to fund amendments to the budget. 

Kaine said that as the vast majority of the money available for amendments was non-recurring, he would use most of it for one-time items and capital expenditures, primarily in education and transportation.  He said that recurring expenses would be used for targeted priorities in health, education, public safety, environmental and economic development objectives.  Some also was used to provide targeted tax relief by increasing the filing threshold on state income taxes from $7,000 to $12,000 for individuals, and from $14,000 to $24,000 for married couples.

What follows is a summary of budget amendments of particular interest to local governments, starting with aid to local governments, and then grouped by state secretariat or department.

 

Aid to Local Governments

HB 599 for localities with police departments. No changes to current year funding; increases FY08 funding by $1.12 million.  Funding in FY08 is allocated on 60/40 basis, with 60 percent of the funding going to all eligible localities according to the Code, and 40 percent distributed proportionately to the 20 cities and counties with the highest average rates of violent crime based on State Police data.  No localities’ distributions are reduced under this distribution method.  Also, adds the Town of Windsor to the allocation list in FY08.

ABC & Wine Taxes.  No changes from the levels established by the 2004 General Assembly, which is $4.15 million for ABC and $4.35 million for wine taxes.

Recordation taxes.  No changes to the $40 million distributed each year.

Sales tax from certain public facilities.  A decrease of $70,000 each year of the biennium, from $1.01 million to $930,000.

Rolling stock taxes.  A decrease of $630,000 each year of the biennium, from $5.6 million to $4.97 million.

TVA payments in lieu of taxes.  An increase of $50,000 each year, from $80,000 to $130,000

 

Education

 K-12 education is reduced by $43.4 million in FY 2007 (the current year), primarily due to decreases in Average Daily Membership (ADM), and increased by $26.9 million in FY 2008.  Detailed, locality-specific information is posted on the Department of Education web site at this address: http://141.104.22.210/VDOE/suptsmemos/2006/inf262.html.  Some specific changes to the state’s $1.5 billion budget include:

Teacher salary increases. $63.9 million to fund the state’s share of a three percent salary increase for state-supported positions, effective Dec. 1, 2007 (the prior budget supported a 1½ percent raise for instructional positions).  Localities would have to give at least a 1.75 percent increase in order to qualify for the funding, as the funding is available as an incentive rather than a mandate.

Reductions due to ADM reforecasting.  Reduction of $20.4 million in FY2007 and $35.8 million in FY2008 to reflect lower students in ADM (5,742 lower in 2007, and 8,448 lower in 2008).

Sales tax estimates.  Adds $1.1 million in FY2007 and $2.7 million in FY2008 to reflect changes in projected revenues from sales tax (this is the 1-1/8 percent distributed on the basis of school age population) but decreases state basic aid accounts by $1.5 million in FY2007 and $3.4 million in FY2008.  When sales taxes increase, basic aid decreases, as do the state and required local shares of basic aid.

FY2007 hold harmless sales tax payment.  The budget decreases the hold harmless sales tax payment, adopted last October, by $1.2 million to account for the increased sales tax estimates referred to in the bullet above.  The Governor’s budget amendments did not propose extending the sales tax hold harmless payment to FY2008, as the Governor has maintained that the hold harmless payment was for FY2007 only.

Lottery payments.  Decreases funding in anticipated lottery proceeds by $20.7 million in FY2007 and FY2008, reflecting that North Carolina now operates its own lottery, which is affecting lottery ticket sales in Virginia.  The per pupil amount for the distribution of lottery payments will by $222.24 in FY2007 and $220.99 in FY2008.  The money is distributed on the basis of the per-pupil amounts in ADM, and must be matched by the local governments based on the local composite index.

Pre-school pilot programs.  $4.6 million to fund an estimated six pre-school pilot programs (Start Strong program), to serve an estimated 1,250 children.  The pilots would be voluntary and could include public and private facilities.  The pilots cannot limit participation to only at-risk students; the budget language also states that the local match requirement “may be waived.”

