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Transportation overview: House bill has far-reaching local implications
Earlier this week, the House Appropriations Committee listened to explanations of a substitute for HB 3202 (Howell), the Republican leadership's transportation package. At the end of the meeting, the substitute bill was referred to a special subcommittee, including Dels. Vince Callahan (Fairfax), Kirk Cox (Chesterfield), Algie Howell (Norfolk), Chris Jones (Suffolk), Joe May (Loudoun), Bud Phillips (Dickenson), Jim Scott (Fairfax) and Leo Wardrup (Virginia Beach).
The package of legislation takes a three-pronged approach to addressing transportation needs, calling for additional revenue, significant changes in land-use law and reforms involving the Virginia Department of Transportation.
Significantly, the funding package would dedicate $250 million annually in state general funds to transportation. In addition, half of any state general fund surplus, and an array of new fees and taxes, would also go to transportation. The funding package relies primarily on general fund revenues rather than a set of dedicated and recurring non-general fund sources.
The proposed VDOT reforms include selection of some Commonwealth Transportation Board (CTB) members by the General Assembly, and selection of the VDOT commissioner by the CTB. Also, a Transportation Accountability Commission would be created, toll facilities would be more fully automated, and road classifications would be shifted to more closely match their functional classifications.
The proposed plan violates two of the league's most important legislative positions adopted by the membership at the VML Annual Conference in October – opposing the use of state general funds for transportation and the transfer of transportation responsibility from the state to local governments. Additional concerns include reductions in transportation funding to localities, and the limitation of local land use authority (see article below).
By dedicating general funds for transportation, the bill will limit the state's ability to address other important needs in the future. For example: re-benchmarking of the state's educational Standards of Quality (SOQ) likely will cost the state more than $1 billion in the next biennium. Estimates show that HB 3202 takes approximately $628 million from the general fund for transportation in the next biennium ($250 million a year in general funds, plus an estimated $64 million in un-obligated, non-recurring general funds.) The revenue component of the proposal would increase general fund investments by $250 million per year, implement abusive driver penalties (generating $57 million), equalize the diesel fuel tax with the gasoline tax ($20 million), increase overweight truck penalties and heavy truck registration ($30 million), and increase vehicle registration fees by $10 (generating $71 million). The proposal also would dedicate 50 percent of each year's general fund surplus to transportation (estimated at $227 million in the current fiscal year, and $64 million per year on an on-going basis). The $339 million set aside from the general fund at the end of the 2006 regular session is also dedicated to transportation.
The proposal refers to new bond issues of $1.3 billion over the next four years, and another $700 million in bonds after 2012. It also dedicates one-third of the insurance premium taxes to Federal Revenue Anticipation Notes (FRAN) debt service.
The package also would grant new revenue authority to the Hampton Roads and Northern Virginia Regional Transportation Authorities.
While VML and its members have asked for additional land-use tools, including authority for a comprehensive adequate public facilities ordinance and broad impact fee authority, the league and the Virginia Association of Counties share significant concerns with this plan. One example is that the proposed impact fee authority included in the plan is limited in scope since it applies in agriculture areas only. The plan, therefore, has limited ability to affect stale residential zoning. Finally, the plan restricts local governments' current ability to deny re-zonings.
The package transfers responsibility for new subdivision streets to counties without a dedicated funding stream. This proposal would put great pressure on localities to raise the real estate tax to cover the new costs. Some legislators have been making the case that new subdivision streets are the cause of the current transportation funding crisis, but the facts do not support that conclusion:
* VDOT's annual cost to maintain secondary roads, including subdivision streets, is $425 million.
* VDOT's annual cost to maintain all subdivision streets is less than $30 million a year, or less than 7 percent of the cost to maintain all secondary roads.
* VDOT's annual cost to maintain new subdivision streets added to the system each year is less than $3 million, or less than 1 percent of the cost to maintain all secondary roads.
Further, VDOT's FY07 transfer from construction accounts to fund the maintenance deficit was $450 million. Transferring construction dollars to maintenance reduces each county's annual secondary road construction allocation.
VML Executive Director R. Michael Amyx and VACo's Executive Director James Campbell testified at the House Appropriations Committee meeting, as well as in letters to both the House and Senate sponsors of the legislation. Their testimony is reflected in this summary. The Senate version of the package appears in three bills: SB 1417 (Norment), SB 1414 (Devolites Davis and O'Brien) and SB 1415 (Stolle).
