March 10, 2008

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Overtime: House, Senate budget negotiations going nowhere slowly

For the fifth time since 2001 the General Assembly failed to end a session on schedule Saturday because of differences over money.

The governing resolution for the 2008 legislative session called for: (1) budget conferees to complete their work by March 4; (2) publishing the budget conference report by March 6; and (3) General Assembly approval of the budget conference amendments by March 8.

The conferees began meeting the last week of February, and missed the deadlines for completing their work. The General Assembly approved an amended governing resolution on Saturday, March 8, directing budget negotiators to complete deliberations no later than midnight tonight (March 10.) The session is now scheduled to conclude by midnight tomorrow (March 11). This will change, of course, if the budget conferees are unable to come to an agreement.

Three (of many) points of contention

Health and Human Resources: The Senate budget package totals $562.1 million for the area of health and human resources, as compared to the House package of $554 million, a difference of $8.1 million. Although the overall dollar amounts are similar, the array of spending is different. The current sticking point concerns mental retardation waivers. The Senate’s amendments total $8.2 million as compared to the House budget of $52.5 million. The expansion of this program is a “signature item” for the House, and House members are vigorously defending the amendments.

There are other differences in health and human resources, specifically in budget reductions. The Senate amendments include almost $92 million in reductions to Gov. Tim Kaine’s introduced budget. The House cuts total almost $139 million. The major difference focuses on reductions in Medicaid rates -- $5 million for the Senate and $21.2 million for the House.

Public Education: House budget amendments increase support for public education by an additional $193.5 million compared to the Senate package of $125.1 million in additional spending. Both packages increase state support for education to almost $13 billion for the 2008-2010 biennium. There are several issues of contention, but the two currently receiving the most scrutiny are salary increases and re-benchmarking of the costs of education.

The House of Delegates previously proposed changing the re-benchmarking process to (1) discount local salary increases in the calculation of costs recognized by the State; (2) increase the deduction of federal revenues in the calculation of state and local effort and (3) cap inflation that the state recognizes. The House received no public support for its policy initiative, which would push an even greater funding responsibility onto local governments and permit the state to retreat from historical education funding commitments. It pulled back this amendment last week.

As a result, the current House conference position is that salary increases for teachers are unaffordable for the biennium. The Senate opposes the re-benchmarking change – at least the portion that relates to the discounting of local salary increases. It is not clear what the Senate position is on the deduction of federal revenues or on the capping of inflation. The Senate supports state funding of teacher salary increases.

Rainy day and debt differences: The conferees have yet to tackle the big dollar ticket issues, specifically the amount to transfer from the Rainy Day Fund and the reversion of general funds from state capital projects. To help close the almost $1 billion budget shortfall in FY08, the Senate budget amendments increase the transfer from the Rainy Day Fund to $422.9 million. The House package transfers a total of $280 million. Regarding capital projects, the Senate swaps $300 million in debt for an identical amount of general fund cash. The House amendments take $544.1 million.

Bottom line for local governments

The lack of progress means that local governments should not let down their guard. Changes in the re-benchmarking methodology, reduction in ‘599’ law enforcement funding, and “raids” on excess court fees provided to localities are not settled. Across-the-board cuts on local governments remain an option.

Actions needed:

1. Phone, write, or meet with your delegation. Inform them of the effects of these issues on your communities.

2. Attend the governor’s town hall meetings this week in Staunton (today at 5:30), Petersburg (Tuesday) and Newport News (Wednesday). Additional town hall meetings will be held later this month. Tell the governor your concerns with the state budget.

3. Check out the Lynchburg News and Advance editorial on the state budget situation and this article and podcast from The New Dominion.com on ‘599’ funding.

4. And, please remember to keep VML informed.

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