Early Reading Intervention expansion.  $4.1 million for expansion of the Early Reading Intervention program to include 100 percent of the eligible children in grades 1 and 2 (currently the state funds 50 percent of these students identified as in need of the service).

SOL Algebra Readiness expansion.  $3.9 million for expansion of the Standards of Learning Algebra Readiness program, to include students in the sixth grade.  Currently state funding is provided only for 7th and 8th graders.

Update Fringe Benefit Rates in FY2008. Adds $4.3 million in FY2008 to reflect a decrease from 0.45 to 0.40 percent for the group life contribution, and an increase from 0.49 to 0.70 for the teacher retiree health care credits.

 

Agriculture and Forestry

Department of Agriculture and Consumer Services

Emergency service animals.  Provides $69,030 in FY08 and one position to coordinate evacuation and transportation of pets and service animals during disasters and natural emergencies, as required by recent federal legislation, and to supervise the pound and shelter program.

 

Commerce and Trade

Secretary of Commerce & Trade

Department of Business Assistance – Workforce Services.  Provides $2.0 million in FY07 and $2.0 million in FY08 for the workforce services jobs investment program to encourage job creation and private investment.

Department of Housing and Community Development 

Enterprise Zones.  Provides $2.0 million in FY07 and $2.0 million in FY08 in additional funding for the enterprise zone grant program to encourage job creation and private investment in distressed areas of the state.

Eastern Shore Broadband.  Provides $1.6 million in FY07 to complete predevelopment engineering etc. necessary for the future installation of fiber optic cable on the Eastern Shore.

Indoor plumbing rehabilitation.  Provides $1.6 million in FY08 in additional funds for the indoor plumbing rehabilitation program.  Also, provides $900,000 in FY07 to the Southeast Rural Community Assistance project, earmarked for indoor plumbing rehabilitation.

Virginia Housing Partnership Revolving Fund.  Earmarks $2 million in FY08 for the Virginia Housing Partnership Revolving Fund for affordable housing and housing for the elderly, disabled and homeless.

Covington Research and Development Center.  Provides $330,000 in FY08 to enable Covington to partner with a higher education institution to creation of an industry-focused research and development center.  Hopewell and Lynchburg were already included in this program.

 

Virginia Economic Development Partnership. 

Emerging markets.  Provides $200,000 in FY08 to assess potential emerging markets.

Newport News Carrier Integration Center.  Provides $1 million in FY07 for the Herbert H. Bateman Advanced Shipbuilding and Carrier Integration Center (ASCIC) for research and development and workforce training projects of value to Virginia’s shipbuilding and ship repair sector.

Governor’s Development Opportunity Fund.  Provides $5 million as “deal-closing” funds for grants or loans to localities to enable the state to compete with other states and countries for major new investment and jobs.

Virginia Tourism Authority – State Welcome Centers.  Includes additional funding of $250,000 in FY08 for state welcome center operations.

 

Health and Human Resources

Secretary of Health and Human Resources

Small business insurance pools.  Provides $100,000 in FY08 for the Secretary of Health and Human Resources to develop strategies that encourage the operation of health insurance risk pools for small businesses domiciled and operated in Virginia.

 

Comprehensive Services Act for At-Risk Youth and Families (CSA)

 State reimbursement for services.  Adds $4.4 million in the current year, and $7.1 million in FY08 to help pay the state’s share of service costs for the children and families served under this program.

 Federal cost-shift adjustment.  Adds $1.2 million in the current year and $3.6 million in FY08 to cover costs previously covered by the federal Medicaid program.  The 2006 Federal Deficit Reduction Act re-wrote some Medicaid service eligibility rules, removing federal participation from the cost of most therapeutic foster care services.

Treatment foster care study.  Language requires the Office of Comprehensive Services, the Departments of Social Services and Medical Assistance Services, and related advocacy groups to study the feasibility of implementing statewide rates for treatment foster care.  The Federal Deficit Reduction Act removed treatment foster care services from the list of Medicaid-eligible services.  The study’s goal is to determine the cost of the program in the future.

