March 4, 2008

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House budget grabs $20 million from localities share of court-collected fees

Tucked away in the House budget package is an amendment to take $10 million a year away from local governments. Under §17.1-285 of the Code of Virginia, the state is entitled to one-third of the excess fees collected by clerks of circuit courts. Counties and cities are entitled to two-thirds of the fees collected unless otherwise provided by law. The House amendment reverses this statutory policy.

Loudoun and Virginia Beach would each lose more than $700,000 in each year of the biennium.

If your local government has a position on the amendment, please inform your delegation, the budget conferees and VML immediately. This matter is before the budget conferees right now. The General Assembly is scheduled to adjourn on Saturday.

Losses by locality spreedsheet.

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

Calls and e-mails needed on HB 599 funding

The budget proposed by Gov. Tim Kaine and those adopted by the House of Delegates and the Senate take very different approaches to the funding of the HB 599 program. Here is a quick overview.

Background:

About 65 percent of all Virginians depend on local police departments for public safety services. The officers of every participating police department -- 39 cities, 9 counties, and 128 towns -- must meet the minimum training requirements set by the state Department of Criminal Justice Services.

1. The Virginia Department of State Police recognizes the effective strength of a locality's police force as a key factor that influences or contributes to crime.
   
2. Based on FY06 data, the '599' program makes up almost 20 percent of Virginia's cities' law enforcement budgets, 14 percent of eligible counties' law enforcement budgets, and 34 percent of the law enforcement budgets for eligible towns. Based on a VML survey of participating cities, counties and towns, more than 2,600 police officers are patrolling Virginia's streets because of the program.
   
3. As a matter of law, '599' dollars must be used to fund local public safety services, and cannot be used to supplant the funding provided by local governments for these services.
   

Respective positions:

Gov. Tim Kaine reduced the appropriation of the program by 5 percent in fiscal year 2008, and proposed extending the reduction in FY 2009 and FY 2010. His action in FY 2008 cut the program to $205 million.

The Senate approved a budget amendment to fund the program in accordance with state statute, resulting in a $5 million increase for the biennium or $207.5 million each year.

The House approved a series of budget amendments effectively reducing the program by $14.9 million for the 2008-2010 biennium:

House Amendment Package FY09 FY10

	FY 2009	FY 2010
HB 30, as introduced	$205,001,876	$205,001,876
Criminal justice training academies	($1,101,101)	($1,101,101)
Internet crime task forces	($1,250,000)	0
School resource officers	($1,490,000)	($1,490,000)
Line of duty benefits	($3,971,897)	($4,426,897)
TOTAL	$197,188,878	$197,983,878

Analysis:

Impact of two budget amendment packages on eligible local governments.

The House amendment on line-of-duty benefits is based on the fact that 65 percent of the benefits provided for the Line of Duty Act are for local government employees. The House failed to take into account that less than 30 percent of all line-of-duty recipients are police officers from eligible '599' localities. More than 40 percent of eligible line-of-duty recipients are local employees who are from localities not eligible for '599' funding or are firefighters and emergency medical technicians. In other words, the House amendment overestimated the fiscal impact of local police officers.

Regional training academies conduct training for law enforcement and jailers as well as other criminal justice personnel. They are funded by groups of localities and by the state. Most of the larger cities and suburban counties, however, operate their own independent criminal justice training academies. The House amendment removes existing state general fund support for the academies and supplants the money with '599' funds. If adopted by the General Assembly, a number cities and counties (i.e., Henrico, Chesterfield, and Prince William) would lose funding and not receive any benefits. Moreover, the '599' money would be used to train personnel who are neither police officers nor employees of '599 eligible localities.

Concerning the school resource officer incentive grants, the House amendment removes almost $1.5 million of general fund support for the program each year and supplants the lost funds with '599 dollars. As is the case with the other House amendments, localities eligible for these incentive grants include communities other than those receiving '599' money. Thus, '599' localities will be losing funds without receiving any benefit.

