February 15, 2008

Governor's recommended budget strategies target localities

Gov. Tim Kaine released, along with his revised revenue estimates on Feb. 13, budget reduction strategies that would significantly affect local services. 

 In FY09, the governor's strategies target $191.5 million in local cuts out of the total $599.7 million slated for reductions.  In FY10, the governor's local government strategies encompass $241.4 million out of the $459.8 million reduction total.

 

Governor's Feb. 12 budget reduction proposal (Impact on local governments ($s in millions)
	2008	2009	2010	Total
Total Revenue Shortfall	339.3	520.1	532.2	1,391.6
School construction	$0	$27.5	$27.5	$55.0
Lottery proceeds for schools	-	82.8	82.8	165.6
WQIF facility upgrades	15.0	-	-	15.0
Farmland preservation grants	-	1.0	1.0	2.0
Pre-K: quality rating & improvement system	-	-	0.5	0.5
VA Early Childhood Foundation	-	-	0.5	0.5
Craigsville wastewater treatment plan	-	-	1.5	1.5
SOQ compensation supplement	-	-	41.4	41.4
5.4% flexible local cut*	-	64.7	65.9	130.6
Pre-K reduced lunch expansion	-	4.6	5.5	10.0
Reduced sales tax to localities	5.7	10.9	14.7	31.3
Total local cuts	$  20.7	$191.5	$241.4	$453.6
Local % of Total Cuts	6.1%	36.8%	45.4%	32.6%
* See governor's menu of programs that could be cut ...

 

The House Appropriations and Senate Finance Committees will consider, but are not obligated to accept, Kaine's recommendations.  Because the two money committees must report out their budget amendments on Sunday, Feb. 17, they may be inclined to accept some of the suggested spending cuts.

 Other major components of the governor's budget reduction proposals include:

•  Increasing the withdrawal from the Rainy Day Fund from $261.1 million to $423.5 million;
• Replacing $300 million of general fund dollars in capital projects with debt; and
• Cutting state agency budgets by $225.2 million.

 The governor's budget strategies cut deeper than the cumulative revenue shortfall of $1,391.6 million.  In order to generate sufficient cash balances to address anticipated and unanticipated contingencies, the spending cuts and other actions total $1,401.9 million, leaving a balance of $10.3 million at the end of fiscal year 2010.  This means the proportion of cuts to localities is higher in fiscal year 2010 than 45.4 percent.  From this perspective, cuts to local governments actually comprise over 52.0 percent of the governor's total corrective actions.

Staff contacts: Neal Menkes (nmenkes@vml.org); Janet Areson (jareson@vml.org)

 Economic slowdown drives state revenues down

In appearances before the Senate Finance and House Appropriations committees on Feb. 13, Secretary of Finance Jody Wagner explained the economics behind the revised General Fund forecast.

 More than 85 percent of General Fund revenues derive from the individual income tax and the general sales and use tax.  The revised forecast recognizes the drop in job and income growth as well as weaker prospects for housing.

 The economic slowdown has also affected corporate profits and home sales, which account for another 8 percent of general fund revenues.

 The result is a three-year hit in revenues of almost $1.4 billion when compared to Gov. Tim Kaine's December revenue forecast -- $339.3 million in FY08, $520.1 million in FY09, and $532.2 million in FY10.  General Fund growth rates were changed from 3.4 percent to 1.2 percent in FY08, from 3.3 percent to 2.2 percent in FY09, and from 6.7 percent to 6.8 percent in FY10.  (Keep in mind that the reduced General Fund base in 2010 more than offsets the slightly higher growth rate to produce less revenue than the December forecast.)   

 About half of the General Fund budget is allocated either directly or indirectly to localities to carry out state mandates or to deliver services of high priority for both the state and local governments.  Consequently, the next round of spending cuts will substantially impact local government budgets and services.

Staff contact: Neal Menkes (nmenkes@vml.org)

 Locality pays attorneys fees for BZA decisions?