 

Department for the Aging

 “No Wrong Door.”  Provides $554,184 in FY08 to continue development of a “No Wrong Door” system for elderly Virginians to access various long-term care services without having to go through multiple agencies.  Funding is for a private contract for a software system and coordination of the overall system.

 Meals on Wheels.  Adds $704,000 in FY08 to expand the number of elderly served, and to also offset the price of fuel, which has eaten into the number of elderly served by some Area Agencies on Aging (AAAs).

 

Department of Health

Local health facilities.  Provides state and federal funding to help with costs of leasing new or expanded facilities for four local health department facilities recommended for replacement, including city of Suffolk.

Antiviral purchases – pandemic preparedness.  Language supports the purchase of a stockpile of antiviral treatments in accordance with federal pandemic flu preparedness guidelines.  The $9.6 million made available through this language will complete a stockpile that, combined with federal actions, could serve up to 25 percent of Virginia’s population if a pandemic is declared.

Federal cost-shift adjustments.  Replaces federal funds with state funds in FY08 for a number of programs previously funded by the Federal Temporary Assistance to Needy Families (TANF) program, which was reauthorized last winter as part of the Federal Deficit Reduction Act.  These include $176,800 for the Resource Mothers Sibling program, $765,000 for the Partners in Prevention Program, and $910,000 for teen pregnancy prevention programs in several cities.

Doctors for underserved areas.  Increases by $250,000 in FY08 the funding to the Virginia Physician Loan Repayment Program to provide loan repayments for more doctors agreeing to serve in medically underserved areas of the state.

 

Behavioral Health Services/Medicaid

Increase mental retardation community slots.  Transfers $5.3 million (GF and NGF) to fund 170 mental retardation waiver slots for individuals on the urgent care waiting list during FY08.  This program allows individuals, many with elderly or ailing parents, to live in the community and get the services and supports they need instead of being placed in institutions. The funding is being transferred from the program that discharges residents from facilities into the community.  This transition is taking longer than policymakers expected.

Increased psychiatric bed reimbursement.  Adds $3.3 million  (and $1.6 million NGF) to increase the reimbursement rate for inpatient hospital psychiatric rates from 78 percent of cost to 84 percent of cost in an attempt to keep more beds open and available in communities (and to decrease use of state facilities).  Private beds continue to dwindle because hospitals can get better return for their dollar when they convert these beds for other purposes.

Increase community placements.  Contingent upon Federal approval, adds $500,000 as a match for $6.7 million in federal funds as a demonstration grant to move additional individuals out of nursing facilities, long-stay hospitals and intermediate care facilities for persons with mental retardation into community placements.

Child psychiatry internships.  Adds $493,000 in FY08 to support 8 internships for individuals specializing in child psychology or child psychiatry at a Virginia college or university.  These inters would serve in an underserved area of the commonwealth (criteria to be determined by state DMHMRSAS).

Mental health services in juvenile detention.  Provides $200,000 to help five juvenile detention facilities to continue provision of mental health services after a federal grant lapses in FY08.

 

Department of Social Services

Automated child care payments.  Provides $942,491 in FY08 to create an automated child care payment and management system, based on the electronic benefit transfer system used for food stamps.

Federal cost-shift adjustments.  Adjusts a number of items in the Department’s budget because of federal disinvestments in the Temporary Assistance to Needy Families (TANF) program.  This includes adding $400,000 in state funds in FY08 to make up for the loss of the same amount of federal funds for foster care and adoption workers in local social services agencies; adding $1.2 million in state funds in FY08 to make up for the loss of a similar amount of federal funds for local domestic violence programs; replacing $4.14 million in federal funds with state funds in FY08 for the Healthy Families program; and replacing federal funds with $7.7 million in state funds over two years for community action agencies to promote self-sufficiency.

Foster care payments.  Adds $3 million in FY08 to increase maintenance payments to foster family homes and special needs adoption homes by 10 percent, and increases the annual clothing allowance to help with recruitment and current placements and to try to avoid more costly residential placements.