Regarding the Internet crime task forces, the House amendment provides $750,000 to the Bedford County Sheriff's Office for the operation of the Southern Virginia Internet Crimes Against Children Task Force and $500,000 to the Virginia State Police for the operation of the Northern Virginia-Washington, D.C., Internet Crimes Against Children Task Force. Bedford County is not eligible for '599' funding. Neither is Virginia State Police.

Del. Phil Hamilton, vice chairman of the House Appropriations Committee, has publicly discussed his opposition to the '599' program. It is not unreasonable to assume that the House budget amendments represent the first steps in dismantling the program. Evidently, the consequences of losing more thanover 2,600 police officers do not seem important.

Next steps:

VML requests that you contact your delegates and senators, and urge them not to accept the House amendments. The budget conference has already started, and it is critical that the delegations be contacted before the conferees take action. Calls, faxes and e-mails should be sent immediately.

Contact information all delegates

Contact information all senators

Keep budget conferees informed

Please make sure that you copy the budget conferees with any correspondence on the budget that you send to your delegates and senators. The budget conferees are listed below.

House Budget Conferees

Name	Telephone	E-mail	Fax
M. Kirkand Cox	(804) 698-1066	DelKCox@house.state.va.us	(804) 786-6310
Phillip A. Hamilton	(804) 698-1093	DelPHamilton@house.state.va.us	(804) 786-6310
Clarke N. Hogan	(804) 698-1060	DelCHogan@house.state.va.us	(804) 786-6310
Johnny S. Joannou	(804) 698-1079	NONE	(804) 786-6310
Lacey E. Putney	(804) 698-1019	DelLPutney@house.state.va.us	(804) 786-6310
Beverly J. Sherwood	(804) 698-1029	DelBSherwood@house.state.va.us	(804) 786-6310

Senate Budget Conferees

Name	Telephone	E-mail	Fax
Charles J. Colgan	(804) 698-7529	district29@sov.state.va.us	(804) 698-7651
Edward R. Houck	(804) 698-7517	district17@sov.state.va.us	(804) 698-7651
Janet D. Howell	(804) 698-7532	district32@sov.state.va.us	(804) 698-7651
Richard L. Saslaw	(804) 698-7535	district35@sov.state.va.us	(804) 698-7651
Walter A. Stosch	(804) 698-7512	district12@sov.state.va.us	(804) 698-7651
William C. Wampler Jr.	(804) 698-7540	district40@sov.state.va.us	(804) 698-7651

Are real estate tax increases in your future?

A consulting firm that does work for VML has reviewed the House budget amendments affecting the rebenchmarking of public education and the "599" law enforcement program.

The table compiled by Fiscal Analytics Inc. shows the fiscal impacts for cities if the House amendments are approved and carried forward into the 2008-2010 biennium and beyond. The table assumes that the changes regarding the federal deduct, inflation cap, and support and instructional salaries all take effect and that the program cuts to "599" are continued. The table also shows the real estate tax rate increases localities would have to approve to make up for lost state dollars.

You may want to share this information with your delegation before the budget conferees make final decisions this week.

Payday loan compromise bill reached by General Assembly

Compromise legislation on the payday lending issue is on the floor of both houses. The media reports that the payday industry does not support the bills. HB 12 (Oder) and SB 588 (Puckett) are identical. The Senate is to take up the bill Tuesday and the House on Wednesday. Senator Puckett, presenting his bill to a House committee on March 3, said that the legislation was not perfect, but represents much progress.

A number of localities have adopted resolutions supporting payday lending reform. The legislation caps interest rates at 36 percent and includes several provisions to protect borrowers.

Localities interested in the issue should contact your delegate and senator in support of the compromise.