SB 519 (Watkins) authorizes a circuit court to award attorneys fees against a local government for a decision of the local board of zoning appeals if the petitioner prevails and the BZAs decision is overturned.  The bill has been assigned to the House Courts Committee and to that committee's civil law subcommittee. 

 VML opposes the bill for three reasons:

• It erodes the American Rule that provides that each litigant pays its own attorney fees.  Even for many civil rights claims, there is no award of attorneys fees.
• Most BZAs are appointed by the circuit court, not the locality.  The BZA may or may not act as an agency of the locality, but overall, it is a quasi-judicial body, making its own decision.  It is not making the decision of the locality. 
• In many cases, the argument is between the property owner and his neighbors.  The BZA is really like a court, and is deciding the rules.  In the appeal of any other court's decision, the lower court is not required to pay attorneys fees.

Please contact your delegate on the House Courts Committee to ask them to vote against the bill. 

Staff contact: Mark Flynn mflynn@vml.org

 Workers' compensation bill passes Senate

One costly workers compensation bill is still alive, and has been referred to the House Militia, Police & Public Safety Committee.  SB 500 (Northam) presumes that any disease contracted by an emergency worker during an epidemic declared by the governor would be covered by the workers compensation.  The problem is that if a disease has become so widespread that the governor has declared it an epidemic, then there is no way to determine where the emergency worker contracted the disease.  Earlier this session, the House Commerce & Labor killed a companion bill (HB 532) on the issue. 

Staff contact: Tim Ailsworth (tailsworth@vmlins.org).

 Senate accelerates gas tax

The Senate approved 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.  The revenues from SB 713 would be deposited to the Highway Maintenance and Operating Fund, and would be used to maintain Virginia's primary, secondary and urban roads. The bill is likely to be referred to House Finance; if your locality has a position in support of the bill, please inform your delegation and VML.  The bill's prospects in House Finance are dim. 

 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 fiscal year 2008, $262.5 million will be transferred from the construction budget for maintenance activities.  In fiscal year 2009, the amount is projected at over $290.0 million.

 The current state motor fuels tax is 17.5 cents per gallon, and raises close to $900.0 million per year.  The fiscal impact statement indicates SB 713 would raise an additional $47.2 million in FY 2009 and $100.0 million in FY 2010.  By fiscal year 2014, the additional taxes would raise $281.6 million.

Staff contact:  Neal Menkes (nmenkes@vml.org). 

Impact fee legislation moves to House

SB 768 (Watkins) squeaked out of the Senate and is before the House.  The bill will be heard by the House Rules Committee, but likely not until next week.  At this point, VML asks that you contact your delegate who serves on House Rules and ask the member to include the bill in a study that is now before House Rules: SJR 70 (Holtzman Vogel).  That study is designed to address many of the issues raised by SB 768.

 VML and others continue to work on the bill, to identify how it works and what is needed to make it workable.  The most significant problem with the bill is the caps on the impact fees.  The best information available to date demonstrates that it will not provide the same level of funding for growth that the current cash proffers do.  As a result, the bill will shift the burden of paying for infrastructure to current landowners, raising the real estate tax. 

Staff contact: Mark Flynn (mflynn@vml.org). 

Broadband bill advances

The Senate has passed legislation to allow approved broadband providers to use state owned communications towers to help provide broadband service to remote areas of the state.  SB 206 (Stuart) is now before the House Commerce & Labor Committee.  VML supports the bill, which will promote economic development in rural areas.

Staff contact: Tim Ailsworth (tailsworth@vmlins.org).

 Changes to road revenue sharing program moving forward

VDOTs revenue sharing program encourages state and local governments to work together on road projects of critical importance to localities. Legislation patroned by Sen. Frank Ruff (SB 99) and Del. Ed Scott (HB 111) changes several key provisions of this program.  The bills would:

• Eliminate the previous priority for projects receiving more than $1 million of local dollars;
• Establish local administration of projects as the first priority for funding;
• Allow local governments to partner with VDOT to deliver the road projects;
• Eliminate the limitation of the amount of proffers that can be used by a local government to match state funds; and
• Require a locality to initiate planning, design, right-of-way, or construction no later than two fiscal years after receiving an allocation from the program.

