eNews – June 5, 2026
Annual Conference registration open, Governor offers new revenue to budgeteers, Public comment on e-cigs...and more!
Friday, June 5, 2026/Categories: eNews
This edition of eNews is sponsored by VAcorp providing a comprehensive array of coverages for local governments to make sure you are taken care of, no matter the need...Learn more >
In this issue:
VML News
Finance
Transportation
Health & Human Resources
Natural Resources
Opportunities
VML News
Registration is now open for the 2026 VML Annual Conference & Mayors 
Institute
We hope everyone will be able to join us in Norfolk this October for several days of learning together. These annual events are also a great opportunity to catch up with your fellow local government officials and staff from across the Commonwealth.
- The Mayors Institute will take place October 10-11
- The Annual Conference will take place October 11-13
Both events will be held at the Norfolk Waterside Marriott.
Registration is now open on the VML website here >.
See you in Norfolk!
VML Contact: Rob Bullington, rbullington@vml.org
2026 Innovation Awards entries now being accepted
The Virginia Municipal League’s Innovation Awards celebrate the programs and individuals that make it possible for our local governments to solve pressing problems, address emerging needs, and adapt to changing circumstances.
Local governments of all sizes are encouraged to compete for coveted Innovation Awards across seven categories. The entries will be judged based on the scope and results of the project in relation to the community’s size, thereby putting all localities on a level playing field.
One of the seven category winners will be selected for the prestigious President’s Award for Innovation. The winner of the President’s Award will be revealed when all the award winners are honored during the Awards Banquet at the VML Annual Conference in Norfolk in October.
Don’t miss this premiere opportunity to spotlight innovative programs that make your town, city or county a great place for people to call home!
Learn more and download the entry form on VML’s website here >.
VML Contact: Manuel Timbreza, mtimbreza@vml.org
Finance
Governor offers up new revenue as budget deadline looms
With time to craft a budget fading fast, and rumors circulating that the General Assembly’s budget conferees finally decided to meet, Governor Spanberger and her finance team went to the well one last time to offer their assistance. Betting that House and Senate budget writers will “Take the money and run”, she’s offering up $1.5 billion in newly found general fund revenues to help close the deal.
Then again, Senator L. Louise Lucas, the Senate’s lead negotiator on the budget, didn’t exactly embrace the governor’s revenue reforecast. It’s not the first time a governor has waved additional money in front of lawmakers to get a final budget agreement (and it certainly won’t be the last).
Now everyone wants to know: Will it work? Or is it even necessary?
Senator Lucas’ tepid response is understandable when you review Governor Spanberger’s letter to the chairs of the money committees and pore over the analysis the governor’s TAX department prepared, officially titled “Revised Economic Outlook and General Fund Revenue Forecast.”
As noted above, Governor Spanberger explains that based on recent economic data, the general fund revenue forecast prepared in December 2025, can be revised upward by $1.5 billion. By year, that translates to:
- $585.5 million in FY 2026 (current biennium)
- $582.4 million in FY 2027 (next biennium)
- $340.2 million in FY 2028 (next biennium)
While the Senate’s budget already recognizes most of the new money the governor’s team identified in FY 2026 – $500 million to be precise – the House budget does not. The Senate earmarks those monies for a one-time bonus payment of $100 for individual tax filers and $200 for joint tax filers. Whether the House will go along with the Senate’s approach remains to be seen.
Concerns that arise from the reforecast are twofold. First, the growth that is driving the forecast change comes from one of the general fund’s most volatile revenue sources, individual tax nonwithholdings that are closely tied to stock market activity. These revenues are notoriously difficult to predict and must be budgeted with extreme caution lest the assumptions they are based upon fail to materialize. Conversely, individual income tax withholding from wages and salaries are projected to be lower than expected. These revenues along with sales and use taxes are the Commonwealth’s fiscal seed corn; projecting that these dollars will fall compared to current estimates is noteworthy.
Second, while additional revenues are assumed, the revised projections come amidst a litany of concerning economic indicators. In fact, the TAX department notes that inflationary pressures have accelerated amid the global oil shock and employment in the Commonwealth is slipping.
Thus far, the consumer has continued to spend, but inflationary pressures may put a damper on that. Some signs of that already occurring include:
- In 2026, 1.8 million Americans are termed long-term unemployed, defined by the government as jobless for at least 27 weeks or more than half a year. “That figure is up about 45% from 2019 and 55% from 2023,” according to a CNBC analysis of Bureau of Labor Statistics.
- American’s personal savings rate has declined from 6.2% in February 2024 to 2.6% in April 2026, significantly less than the savings rate in the 2000s (4.2%) and 1990s (7.2%), based on data reported from the Bureau of Economic Analysis.
- According to Vanguard, so-called hardship withdrawals from 401(k) accounts have risen from 1.7% in 2000 to 6.0% in 2026, as consumers tap their retirement savings to address current obligations.
