February 29, 2008

Impact fee bill carried over until '09 session

The House Rules Committee has carried over SB 768 for the year. The committee adopted a substitute version of the bill before carrying it over. The substitute was developed by VML, VACo and the development industry during the session. The substitute is an improvement over the prior version, but the parties are still far apart on its terms.

VML, VACo and the High Growth Coalition have pledged to continue working with the Homebuilders Association of Virginia in an attempt to craft an impact fee law for Virginia that works. The homebuilders have pledged to continue this effort. Meetings will hopefully start not long after the General Assembly session ends.

As a part of an arrangement to move the effort forward, the local government associations and the homebuilders agreed to prohibit any localities from adopting a road impact fee ordinance from July 2008 to July 2009. The road impact fee authority is a part of HB 3202 passed by the General Assembly in its 2007 session. The bill that would put this bar in place is likely be heard by the full Senate on Monday.

Attorney fee bill in Senate Courts Committee; call senator to oppose

HB 371 (Carrico) amends the state code section that prohibits local governments from regulating firearms. Under the bill, anyone who complains that a locality has violated the law shall be awarded attorneys fees—even if the issue doesn’t go to court.

The bill is being heard in the Senate Courts committee Monday morning, March 3. Please call your senator on the Courts Committee to oppose the bill.

Here are some talking points:

• If attorney's fees are awarded in these cases, the taxpayers foot the bill.
  
• As the bill is written, if an individual hires an attorney to complain about an ordinance before the city council and convinces the city to strike an ordinance, the bill requires the locality to pay those attorneys fees.
  
• Under this bill, if a library director-without consulting the City Attorney's office-posts rules that included a prohibition of firearms, the city would have to pay attorneys fees if a citizen complained and hired an attorney. This would be the case even if the city attorney instructs the library director to remove the posting.
  
• Nothing in the bill says who evaluates the fees, nor does it state who determines if the amount is appropriate. A person who hires an attorney could simply demand payment by the locality if the council or some department had violated the code section.
  
• The state doesn't like claims bills. This bill is similar to a claims bill, but the burden is on the locality.
  
• Claims bills set a limit in the bill that will be paid. This bill doesn't specify amounts being paid.
  

Senate Courts Committee membership

Immigration bills moving through both houses

Gov. Tim Kaine will not be required to enter into an agreement with the federal government that would allow designated state and local police officers to perform certain federal immigration law functions. HB 623 (Miller, J.), a bill that would have mandated this requirement, was passed by indefinitely in the Senate Courts of Justice Committee on a 7-5 vote.

Sen. Ken Stolle’s presumption bill (SB 623), a bill that denies bail to illegal aliens if they have performed certain crimes, will be brought up in the Committee on Courts of Justice this afternoon. Del. Rust has a similar bill (HB 440), which has now passed both houses and is moving toward the governor’s office.

Del. Tom Rust’s HB 445, protects the owner or managing agent of a single-family residential dwelling from penalty for overcrowding of the unit if he is diligently pursuing the problem. This will be heard in Senate Civil Courts subcommittee first thing March 3.

Other immigration bills still before committee are:

• HB 820 (Albo) and SB 609 (Stolle), jail operation bills that would require jails to inquire with each inmate about their citizenship and country of birth.
  
• HB 926 (Byron) and SB 782 (Obenshain), procurement bills which would require the State Corporation Commission to revoke the charter or authority to do business in any business that violates the laws on hiring illegal immigrants.
  
• HB 1298 (Frederick) and SB 517 (Cuccinelli), procurement bills that require all public bodies, including local governments, to provide in every written contract that the contractor will not hire illegal aliens. These bills, in their current form, are too broad and will lead to problems for localities. A purchase order and a minor contract for supplies are written contracts. The bill requires even minor contracts to include the provision. VML is working to see if an earlier, $10,000 floor would be acceptable for these bills.
  

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

House Appropriations Committee defends education funding proposal

Members of the House Appropriations committee had a spirited debate over the House budget proposal to change the rebenchmarking process. Del. Lacey Putney, chairman of the House Appropriations Committee, said that the two biggest programs in the state budget were Medicaid and public education. He went on to say that the General Assembly couldn’t control the cost of Medicaid, and that public education was the biggest program that the legislature could control. He said that localities would continue with their “local aspiration” funding, but that the General Assembly would not be funding that aspiration through rebenchmarking.