Land-use portion of transportation package has far-reaching effects, too
HB 3202 (Howell) is the omnibus transportation funding / land-use bill that has been assigned to the House Appropriations Committee. The committee heard a presentation on the elements of the bill this week. Prior to the meeting of the committee, there was information indicating that the land use provisions would be excised from the bill. That has not happened yet, although the committee has not acted on the bill. The Senate bill, SB 1417 (Norment) is to be presented to a special Senate Transportation subcommittee consisting of senators Frank Wagner (Chairman), Phil Puckett and Jay O'Brien. That committee is to meet Tuesday morning, Jan. 30 at 9 a.m.
As a recap, the land use provisions of the omnibus bills have three major elements:
1. Urban development area - each county that has a 5 percent growth rate would create one or more urban development areas in its comprehensive plan to receive the growth for the next 20 years with high density residential. As currently drafted, if a county fails to adopt such areas, it would lose 50 percent of its road allocations from VDOT for construction.
2. Urban Transportation Service District - any county with a population exceeding 90,000 that currently does not maintain its roads may create one or more urban transportation service districts. In the district, a county may charge an additional tax for roads. The county would become responsible for road maintenance in the district. Outside the district, the county may charge an impact fee, but only in lands zoned for agricultural uses. Any county that creates a district would be given express authority to deny rezonings if off-site roads are inadequate. If this provision becomes law, by negative implication, no other county could deny a rezoning on that basis. Current law is clear enough that the authority exists today. Three bills that would have made the denial of rezoning provision statewide all died in committee. In fact, the House version, HB 2814 (Del. Mark Sickles, Fairfax), died in subcommittee without ever receiving a full committee vote. Further, in the districts, the state would pay the county the current urban road maintenance PLUS the difference between the urban rate and the costs VDOT currently bears for secondary road maintenance. This is a much higher amount than is paid cities and towns. There is no dedicated funding source for this cost. History would suggest that the moneys would not be paid. Further, cities and towns would be harmed by the fact that the pool of money would be divided up among more localities.
3. County responsibility for subdivision street maintenance - VDOT would stop accepting new subdivision roads into the system for maintenance, including roads that are already approved, but not yet built. However, VDOT would continue to maintain new subdivision roads in an urban development area.
Solid waste surcharge bill still in subcommittee
HB 1945 (Purkey), which would require that landfill operators pay a tipping fee for each ton of solid waste received at the landfill, is still in a subcommittee of the House Committee on Agriculture, Chesapeake and Natural Resources. The proposed fee would increase commensurate with the volume of trash disposed of at the landfill, and proceeds would be deposited into the state general fund. VML opposes the legislation, because it is a state tax on a local service.
Bay bonds bills remain afloat
The Chesapeake Bay Bonds Bill, HB 1710 (Callahan), would authorize the Virginia Public Building Authority to issue $250 million in bonds for grants to fund nutrient removal technologies at specified publicly owned treatment works. The plant upgrades are required to implement the Commonwealth's Chesapeake Bay Tributary Strategies.
A related bill, HB 3178 (Callahan), still uses bonds, but first accesses state general funds for the projects. HB 3178 provides for a direct appropriation to the Water Quality Improvement Fund of up to $500 million for grants to upgrade wastewater treatment plants and provides three methods for the payment of that sum: (i) current funding in the Water Quality Improvement Fund; (ii) future deposits to the Water Quality Improvement Fund; and, (iii) the use of Virginia Public Building Authority bonds. The bill provides for the payment of these grants to 89 publicly-owned wastewater treatment plants according to the methodology specified in the Water Quality Improvement Act, with a minimum grant amount of 35 percent of the costs for the design and installation of nutrient removal technology.
VML supports state funding for wastewater treatment facility improvements required for Chesapeake Bay clean up. VML is working with the bill patrons on this legislation.
House Appropriations signals support for teacher retirement increases
Del. Lacey Putney (Bedford), chair of the House Appropriations Subcommittee on Compensation & Retirement, appeared to signal support for some kind of increase in teacher retirement benefits at the Jan. 25 meeting of the subcommittee. The comments came during presentation of a number of bills increasing the health insurance credit, the multiplier, or other aspects of retirement benefits for teachers.
Local governments pay 60 percent of the costs of teacher retirement benefits. The subcommittee will consider a variety of bills dealing with retirement benefits for law enforcement officers on Sunday, Jan. 28. It would not be surprising if the committee endorsed some variation of Gov. Tim Kaine's budget amendment to encourage extension of enhanced benefits to sheriffs' deputies.