- 13.1% of credit card balances are 90 days or more in arrears, the highest reading since 2011, according to data provided by New York Fed. And a higher percentage of auto loans are delinquent than during the Great Recession or the pandemic.
All these data points are concerning. But, even as these signs of strain on consumers emerge, the stock market continues to reach record highs. However, it’s worth remembering, however, that the market is not the economy. And consumers are in a sour mood (and have been in a sour mood for some time). If consumers pull back on spending, it won’t be pretty.
All of which is to say that the Commonwealth needs to be extremely cautious about how to proceed. Luckily, those responsible for crafting a budget have historically heeded that advice.
What the money committees decide to do with any extra monies the governor has put on the menu remains to be seen. We’ll know the General Assembly’s plan in less than 30 days. It’s been a long time coming, for sure, but we’re glad to see that the budget train finally starting to leave the station.
VML Contact: Joe Flores, jflores@vml.org
JLARC hears reports on its oversight of local governments and film industry incentives
Earlier this week, the Commonwealth’s Auditor of Public Accounts (APA), Staci Henshaw, reminded the members of the Joint Legislative Audit and Review Commission (JLARC), about its responsibility oversee local government’s fiscal operations by annually reviewing state-mandated financial reports and report its findings.
Henshaw reminded JLARC that the APA compiles data submitted by localities in its annual Comparative Report of Local Government. She also noted that when the APA’s initial report for FY 2025 was reported to JLARC on February 15, 2026, 52 localities had data missing. At the end of May 2026, the APA reported that 27 localities were still tardy.
VML strongly encourages every locality that is required to respond to do so as quickly as possible. Further, please keep the APA informed about where you are in the process.
The APA also advised JLARC members that they use the data as part of the agency’s early warning system to identify localities that may be in fiscal distress. This process has been modified in recent years to more proactively respond when a locality is in distress. Moreover, VML staff frequently use the data reported by localities to respond to outside inquiries or for our own internal analysis.
Interestingly, on the day before JLARC’s meeting, we were reminded by a call from a town official about the struggle localities continue to have finding affordable auditors who are willing to review local government books. Henshaw acknowledged as much in her presentation, pointing out that there are a handful of entities in the Commonwealth who conduct most of the local audits and price remains a sticking point.
Henshaw also pointed out that small towns – those with a population under 3,500 – are not required to have an annual audit, but some conduct one to satisfy debt covenants or state and federal funding requirements.
It was encouraging to hear Ms. Henshaw tell JLARC that changes need to be considered to ensure that localities can afford an auditor to help them manage their finances. VML staff will be working with the APA this summer to further those conversations.
The APA’s presentation to JLARC can be found here >.
Film, media, and tourism incentives
The report on tax incentives for the film industry demonstrated that incentivized film activity varies from year to year due to the cap imposed on tax incentives, lack of consistent film and media production staff, and other industry challenges, making it difficult for the state to develop a sustainable film industry. The report also focused on whether the current exemptions generate sufficient economic benefits.
The report on film, media, and tourism incentives can be found here >.
VML Contacts: Joe Flores, jflores@vml.org; Josette Bulova, jbulova@vml.org
Transportation
Urban road maintenance payments decline in FY27 amid rising costs at VDOT
At the May meeting of the Commonwealth Transportation Board (CTB), The Virginia Department of Transportation (VDOT) announced the FY27 maintenance payment rates which will decline 3.27% from FY26 rates due to the expiration of one-time rate increases.
Urban maintenance payments for FY27
- Principal and Minor Arterial: $28,796 per lane mile.
- Collector Roads and Local Streets: $16,907 per lane mile.
VDOT budgets are being further strained because of unanticipated costs the agency must absorb due to severe winter weather and new policy changes made by the General Assembly this year. Total unanticipated costs exceed budgeted reserves by more than $200 million. The CTB adopted a revised FY26 budget for VDOT at the May meeting to authorize shifting funds from the construction program to the maintenance program to partially pay for unbudgeted costs.
It is likely that construction program funds will continue to be squeezed due to these unanticipated costs as well as the ongoing inflation impacting transportation projects. VDOT reports that equipment and material cost increases have outpaced inflation in recent years. Over the previous Six Year Improvement Program material costs increased anywhere from 40%-120%.
The Commonwealth Transportation Board members will act on Maintenance Payment rates at the June 17 meeting in Richmond when they adopt the FY27 VDOT budget.
VML Contact: Mitchell Smiley, msmiley@vml.org
Health & Human Resources
Health commission hears report on e-cigarettes including local regulatory efforts; public comment open until June 12
E-cigarettes are increasing in popularity compared to traditional cigarettes, and access to these products increase the likelihood that people will try them and continue using them. Virginia’s e-cigarette product and retailer regulatory framework – which has evolved since 2024 – uses a multifaceted approach that includes local efforts to regulate the location of retail shops. There remain challenges in identifying retailers and preventing and enforcing rules against sales to underage users; legislation approved by the 2026 General Assembly may help in these efforts.