Community action agency study.  Requests the Department to work with the Virginia Community Action Partnership to review areas of the state that are not currently served by a community action agency and make recommendations concerning the appropriate level and local of additional services through either expanding service areas of existing agencies or encouraging creation of new agencies.  Findings are due by Oct. 1, 2007.

Natural Resources

Department of Conservation and Recreation

Water Quality Improvement Fund.  Increases funds to provide matching grants for controlling agricultural runoff pollution using riparian buffers, cover crops, conservation tillage, nutrient management, and livestock exclusion from state waters.  The appropriation of $7.5 million in FY07 includes $3.8 million that is the remainder of the mandatory deposit required by statute.

Dam safety.  Provides $352,377 in FY08 to evaluate dams not now under regulation and classified as high hazard.

Dam repair.  Provides money to match federal grants to repair dams owned and operated by local Soil and Water Conservation Districts. For FY08, $616,000.

Land conservation.  Increases funding for the land conservation initiative.  Funding includes $13.7 million in FY07 in grants to the Virginia Land Conservation Foundation, and $5 million in FY07 to the Office of Farmland Preservation to establish a state fund to match local government purchase of development rights program funds for the preservation of working farms and forest lands.  Operating support of $950,000 is provided to the Virginia Outdoors Foundation for FY07 to provide assistance to landowners with placing property under conservation easements. 

 

Department of Environmental Quality

Wetlands/water protection program.  For FY08, provides $574,566 and an increase of six positions to take on the U.S. Army Corps of Engineers State Programmatic General Permit program, reducing redundancy in the wetlands/water protection permitting program.

Solid waste management.  Provides $511,218 in FY08 and an increase of five positions for oversight of landfills and to enhance solid waste management compliance.

Water Quality Improvement Fund.  Provides additional mandatory funding for the WQIF of $1,613,700 in FY07.  The governor will also introduce a separate bill that will authorize the issuance of up to $250 million in bonds for nutrient removal technologies at wastewater treatment plants in the Chesapeake Bay watershed.

CSOs.  Provides $9.1 million in additional funding for the City of Richmond and City of Lynchburg’s combined sewer overflow projects.  Funding includes $3.1 million for Lynchburg in FY07, and $3.0 million for each city in FY08.

 

Public Safety

Jail per diems.  Includes $7.7 million for current year to meet increased costs of per diem payments in local jails.  No funding was included to meet the anticipated need in FY08.

Enhanced retirement benefits for sheriffs’ deputies.  Increase of $11.5 million in FY 2008 for payments to counties, cities, and regional jail authorities that provide enhanced retirement benefits to sheriff’s deputies.  Funding is for those localities and authorities that provide the enhanced benefits as of May 1, 2008.  State funding would range from $600 to $1,825 for each state-funded position, based on the local fiscal stress index.  The localities judged to be the most affluent would receive $600, and the localities measured to be the least affluent would receive higher amounts. 

Increase in retirement multiplier for State Police; retains current multiplier for LEOS.  Adds $2.3 million in general funds and $533,000 in nongeneral funds in FY2008 to pay for the cost of increasing the multiplier for state police troopers receiving enhanced retirement benefits under the State Police Officers Retirement System (SPORS).  Further, Item 143 of the budget further retains the current multipler for local public safety personnel receiving enhanced benefits from the Law Enforcement Officers System. Up until now, any benefit changes in the state program were automatically made applicable to the local program.

State supported local employees.  The budget includes employees of local community corrections programs and pre-trial services programs in the list of local employees eligible for state funding of salary increases. 

Prisoner re-entry pilot programs.  Requests $4.3 million to support five pilot local interagency programs to help adults and juveniles re-entering the community from incarceration.  Includes grants to community non-profit organizations for case management and coordination, grants to re-entry programs for service, and transition specialist positions at Corrections.  Also, would establish housing for juveniles, expand career readiness programs, and day reporting centers for juveniles.

 

Virginia Department of Emergency Management

Assistance to the disabled during catastrophic events.  Provides $67,882 in FY08 to fund a position and costs through the Office of Community Integration, working with VDEM, evaluate and coordinate services statewide for individuals with disabilities during a catastrophic event, and develop a plan to maximize services for the disabled within existing resources.