Annexation moratorium extension passes House
HB 1979 (Lohr) extends the moratorium on city-initiated annexation from 2010 to 2020. The House approved the measure 72-24. Amendments made during the House floor to repeal the moratorium failed. VML testified at two committee hearings on the bill on the negative effect the loss of annexation has on Virginia's cities. Some delegates who represent cities and who recall the history voted against the measure. At least one delegate reminded the Counties, Cities and Towns Committee during debate on the bill that the 599 funding was promised as a partial replacement for annexation and that the General Assembly had not lived up to its promises on the 599 funding.
Machinery & tools tax compromise legislation moves forward
SB 1151 (Wagner) was reported unanimously from the Senate Finance Committee on Jan. 24. The bill would allow manufacturers to give localities nine months advance notice that equipment will be idled in the upcoming tax year – and then not owe the machinery & tools tax on that equipment in the tax year it is actually idle.
Currently, the equipment must be idle for 12 months before the tax break is given. The bill is the result of lengthy work between local government and manufacturer representatives. The companion bill, HB 2181 (Saxman), has not been reported from the House Finance Committee at this point.
House P&E Committee postpones action on constitutional amendments
The House Privileges & Elections Committee evidently will take up constitutional amendments at its Feb. 2 meetings, as the committee fell short of time and failed to take them up on Jan. 26.
Local officials need to be very vocal in opposing several of these amendments. HJR 586 (Cole) amends the constitution to exempt motor vehicles used for nonbusiness purposes from personal property taxes. There is no replacement source of revenue included in the amendment.
Here are some talking points:
1. Local governments depend on the revenue from the personal property tax – both from the state subsidy and the individual taxpayer. The revenue is a key part of local general funds, supporting critical local services, including public safety and education. In FY 2005, local governments spent $1.3 billion just on law enforcement and traffic control, fire and rescue, and corrections – slightly more than is generated by personal property taxation.
2. Elimination of the authority to tax this large group of motor vehicles will place increased pressure on real estate taxes. Local governments' revenue options are extremely limited.
3. Local governments are in an unfortunate position in their reliance on the state to fund $950 million per year in "car taxes." There simply are too many pressures on the state budget to guarantee that the state will continue to make these payments in perpetuity.
Local officials also need to oppose HJR 684 (Frederick). The amendment caps state and local spending, requires referenda for any new taxes or changes in policy that increase revenues, and requires refunds of surpluses.
Here are some talking points:
* Revenue and spending limits results in a reduction in the quality of life and economic performance. Forbes magazine ranks Virginia as the best state in which to do business, citing its smart labor force, low cost of doing business, good regulatory climate and great quality of life. Producing the smart labor force and the great quality of life requires expenditures on the part of state and local governments, but produces gains in terms of economic development.
* The state and local governments face major, pressing problems in transportation, water quality, the clean up of the Chesapeake Bay, and education. Revenue and spending limits will mean that the state will not be able to address these issues.
* Elected officials at the state and local level have the responsibility for balancing service demands and the need to maintain low taxes.
* Voters already have the most effective "referendum" of all -- the chance to vote out state and local officials if they are displeased with their management of the locality or state.
* Virginia is a low tax state, ranking 45th in terms of state and local taxes as a percent of personal income.
* Inflation and population are not accurate measures for government because requirements for particular services grow faster than these norms. Examples include service increases required for the elderly, school age children and the disabled. State and local government service demands also are affected by federal mandates, resulting from initiatives ranging from the No Child Left Behind legislation, homeland security, Help America Vote, Americans with Disabilities Act, clean water and air requirements, and so forth.
Contact senators to support erosion and sediment control bill
SB 821 (Devolites Davis) increases local discretion to impose a civil penalty for a violation of its erosion and sediment control ordinance. Under the bill, local governments could charge up to $1,000 (instead of the current $100) for violations. The bill is still in the Senate Agriculture Committee. Local governments should contact their Senate members in support of the proposal.
2 bills regarding local authority to deny business licenses remain alive
SB 1118 (Cuccinelli) was defeated in the Senate Finance Committee Jan. 24. The bill would have given localities the authority to deny or revoke a business license for those who cannot provide the appropriate legal documents proving their eligibility to work, or those who hire any such ineligible person.
Two mandatory measures are still alive in the House Finance Committee, HB 3130 (Byron) and HB 2930 (J. Miller). VML has expressed concerns about the difficulty local governments would have in enforcing these requirements equitably.
House declines to abolish BPOL tax
A bill that would have eliminated the BPOL tax was killed. HB 2443 (Frederick) would have resulted in the loss of more than $560 million statewide to counties, cities and towns.
Bills allow local governments to work with IRS in collecting delinquent local taxes
Two bills would allow local governments to work with the federal government to collect past due local taxes from federal income tax returns. This process, called set-off debt collection, would take effect on the effective date of federal legislation enacted by Congress.