Major provisions in the bills are:

• Interest rate capped at 36 percent annual rate, but the fees are increased (20 percent of loan amount plus a verification fee of $5 used to operate the database of payday loans to ensure 1 loan at a time, etc.);
  
• Only 1 loan at a time with the database to determine number of loans, repayment history and other matters needed to help lenders comply with new law; no more than 10 loans per year per person;
  
• Loan repayment period doubled to twice the borrower's pay period;
  
• Interest amount charged must be shown on loan documents;
  
• No loan allowed on day prior loan repaid;
  
• No loan for 45 days after fifth loan to borrower in a 180-day period;
  
• No loan for 120 days after borrower makes an extended loan;
  
• Lender may not file criminal charges for failure to pay and must wait 60 days after default to collect in court (3 times damages to borrower if criminal proceedings provision violated);
  
• Prohibits loans knowingly made to military personnel or their spouse or dependents;
  
• Subjects payday loans to Federal Fair Debt Collections Practices Act;
  
• Creates right of borrower to convert loan to "extended payment plan" of at least 60 days.
  

Senate passes one year ban on adoption of road impact fees

The Senate has passed HB 111 (Scott) with an amendment to prohibit any locality from adopting a road impact fee ordinance from July 1, 2008 to July 1, 2009. The patron is reported to support the amendment, so the amendment stands a good chance of being accepted in the House when it returns for approval of the amendment. The bill does not prohibit adoption of a road impact fee ordinance prior to July 1, 2008. It does not prohibit a locality that now has a road impact fee from amending or expanding it.

The amendment was a part of an agreement by VML, VACo, the High Growth Coalition, the homebuilders association, realtors and commercial property owners in regards to 1) carrying over SB 768, (Watkins) the impact fee bill; 2) all parties making a commitment to work on the impact fee bill after the session with the goal of reaching a consensus bill for the 2009 session; and 3) the request by the Speaker of the House to local governments to not increase the cash proffer guidelines for a year while the parties attempt to hammer out a workable impact fee system for Virginia.

FOIA bills update

Legislation to allow local governing bodies to meet electronically during emergency situations, without a quorum being physically present, continues to advance through the Senate. HB 854 (Ebbin) was reported 10-0 from the Senate General Laws and Technology Committee and is on the Senate floor. The bill requires the governor to declare a state of emergency and that the situation be so catastrophic that convening a physical quorum would be impractical.

Two bills dealing with the collection, use and disclosure of individual Social Security numbers are also advancing through the General Assembly.

SB 132 (Houck) was reported from House General Laws with technical amendments and is now on the House floor for consideration. Houck’s bill would, in part, amend the Government Data Collection and Dissemination Practices Act (GDCDPA) to prohibit local government agencies from requiring individuals to furnish SSNs or driver’s license numbers unless required by another state or federal law.

HB 633 (May) was reported 8-2 from Senate General Laws and Technology Committee and is up for consideration on the Senate floor. May’s bill would prohibit the dissemination of another person’s social security number, regardless of whether such number is obtained from a public or private record.

Staff contact: Roger Wiley (roger@heftywiley.com)

Senate passes omnibus mental health bill

The Senate has passed a substitute version of HB 499 (Hamilton), a mental health bill that addresses a number of issues surrounding emergency custody, involuntary commitment, and mental health treatment.

The bill: 1) clarifies the legal criteria for involuntary commitment; 2) increases the amount of time allotted for emergency custody (from 4 to 6 hours as necessary); 3) strengthens and clarifies the requirements for ordering, delivering, monitoring, and oversight of any outpatient treatment ordered; 4) outlines training requirements; and 5) clarifies when medical records may be shared with law enforcement, courts, etc. A companion bill, SB 246 (Howell), is up for its third reading on the House floor.

HB 499 and its companion have seen several amendments since their introduction early this session. HB 499 came under scrutiny in the Senate Courts of Justice Committee during the past week because of a disagreement between the committee’s counsel and the Attorney General’s Office regarding the bill’s provisions for sharing of health records and restrictions imposed by federal health information privacy laws. The disagreements were resolved and a final amended bill was presented on the Senate floor on March 4. The Senate adopted the substitute bill 40-0.

