February 13, 2008

House passes property tax measure imposing more requirements on local governments

The House approved a bill Monday mandating that local governments offer deferral programs for real property taxes on all real property owned by and occupied as the primary dwelling of the taxpayer. The vote to approve HB 1009 (Hugo) was 74-24.

The bill also mandates assessment notices to include the tax rate that will apply to the new assessed value, the total amount of the new tax levy, and the percentage change in the new tax levy from the immediately prior one. Lastly, treasurers would be required to attach to tax bills for all real estate and tangible personal property the tax rate that will apply, the assessed value of the property, the total amount of the new tax levy, the total amount of the prior year's tax levy, and the percentage change in the new tax levy from the prior year's tax levy.

The measure will increase administrative costs for local governments without significantly providing taxpayers with information that is not already available. Also, many localities do not set their tax rates prior to mailing the assessments. If your locality has a position on the bill, please inform your Senate delegation and VML. Staff contact: Neal Menkes (nmenkes@vml.org).

Senate panel pushes gas tax

The Senate Finance Committee approved a bill to increase the state motor fuels tax rate by 5 cents per gallon in increments of 1 cent per gallon in each of the next five fiscal years. Under SB 713 (Saslaw) the revenues would be deposited to the Highway Maintenance and Operating Fund, and would be used to maintain Virginia's primary, secondary and urban roads.

Road maintenance is VDOT's highest transportation priority. Transportation revenues dedicated for road maintenance are not sufficient to cover these expenses, requiring the transfer of dollars from the road construction budget. In FY08, $262.5 million will be transferred from the construction budget for maintenance activities. In FY09, the amount is projected at more than $290 million.

The current state motor fuels tax is 17.5 cents per gallon, and raises close to $900 million per year. The fiscal impact statement indicates SB 713 would raise an additional $47.2 million in FY09 and $100 million in FY10. By FY14, the additional taxes would raise $281.6 million annually.

The Senate will debate and vote on SB 713 this week. If your locality has a position on the measure, please inform your delegation and VML. Staff contact: Neal Menkes (nmenkes@vml.org).

Homestead exemption bill advances with amendments

The Senate passed legislation to implement the proposed constitutional amendment authorizing a local option homestead exemption program. After 10 days of political maneuvering, the Senate endorsed SB 496 (Northam) 36-3.

The Senate adopted three floor amendments, including provisions to: (1) clarify that the bill only partially exempts the assessed value of residential property; (2) explain that the exemption cannot exceed 20 percent of the value of any single parcel that is residential property; and (3) ensure that the homestead exemption program not curtail or reduce tax relief for the elderly and disabled.

As passed by the Senate, SB 496 authorizes local governing bodies to exempt, partially exempt, or defer the taxation of real property not to exceed 20 percent of the assessed value of any single parcel or the assessment for real property that is residential or farm property designed for continuous habitation and occupied as the primary dwelling of the individual owners. This bill is similar to HB 1118, which did not pass the House of Delegates.

Earlier in the session, the Senate Finance Committee killed the Senate version of the constitutional amendment (SJ 6). The House version, HJ 4 (Albo), is awaiting action in the Senate Privileges and Elections Committee.

It is VML's position that the General Assembly must enact SB 496 along with HJ 4. Local governments need the flexibility to craft a homestead exemption program that best meets local needs. Staff contact: Neal Menkes (nmenkes@vml.org) Mary Jo Fields (mfields@vml.org).

Senate narrowly approves impact fee bill

The Senate narrowly approved the controversial impact fee bill on Tuesday. The 21-19 vote was much closer than many had expected, due largely to the many contacts that localities made to their senators. The senators who voted against the bill are for the most part from areas of the state that face growth pressures.

Here is how senators voted on SB 768 (Watkins):

YEAS (21) -- Howell, Hurt, Lucas, Marsh, Martin, McDougle, McEachin, Miller, J.C., Norment, Northam, Puckett, Reynolds, Ruff, Saslaw, Smith, Stolle, Stosch, Wagner, Wampler, Watkins and Whipple.