SB 1021 (Whipple) was reported by the Senate Finance Committee unanimously, and is currently on the Senate floor. HB 2139 (Brink) was reported by the House Finance Committee and referred the House Appropriations Committee for purposes of ensuring that the state Department of Taxation has sufficient funding to assist with this potential program.
Publications tax would raise money for water quality fund
A bill introduced by Del. Leo Wardrup of Virginia Beach would create a new publications tax at the rate of one cent per every delivered newspaper, magazine, newsletter and publication. HB 2225 would not apply to not-for-profit publications. The funding generated would be dedicated to the Virginia Water Quality Improvement Fund.
CSA bills remain in committee
Three bills and two resolutions regarding the Comprehensive Services Act for At-Risk Youth and Families (CSA) will be coming up in committee next week.
HB 2150 and HB 2620 (Fralin) will be before the House General Laws Subcommittee on Professional, Occupational, and Administrative Process on Tuesday, Jan. 30.
HB 2150 would change the definition of foster care to include "custody relinquishment" for foster care prevention services.
HB 2620 would expand the mandated population to be served under CSA to include all children in need of mental health services for serious emotional disturbances whose insurance does not cover the services and whoare not Medicaid eligible. VML opposes any expansion of the CSA mandated population. Further, children in need of mental health services and who are not in danger of abuse or neglect should be served through the mental health system, specifically with non-mandated funding already provided for this purpose. It is inappropriate for the foster care system to become the de facto mental health system for children who are not in danger of abuse or neglect.
SB 1332 (Devolites Davis), which is identical to HB 2620, will be heard before Senate General Laws and Technology on Wednesday, Jan. 31.
HJR 774 (Kilgore) is before the House Rules Committee. This resolution recognizes that mental health services should be provided and funded through the state's mental health, mental retardation and substance abuse services system, and that the foster care system should not become the default system for mental health services. It calls for the Secretary of Health and Human Resources to develop budget recommendations for the 2008-2010 biennium that facilitates service delivery through the state's MHMRSAS system. VML, in cooperation with VACo and the Virginia League of Social Services Executives, worked on development of this resolution.
SJR 402 (Hanger) is before the Senate Rules Committee. This resolution asks JLARC to study the fiscal impact of the recent Attorney General's opinion regarding CSA and services to children with mental health needs who are not a part of mandated population. VML supports this resolution.
DEQ director could gain permitting authority
HB 3113 (Landes), would consolidate the State Air Pollution Control Board, the State Water Control Board, and the Waste Management Board into one eleven-member citizen board--the Virginia Board of Environmental Quality -- with the authority to adopt regulations. All other responsibilities of the existing boards, including the authority to issue licenses and permits, would be transferred to the Department of Environmental Quality. A subcommittee of the House committee on Agriculture, Chesapeake and Natural Resources moved the measure forward.
Muzzle loading rifle bill dies
SB 950 (Quayle) was killed in the Senate Agriculture Committee. The measure would have prohibited local governments from adopting ordinances regulating use of muzzle loading rifles.
Senate biosolids bills advance
Several bills affecting Virginia's biosolids program moved forward. The Senate passed SB 1300 (Newman), which allows a local government to adopt an ordinance requiring a special exception or a special use permit in the siting of a biosolids storage facility. SB 1339 (Newman), which shifts administrative responsibilities associated with the biosolids program to the Department of Environmental Quality (DEQ), also passed the Senate. The Senate sent SB 1313 (Hawkins), which would require a person applying for a permit to certify consistency with applicable local ordinances, back to the Senate Agriculture Committee, pending amendments offered by Sen. Patsy Ticer.
House passes bill exempting local governments from DMV data fees
HB 1930 (Rapp), legislation requested by local governments, exempts federal, state and local officials from fees charged by DMV for obtaining data from DMV records. Local governments use the data to determine eligibility for social service programs, among other things. The bill passed the House, and was referred to the Senate Transportation Committee.
House Commerce and Labor bills gone
HB 2725 (McClellan) which would have given the Department of Labor and Industry the authority to fine local governments for OSHA violations, was defeated this week in House Commerce and Labor by a vote of 8-7. Local governments in Virginia are subject to OSHA regulations, although the Department does not currently have the authority to fine.
HB 2428 (Albo) was Passed By Indefinitely at the request of the patron. This bill would have extended workers' compensation benefits to family members of emergency workers for certain diseases contracted by the worker who then spreads the disease to the family member.
Bill would exempt disabled veterans from real estate taxes
The House Privileges & Elections Committee will consider HJR 581 (Lingamfelter), which would amend the state constitution to exempt the principal residence of any totally disabled veteran from real estate taxation. The exemption applies to joint property owned by the veteran and spouse, and extends to the surviving spouse as long as the property remains the principal place of residence.