The introduced budget and both the House and Senate budgets include funding to help implement mental health reform measures.

Regional road funding proposals surface

The General Assembly is considering possible solutions to the state’s latest transportation funding problems. It’s unclear whether there will be legislation this year that provides funding for transportation, and if such legislation will address state-wide needs, or whether a special session is needed to do so.

Meanwhile, one partial remedy proposed by the Senate would authorize the state to impose fees to be used for road projects in the Hampton Roads region. In contrast, the House reworked a Senate bill to propose that local governments use their existing sales tax revenues for transportation projects in Northern Virginia. These latest proposals follow a Supreme Court ruling on Feb. 29 that the 2007 transportation bill -- HB 3202 -- authorizing the Northern Virginia Transportation Authority to impose an array of taxes, is unconstitutional. The court decision would seem to apply also to the General Assembly’s delegation of tax authority to the Hampton Roads Transportation Authority. The only tax to survive the court’s ruling was the local option commercial real estate tax.

The Senate agreed on March 3 to the introduction of new legislation, SB 798 (Wagner), proposing that the state, rather than the HRTA, levy the menu of fees -- additional vehicle license fees, registration fees, inspection fees, a regional congestion relief fee and others – enumerated in HB 3202. In a substitute for SB 729 (Saslaw) reported on March 3, the House Committee on Rules proposed that local governments included in the Northern Virginia Transportation Authority may dedicate the one percent local option retail sales and use tax for transportation.

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.

Attorney fee bill passed by indefinitely

The Senate Courts Committee voted 8-7 to pass by indefinitely a bill that would have amended a section of the state code that prohibits local governments from regulating firearms. Under HB 371 (Carrico), anyone who complained that a locality had violated the law would be awarded attorneys fees even if the issue had not gone to court. Thanks to members who contacted their senators about the bill.

Lottery proceeds unlawfully appropriated

David Rosenberg, a lawyer with the Division of Legislative Services, advised the House Appropriations Committee March 3 that the method by which $437 million in lottery funds was directed to education last year was unconstitutional. He told the committee that the lottery money has been going into the General Fund, and that the “commingling” of lottery funds with general funds is unconstitutional.

To clarify his position, Rosenberg pointed to the first paragraph of Article X, section 7-A of the state constitution, which reads, “The General Assembly shall establish a Lottery Proceeds Fund. The Fund shall consist of the net revenues of any lottery conducted by the Commonwealth. Lottery proceeds shall be appropriated from the Fund to the Commonwealth’s counties, cities, and towns, and the school divisions thereof, to be expended for the purposes of public education.”

Rosenberg said that upon reviewing financial statements from the last fiscal year, it is evident money was taken from the General Fund for the purpose of “fronting” direct aid to localities, and that the borrowed money was later replaced with lottery dollars. When asked whether this common practice, demonstrated in both the House and Senate budgets, is unconstitutional, Rosenberg replied bluntly: "yes."

Rosenberg’s opinion reverses a written opinion sent to the chairman of the Senate Finance Committee early last week. In that opinion, the Division of Legislative Services said that the budget amendments adopted by the Senate regarding the disposition of lottery funds was constitutional.

The question of the constitutionality of the appropriation of lottery funds was controversial when the Senate adopted the budget. Lt. Gov. Bill Bolling ruled that an extraordinary majority was needed to approve the budget, because it appropriated lottery revenues not related to the purposes of education. The Senate overruled the lieutenant governor’s ruling 21-19, and proceeded to adopt its version of the budget.

The state has been using at least 60 percent of the lottery proceeds to fund a portion of basic aid, and has been returning the remainder to localities with school divisions. This constitutional discussion does not affect this distribution. Apparently, the state could continue to use lottery proceeds to pay a portion of its basic aid, but would need to first put that money in a Lottery Proceeds Fund instead of in the General Fund as has been the practice.

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