Evacuation facility grants.  Provides $3.5 million in FY08 to establish a grant program to ensure the availability of adequate facilities to house individuals forced to evacuate their homes due to an emergency.  The department shall develop grant criteria for this program.

Hampton Roads evacuation simulation.  Provides $690,000 in FY08 to support Old Dominion University’s Hampton Roads Flood Evacuation Simulation, establishes traffic video monitoring capabilities at Virginia’s Emergency Operations Center, and conducts citizen preparedness surveys and public information campaign.

Citizen information and COOP.  Provides $1.3 million in FY08 to expand citizen alert networks, EMNet for Hampton Roads and central Virginia local governments to target densely populated areas, and support for continued development of continuity of operations (COOP) efforts to ensure state and local delivery of services in cases of prolonged emergencies (such as a pandemic or devastating hurricane).

 

Transportation

Department of Aviation

Aviation economics/strategic planning.  Provides $375,000 in FY08 for contractual services to measure and report aviation economic activity and airport facility needs.

 

Department of Rail and Public Transportation.

Commonwealth Transportation Board.  Adjusts FY07 budget by adding $9.3 million (NGF) and the FY08 budget by adding $14.1 million (NGF) to bring the appropriation into alignment with the Commonwealth Transportation Board’s approved budget.  The budget is based on official estimates for the Transportation Trust Fund and the revenue impact for federal grants.

Transit Capital Assistance program.  Adds language to redeploy an unused $10 million to the Transit Capital Assistance program.  The funds had previously been earmarked for a bus rapid transit system that the localities do not plan to implement.

 

Department of Transportation

Portable evacuation route monitoring system.  Provides $405,000 in FY08 for equipment to monitor traffic and speeds along evacuation routes, enabling faster response to incidents that may arise during a natural or man-made catastrophic event.

Transportation Initiative funding.  Provides $161 million in FY07 to supplement the $339 million Transportation Initiative.  The budget presently sets aside $339 million in general fund support for transportation but the General Assembly has been unable to agree on specific project authorizations. The addition of $161 million in general fund revenue will bring the total initiative to $500 million.  A language amendment proposes  funding as follows:

• $305 million to the Transportation Partnership Opportunity Fund to support PPTA and design-build projects on the Capital Beltway Capitol Beltway HOT lanes, the Hillsville Bypass on Route 58; the I-64/I-264 interchange; and Route 50 widening in Fairfax and Loudoun Counties.  While the final dollar amount for each project will be a matter of negotiation, this funding level should permit completion of these projects.
• $65 million to the Rail Enhancement Fund to complete funding for the six I-95 rail corridor improvements underway and the travel-time improvements for passenger rail service between Main Street and Staples Mill stations.  Remaining funds will address Phase 1 of the I-85 Rail Corridor Improvements to take trucks off of I-81. 
• $45 million to the Commonwealth Transit Capital Fund to support rolling stock acquisition by the Washington Metropolitan Area Transit Authority ($20 million) and the Virginia Railway Express ($15 million), and for the Hampton Roads Transit Light rail project ($10 million).
• $50 million to complete the Route 164 rail relocation in South Hampton Roads (up to $40 million) and to begin the planning and engineering for the Craney Island expansion.
• $20 million to create a one-time technology innovation grant program for Hampton Roads and Northern Virginia. 

Highway maintenance. Decreases funding for highway construction and transfers $19.3 million in FY08 to the department’s highway maintenance program as a result of increases in the costs of materials used for road maintenance.  This reduction in construction funding will result in a $19.3 million increase in funding for maintenance.

Virginia Port Authority – local service charges.  Provides funding of $1.0 million in FY08 for service charges to be paid to counties and cities in which the Virginia Port Authority owns tax-exempt real estate.

Expand empty rail yard.  Provides $20.0 million in FY07 and FY08 to expand rail facilities into a vacant area at the Norfolk International Terminal.  The project will be funded through terminal revenues.

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