The league and VACo asked a P&E subcommittee to instead allow local governments the authority to grant these exemptions, but the subcommittee did not agree. The resolution will be before the full House P&E Committee on Feb. 2.
While it is very difficult to argue against the principal of granting permanently and totally disabled veterans tax relief, the league and VACo testified that the preference would be to continue to segregate real estate for local tax purposes.
More verified voting machine questions emerge
The House Privileges & Elections Committee will consider on Feb. 2 the House version of a bill to require the use of optical scan voting machines. HB 2707 (Hugo) has been amended to conform to SB 840 (Devolites Davis), which is on the Senate floor awaiting final passage.
As introduced, both bills required local governments to replace direct electronic recording (DRE) voting machines with optical scan voting machines. Both bills have been amended to require that localities purchase these optical scan voting machines in the future, instead of having to immediately replace all the DREs.
Voter registrars at a Jan. 26 meeting of a House subcommittee, however, indicated that even phasing in these machines will increase local costs for election administration. Interested parties are to continue working on HB 2707 next week, with consideration by the full committee on Feb. 2.
Campaign contribution limitations bill appears in trouble
A House Privileges & Elections subcommittee appeared ready to table a bill today that would place stringent limitations on local campaign contributions, but the patron, Del. Jeff Frederick (Prince William), asked instead that HB 3012 be passed by until Feb. 2. The bill prohibits local elected officials in cities, counties and towns from soliciting or accepting campaign contributions from any person who has a personal interest in a transaction pending before the council or board while the matter is pending, or during 90 days after final action.
The bill also requires officials, before voting on a transaction, to disclose campaign contributions of $500 or more received in the past year from any person having a personal interest in the pending transaction. Dels. Chris Jones (Suffolk), John Cosgrove (Chesapeake) and Jim Scott (Fairfax), all former local elected officials, discussed the problems the bill could unwittingly pose to supervisors and council members.
For example, a matter could be pending in a planning commission, but a council member or supervisor could be unaware of that and unwittingly accept a contribution. Further, actions involving land use generally take at least a year. Scott pointed out that the bill placed more stringent contribution limits on local officials than it did on members of the General Assembly, and that the bill was a significant overreach. The subcommittee meets Fridays at 7 a.m.
Photo-red bill reported out of subcommittee
A substitute bill that takes parts of four House bills dealing with technology to catch motorists running red lights was reported out of a House Transportation subcommittee this week. HB 1683 (McQuigg) is a combination of HB 1683, HB 1762, HB 1776 and HB 2484. The bill will give the option to any locality to use this technology to catch motorists running red lights.
Some other specifics of the bill include: capping each offense at $50, cameras are limited to no more than one intersection for every 10,000 residents within each county, city or town at any one time; information pertaining to a specific violation will be purged every 60 days after the collection of any civil penalties; the locality shall evaluate the technology on a monthly basis to make sure that it's in proper working order, place signs within 500 feet of the intersection to alert drivers that the technology is being used, and, finally, the locality shall conduct a public awareness program advising the public that the locality is implementing or expanding this traffic light signal violation monitoring system.
Immigration bill could affect law enforcement and local jails
HB 2926 (Rust) will give sheriffs and police the ability to exercise any immigration powers conferred upon them by the agreement with the U.S. Department of Homeland Security. The bill will also allow state correctional facilities to receive any person committed under the authority of the United States and retain him until he shall be discharged. The federal government will compensate the state for housing these individuals. Localities should keep in mind that if state prisoners are being held in local jails now, that these individuals could very well be housed in local facilities as well. The bill is a substitute that combines HB 2933 (J. Miller) into HB 2926.
Bill dies that would have allowed local governments to prohibit guns in libraries
A bill that would have allowed local governments to adopt ordinances prohibiting people from carrying firearms in public libraries died in the House Committee on Militia, Police and Public Safety. The bill was HB 2173 (BaCote).
Bill requires local agencies to update emergency plans every 4 years
The House Committee on Militia, Police and Public Safety reported HB 3048 (P. Miller), which requires every local and interjurisdictional agency to review and update its emergency operations plan every four years. The updated plan must be formally approved by the locality's governing body.
Localities can request emergency plans of nursing homes, other facilities
HB 2726 (McClellan) grants authority to localities to request the review of, and suggest amendments to, the emergency plans of nursing homes, assisted living facilities, adult day care centers and child day care centers that are located within the locality. The bill was amended to mandate that if a locality requests this information, the facility must provide it.
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