Dels. Phillip Hamilton of Newport News and Harvey Morgan of Gloucester County also defended the proposed change. Del. Bud Phillips of Dickenson County said that he thought that the proposal was unconstitutional, as it did not take into account actual expenditures for education. Del. Jim Scott of Fairfax County said that the proposal would restrain the amount of funding for localities, which is current based on the actual cost. He said that the change would mean that the state would not fund part of the actual cost of education.

Local officials are urged to contact their delegates and senators in opposition to the budget proposal to change the education rebenchmarking process. The long term effect will be detrimental to the quality of public education and to local finances. A separate Action Call on the issue was sent earlier today.

Staff contact: Mary Jo Fields (mfields@vml.org); Neal Menkes (nmenkes@vml.org).

Supreme Court invalidates Northern Virginia Transportation Authority taxes

The Virginia Supreme Court has ruled that last year’s transportation bill -- HB 3202 -- authorizing the Northern Virginia Transportation Authority to impose an array of taxes, is unconstitutional. As a result, the NVTA has no ability to impose the taxes and fees. The court’s decision raises the question of whether those taxes and fees must be repaid to the citizens who paid them. The taxes that the court addressed in its opinion include an additional annual vehicle license fee, additional initial vehicle registration fee, additional annual inspection fee, a local sales and use tax on vehicle repairs, a regional congestion relief fee, a local rental car transportation fee and an additional transient occupancy tax.

The court’s decision is based on the fact that the General Assembly delegated the authority to impose taxes to a non-elected body -– the NVTA. The court ruled that the constitution allows delegation to a county, city, town or regional government, so long as the members of the taxing entity are elected by the voters. Since the NVTA is not an elected body, it is not a body that the General Assembly may delegate taxing authority to under the Virginia constitution.

HB 3202 authorized the Hampton Roads Transportation Authority to impose similar taxes and fees. The HRTA was not directly involved in the litigation. The court decision, however, would seem to apply to the General Assembly’s delegation of tax authority to HRTA as well as NVTA.

Court’s ruling wrecks region’s transportation plans

The Supreme Court’s decision derails plans by the Northern Virginia Transportation Authority (NVTA) to issue bonds for a number of high profile projects in the region, as well as raise cash for local road and transit projects. The ruling does not affect the taxes and fees imposed by the state for state maintenance and transit programs.

The taxes and fees enumerated in HB 3202 were projected to raise roughly $330 million per year. The only tax to survive the court’s ruling is the commercial real estate tax of up to 25¢ per $100 value. This is a local option tax, and was not affected by the ruling.

HB 3202 NVTA Revenue Sources

($s in millions)

Item	Rate Change	FY08	FY09	FY10	FY11
Motor vehicle rental tax	2%	$ 4.2	$ 8.6	$ 8.8	$ 9.2
Transient occupancy tax	2%	9.3	23.2	24.1	25.2
Congestion relief tax	40¢ per $100	75.8	163.6	172	172.4
Safety inspection fee	$10	8.1	16.2	16.2	16.2
Initial vehicle registration	1%	25.9	62.8	63.9	64.4
Sales tax on auto repairs	5%	13.4	33.2	33.2	33.2
Regional registration fee	$10	8.5	17	17	17
Commercial real estate	Up to 25¢ per $10	Local option revenue
Total Revenues		$145.2	$324.6	$335.2	$337.4

NVTA imposed these taxes beginning in January. Although the ruling is silent on the issue, it is assumed that the taxes collected will have to be refunded. This will be administratively difficult, and it is uncertain how this will be done and who will be responsible for the action.

Although the Hampton Roads Transportation Authority was not party to the suit, the court’s ruling will almost certainly apply. The taxes and fees are similar and, most importantly, the revenues are to be imposed by the authority. The authority had postponed the actual collection of the taxes and fees until May. Thus, there is no refund problem.

It is highly unlikely that the General Assembly will take up the transportation funding challenge in the closing weeks of the session. Whether or not there is a special session will be determined by the amount of pressure applied to the governor and legislature. After two bruising sessions in 2006 and 2007 on the transportation topic, this is not an issue that either the General Assembly or the governor is eager to take on.

VML’s position on transportation funding is that local governments need adequate, sustainable, dedicated, non-general funds from the state to support Virginia’s transportation network.

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