 SB 99 has passed the Senate and has been referred to the House Committee on Transportation.  Its companion, HB 111, has passed the House and has been referred to the Senate Committee on Transportation. VDOT also has agreed to strengthen its efforts to help local governments administer local road projects, developing teams and programs for the sole purpose of facilitating local administration.

Staff contacts: Neal Menkes (nmenkes@vml.org) and Denise Thompson (dthompson@vml.org).

 Air, water permitting legislation moves forward

Legislation that leaves the power to issue permits governing air and water pollution with the Air Board and the Water Board passed the House and the Senate.  The two bills, substitute language for SB 423 (Puckett) and its companion, HB 1332 (Landes) also set up a process and timetable for public comment, and synchronize the number of members on each board to seven.  Earlier versions of the bills proposed to vest air and water permitting authority with the Director of the Department of Environmental Quality, as is currently done for waste permits.  The initial proposals were controversial. Industry representatives and others sought to improve the predictability of the permitting process, but some conservation groups thought the proposed changes would weaken public representation.  The legislation approved by the House and Senate is considered a compromise, and Gov. Tim Kaine has indicated that he will sign the bills in their present form.

Staff contact: Denise Thompson (dthompson@vml.org)

 School construction revolving loan program heads to Senate

The House of Delegates on Feb.12 approved legislation to establish a revolving loan program for school construction.  Under HB 923 (Rust), state funding would be deposited in the program, which then would make below-market rate loans for the construction of school buildings. Loan payments would replenish the fund. The funding would be in the appropriations act. The legislation proposes housing the program in the VML-VACo local government finance program, which currently offers a pool for bonds for various local projects. The Senate Finance Committee earlier in the session rejected two identical Senate bills. 

Staff contact: Mary Jo Fields (mfields@vml.org). 

 Status of CSA-related bills

A number of bills related to the Comprehensive Services Act for At-Risk Youth and Families (CSA), are making their way through the General Assembly.  A list of those bills, with the most recent actions, is below.

 There are also a number of proposed budget actions regarding this program, both from the introduced budget (Governor Tim Kaine's budget proposal), as well as proposed budget amendments from the House and Senate (many of which were promoted by VML, VACo, and the League of Social Services Executives).  We will not know the fate of these proposals until after Sunday's budget release by the House and Senate budget-writing committees.  We will report on any actions taken in those proposed budgets next week.

Here is a list of bills affecting CSA and their status:

SB 479 (Hanger) would require the Office of Comprehensive Services to offer annual training/dissemination of information on best practices to staff and stakeholders who work with this program.

Status:  Passed the Senate; reported by the House Committee on Health, Welfare & Institutions (2/14/08)

SB 483 (Hanger) would require the SEC to oversee development of a uniform data collection (client specific) system; development of performance measures; and dissemination of management reports from the state to CPMTs and the public regarding child outcomes and provider performance. 

Status:  Passed the Senate; reported by the House Committee on Health, Welfare & Institutions (2/1/4/08)

SB 487 (Hanger) would require the SEC to oversee development of uniform mandatory guidelines regarding intensive care coordination services for children at, or at risk of entering residential care.  Would require FAPTs to identify children at risk of, or placed in residential care to see if they could appropriately be served at home, in a relative's home, or otherwise in the community.

Status:  Passed the Senate; reported by the House Committee on Health, Welfare & Institutions (2/14/08)

SB 493 (Hanger) would require the Department of Social Services to develop minimum training requirements and establish education programs for foster care and adoption workers and their supervisors.

Status:  Passed the Senate; reported by the House Committee on Health, Welfare & Institutions (2/14/08)

SB 472 (Hanger) would eliminate interdepartmental regulation of group homes and residential facilities for children and give responsibilities to the various state agencies (DSS, DMHMRSAS, DOE, DJJ).

Status:  Passed the Senate; referred to the House Committee on Health, Welfare & Institutions (2/14/08)

SJR 17 (Deeds) would direct OCS to revise or replace the current service fee directory to provide more information about key provider performance, compliance, and financial information, including rates.  Preliminary report is due in 2009; final report due in 2010.