NAYS (19) -- Barker, Blevins, Colgan, Cuccinelli, Deeds, Edwards, Hanger, Herring, Houck, Locke, Miller, Y.B., Newman, Obenshain, Petersen, Puller, Quayle, Stuart, Ticer and Vogel.

Several members of the House have expressed reservations about the bill, especially members who represent areas with rapid growth. It is critical that localities contact their House members, particularly members who are on the Counties, Cities and Towns Committee, where the bill will likely go, to let them know that the bill will harm local funding of schools, roads, parks, libraries and other needs.

In the last week, amendments were made to the bill to improve it, but not enough to make the bill workable. The major problem is that it leaves localities inadequate funding for schools and roads. As a result, the bill will effectively force localities to increase real estate taxes to fund their capital needs. Existing taxpayers will bear an increased burden, while developers will pay less. Staff contact: Mark Flynn (mflynn@vml.org).

Mental health bills pass the House

Bills related to involuntary commitment, emergency custody orders, and responsibilities of community services boards (CSBs) regarding commitment hearings and monitoring outpatient commitment orders, were passed by the House this week. These bills are similar to measures introduced in the Senate and passed by that body last week.

The bills passed by the House include:

HB 267 (Albo) regarding involuntary admissions standards and enforcement of compliance with outpatient treatment.

HB 499 (Hamilton), regarding new standards for involuntary commitment and for outpatient commitment, as well as revised responsibilities for CSBs in attending commitment hearings, and monitoring of those individuals under an outpatient commitment order.

HB 560 (Bell), regarding attendance of the independent examiner and CSB employee or designee who prepared a prescreening report to attend the commitment hearing.

HB 559 (Bell), changing the criteria for emergency custody orders, for juveniles and involuntary commitment, and the length of time someone can be detained or involuntarily committed.

HB 475 (Cox), to require that the Department of Veterans Services work with the Department of Mental Health, Mental Retardation, and Substance Abuse Services and with the Department of Rehabilitative Services to establish a program to monitor and coordinate mental health and rehabilitative services for Virginia veterans and members of the Virginia National Guard and Virginia residents in the Armed Forces Reserves not in active service.

These bills now move to Senate committees for further consideration. Staff contact: Janet Areson (jareson@vml.org).

Budgets to be released Sunday

The House and Senate budget-writing committees are scheduled to release their versions of the 2008-2010 budget, as well as changes to the current year (FY08) budget, on Sunday. Given the weak revenue forecast released by Gov. Tim Kaine on Tuesday, the budgets to be released will likely include reduction or elimination of proposed initiatives from the introduced budget, as well as reductions in existing programs.

The information to be released on Sunday usually consists of a fairly broad overview of the changes the committees propose to make. The actual amendments, which detail the changes the committees propose to make to the budget, are scheduled for release on Tuesday. VML will report on the budget release on Sunday, with a more detailed reporting on the actual amendments later in the week.

Payday lending measures advance

Both the House and Senate have approved measures regulating the payday lending industry.

The bills impose a 36 percent cap on interest on payday loans, require payday lenders to enter transactions into a database in order to prevent customers from taking out multiple loans from different companies at the same time; and allow payday lenders to charge a fee of up to 10 percent of the value of a loan.

HB 12 (Oder) and SB 588 (Puckett) differ in some details, especially with regard to how frequently loans can be made.

HB 12 restricts borrowers to up to five loans a year and prohibits lenders from making loans to borrowers for 24 hours after a loan is paid off. The bill allows payday lenders to charge a $5 verification fee.

SB 588 prohibits payday lenders from relocating or opening new offices within 1½ miles of an existing office, making new loans to borrowers on the same day in which a previous loan was repaid, and making new loans within 90 days of borrowers paying off extended loans. The bill allows lenders to charge a $10 verification fee. Staff contact: Mary Jo Fields (mfields@vml.org).

Bills fall by the wayside

Crossover Day was Tuesday, the day by which each house had to complete work on its own legislation, except for revenue and budget bills.

• The House passed 616 of 1,576 bills introduced: a survival rate of about 39 percent.
• The Senate was kinder to its members, passing 433 of 795 introduced bills, for a survival rate of about 54 percent.

House and Senate committees face a deadline of March 3 for action on bills, except for the budget and revenue bills.

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