The above were some of the overall findings in a presentation by staff of the Joint Commission on Health Care issued at its June 4 meeting in Richmond that included a draft report and presentation.
The JCHC is currently accepting public comments on the draft report until Friday, June 12. You may submit comments via email to jchcpubliccomments@jchc.virginia.gov or by mail to 411 E Franklin Street, Suite 505, Richmond, VA 23219.
Earlier this spring, Commission staff asked VML and VACo to disseminate a survey on local practices in regulating the location of retailers selling tobacco and hemp products, including e-cigarette retailers and vape shops. A total of 70 local governments responded to the survey.
The Commission report noted that legislation approved by the General Assembly in 2024 authorized localities to regulate the location of certain retailers; it allows localities to prohibit the location of a tobacco or hemp retailer within 1,000 feet of a day care center or school (retailers in place prior to July 1, 2024, were not subject to regulation). The Commission reported that as of April 2026, at least 22 localities had amended their zoning ordinances to regulate the location of tobacco or hemp retailers, and an additional 13 localities were considering doing so. According to the report, most localities with amended zoning ordinances restrict e-cigarette retailers to specific types of zoning districts, such as commercial or business zones, require such retailers to seek conditional use or special use permits establishing their business, or both.
While 18 localities prohibit e-cigarette locations within a certain distance of schools and daycare centers (consistent with the permissions granted in state law), 10 localities also prohibit retail locations within a specified distance from other types of establishments, such as parks, libraries, places of worship, community centers, or other e-cigarette retailers. Some localities also include other types of restrictions on e-cigarette retailers, including prohibitions on drive-through sales, operating hours, lighting, and the extent to which windows can be covered or tinted.
The Commission report noted the challenges in tracking sales and enforcing rules against sales to underage consumers. Legislation was approved in 2026 that may help with these efforts.
VML Contact: Janet Areson, jareson@vml.org
Natural Resources
Tree canopy workgroup listening sessions happening in June and July
Old Dominion University's Institute for Coastal Adaptation & Resilience is convening a workgroup pursuant to HB549 (Hope) to review existing provisions of the Code of Virginia and related regulations for the conservation and replacement of tree canopy during land development.
For this review, the workgroup will consider four criteria:
- Evaluate policies to increase tree canopy in the Commonwealth in a manner that balances state and local environmental and economic development objectives;
- Identify incentives to preserve healthy mature trees;
- Analyze and identify methods in which parity can be created for tree canopy requirements across local governments; and
- Develop recommendations to provide regulatory assurance and cost-effective methods for tree canopy conservation and replacement for developers.
Workgroup listening sessions provide an opportunity for local elected officials, staff, and interested parties to provide feedback on the four criteria established in HB549. These sessions will inform the discussions of the work group and recommendations that the work group makes to the General Assembly by November 1, 2026.
Members who are interested in tree canopy issues are encouraged to attend and participate in one of the upcoming sessions:
- June 24: City of Alexandria at AlexRenew (1800 Limerick St., 22314)
- July 20: City of Suffolk at the ODU Virginia Modeling Analysis & Simulation Center (1030 University Blvd, 23435)
For more information, contact Mitchell Smiley at the email address given below.
VML Contact: Mitchell Smiley, msmiley@vml.org
Opportunities
HUD announces $3 million in funding to deploy automated permitting systems to increase housing construction speed
The U.S. Department of Housing and Urban Development (HUD), through its Office of Policy Development and Research (PD&R), has announced a new funding opportunity offering up to $3 million for jurisdictions that will deploy automated building code permitting systems and partner with HUD to evaluate their applicability and effectiveness within real-world operating conditions.
Applications are due July 13, 2026, at 11:59pm. Please visit the funding opportunities page on HUD User to access important links, FAQs, and upcoming webinars.
Funding Opportunity Details
Automated Permitting Systems Demonstration NOFO (PDR-2600-DC-029O)
Through this demonstration, HUD seeks to accelerate digital adoption in willing jurisdictions, gather operational data on performance and implementation challenges, and develop practical guidance for other permitting offices considering similar investments. The resulting findings are intended to inform future state and local policy, technical assistance, and permitting modernization efforts nationwide. Additionally, jurisdictions will track core metrics for their administrative permitting process, including permit timelines, revision cycles, and review outcomes, before and after implementation of an automated permitting system. The demonstration will quantify changes in permit processing time, staff workload, applicant experience, and costs (in dollars and percentages) resulting from the use of automated permitting, and identify the data, governance, and operational conditions required for effective use of these technologies.
How to Apply
Applications are due by July 13, 2026. Eligible applicants are limited to state, county, city, and tribal governments. Full details are available at Grants.gov.
Contact: For additional information, visit the funding opportunities pages on HUD.gov and HUD User.