Status:  Passed the Senate; referred to the House Rules Committee.

SJR 74 (Hanger) would request DSS to study ways in which to increase the number of foster care families.

Status:  Passed the Senate; referred to the House Rules Committee.

SJR 75 (Hanger) would continue the joint subcommittee studying the administration of CSA (study began in 2006).

Status:  Passed the Senate; referred to the House Rules Committee.

HB 503 (Hamilton) would require the development of case management services for children in residential care, including monitoring and review of the plan and the child's progress towards identified goals and planning for the child's return to his home or community.

Status:  Passed the House; reported by the Senate Committee on Rehabilitation and Social Services (2/15/08)

HB 825 (BaCote) -- same as SB 493 -- would require development of minimum training standards for foster care and adoption workers and their supervisors and establishment of educational programs.

Status:  Passed the House; reported by the Senate Committee on Rehabilitation and Social Services (2/15/08) 

Staff contact: Janet Areson (jareson@vml.org).

 Status of bills addressing immigration after crossover

Here is a list of bills that are still alive dealing with immigration issues.  For local governments the bills fall into four categories: overcrowding (HB 445); presumption against bail (HB 440, HB 623 and SB 623); jail operations (HB 820, SB 609) and procurement (HB 926, HB 1298, SB 517 and SB 782).

 Overcrowding

HB 445 (Rust) protects a landlord from prosecution for allowing overcrowding by the locality so long as he is pursuing the tenants in court to eliminate overcrowding in violation of the lease.  The locality may still pursue compliance with local codes on the number of persons living in a residential unit.

 Presumption against bail

SB 623 (Stolle) and HB 440 (Rust) create a presumption that a person who commits any of a list of serious crimes and who the United States Immigration and Customs Enforcement office determines is an illegal alien is ineligible for bail.  The denial of bail in misdemeanor cases and drug possession cases is limited to cases where ICE commits to federal enforcement of immigration laws and to paying the costs of incarceration. 

 HB 623 (Miller, J.K.) requires the governor to enter into an agreement with ICE for certain state and local police to enforce various provisions of the immigration laws.  The bill is now in the Senate General Laws Committee.

 Jail operations

HB 820 (Albo) and SB 609 (Stolle) require each jail to ask whether each inmate was born in a country other than U.S. and whether the inmate is a citizen of another country.  If the person is either, the jailor must communicate the results to the compensation board, which is to follow up with the compensation  board and the federal government. 

 Procurement

HB 926 (Byron) and SB 782 (Obenshain) require the State Corporation Commission to revoke the charter or authority to do business of any business that violates the laws on hiring illegal immigrants.  This could affect the validity of a contract a local government is in with such a business. 

 HB 1298 (Frederick) provides that all public bodies, including local governments, must require that contractors with the public bodies will not knowingly violate the federal law on hiring unauthorized aliens.  SB 517 (Sen. Ken Cuccinelli) contains similar requirements, but applies only to contracts exceeding $10,000.

Staff contact: Mark Flynn (mflynn@vml.org.) 

 House, Senate approve animal control bills

Several bills dealing with animal control have passed both the House and Senate.  The legislation includes HB 5 (Orrock), prohibiting the use of gas chambers for euthanizing companion animals; and HB 207 (Morgan), clarifying that a facility serving as a pound or shelter may operate in either a building or a portion of a building, as designated by the State Veterinarian. This change would allow inspectors to tailor the separate inspection and regulatory standards for shelters and pounds to the respective portion of the facility designated for each purpose.  Also passing both the House and the Senate was HB 537 (Orrock), exempting records sent by veterinarians to local treasurers from public access under the Freedom of Information Act when the information is not contained in the animal license or license application. This will allow local treasures to dispose of records sent from veterinarians.

 The House also passed a bill designed to better regulate dog breeders.  The measure is now before the Senate Committee on Agriculture, Conservation and Natural Resources.  HB 538 (Orrock), the so-called "puppy mill" bill defines a "commercial dog breeder" as any person who "during a 12-month period" maintains at least "30 or more adult female dogs for the primary purpose of sale of their offspring."  The bill requires that breeders cooperate with inspections by animal control officers to ensure compliance with state and federal animal care laws, and includes as a delayed effective date of July 1, 2009.

Staff contact: Denise Thompson (dthompson@vml.org).

 Environmental bills address stormwater, recycling

The House and the Senate have approved bills of interest to local governments, including legislation that gives local governments greater authority to enforce stormwater permits. HB 392 (Bulova) would authorize local governments classified as MS4 (municipal separate storm sewer systems) to enact ordinances to enforce stormwater permits. The bill would give these localities the authority to seek civil charges and injunctive relief, and impose civil penalties. Violators would be subject to a criminal penalty of a Class 1 misdemeanor. 

 Another bill succeeding in both the House and the Senate provides greater local control options for recycling old television picture tubes.  HB 343 (Plum), permits local governments to prohibit the disposal of cathode ray tubes (television picture tubes) in a waste-to-energy or solid waste disposal facility within its jurisdiction, provided the locality has implemented a recycling program that is capable of handling all cathode ray tubes generated within its jurisdiction. Previously the ban only applied to privately operated landfills.  Also passing both bodies was HB 528 (Pogge), allowing localities subject to the Chesapeake Bay Preservation Act to establish a time limit of at least 30 days for an aggrieved party to appeal a decision of the local board to the circuit court.

Staff contact: Denise Thompson (dthompson@vml.org).

 Monetary threshold raised for environmental reports

Both houses have passed HB 1259 (O'Bannon), which requires local governments to submit an environmental impact report in connection with a highway construction, reconstruction, or improvement project only for projects estimated to cost more than $1 million.  The current threshold amount requiring such a report is $100,000.  Companion legislation, SB 43 (Y. Miller), passed the Senate and has been referred to the House Committee on Agriculture, Chesapeake and Natural Resources. VML supports the bills.

Staff contact: Denise Thompson (dthompson@vml.org)

 OPEB bill referred to House Appropriations

SB 614 (Stolle) authorizes local governments to contract with VRS for the administration of trusts established to pre-fund post employment benefits such as health or dental insurance for retirees.  The bill has been referred to the House Appropriations Committee, which last session rejected a role for VRS in the administration of these trusts.  VML supports the bill.

Staff contact: Mary Jo Fields (mfields@vml.org).

 Retirement changes appear unlikely

The House Appropriations Committee did not approve a variety of legislation that would have expanded retirement benefits, including HB 596 (Hamilton). HB 596 is identical to SB 624 (Stolle), which has been passed by the Senate and referred to House Appropriations.  SB 624 requires that enhanced retirement benefits be extended to jail superintendents and jail deputies.  Localities were required in the 2007 session to extend these enhanced benefits to sheriffs and deputies.  The fiscal impact on local governments is $1.5 million a year for those 5 regional jails which do not currently provide these benefits.  It would seem unlikely that the House Appropriations Committee would approve SB 624.

Staff contact: Mary Jo Fields (mfields@vml.org).

 Mental health study proposed

Senator Louise Lucas has proposed SJR 42, to request that the Joint Commission on Health Care study mental health reform.  Specifically, the Health Care Commission (which includes a behavioral health subcommittee), would receive and review recommendations of the Chief Justice's Commission on Mental Health Law Reform, the Virginia Tech Review Panel, the Office of the Inspector General (for the Department of Mental Health, Mental Retardation and Substance Abuse Services), and any other committee, commission or any legislation submitted to the General Assembly related to mental health services and to involuntary commitment.  The Senate has passed this study resolution, and communicated it to the House, where it has been referred to the Rules Committee.

 It appears as well that the Senate Finance Committee may direct some of its subcommittees to study some mental health-related proposals this year.  The committee carried over some bills related to treatment of persons with mental illness in correctional facilities, as well as training law enforcement to deal with mental health crisis situations. 

Staff contact: Janet Areson (jareson@vml.org).

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