eNews

 

In this issue:

• VML policy committee meeting date set
• Upcoming VML events in Southwest Virginia
• General Assembly reacts to federal tax reforms
• Woodbury named to TSA committee
• Changes to the 2018-20 state General Fund budget
• Public safety stakeholders discuss 2019 Homeland Security Grant
• NLC census preparation survey
• Small scale development workshop in Staunton

 

VML policy committee meeting date set; nominations underway

The VML policy committee meeting day has been set for Thursday, July 18, at the Marriott Hotel in downtown Richmond.  All committees will meet that day.

VML’s policy committees meet each year to learn about and discuss current issues, develop positions on emerging issues, and review and revise VML’s current policy positions.  Each committee also recommends issues to the VML Legislative Committee as it develops the annual legislative program for the League.

VML has six policy committees:

• Community & Economic Development
• Environmental Quality
• Finance
• General Laws
• Human Development & Education
• Transportation

Any VML full-member community can nominate members to serve on these committees. Information about the 2019 committees was sent to each manager and clerk two weeks ago to share with their councils and appointed officials.

VML Contact: Janet Areson, jareson@vml.org

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Upcoming VML events in Southwest Virginia

Newly Elected Officials Conference – Tuesday, April 23 in Abingdon:

This full day conference is offered by the Virginia Municipal League twice a year; it is designed primarily for newly elected officials, but it is also a useful refresher course for incumbent officeholders and staff. The cost is $35 per person which includes lunch and copy of the FOIA/COIA handbook.

More info and registration available here.

Regional Dinner – 2019 General Assembly Update – Tuesday, April 23 in Marion:

Join VML’s experts at the Holston Hills Community Golf Course and get the details of the big issues brought before the Assembly this year. The fee is $35. Please indicate your choice of entrée when registering. Additionally, the Town of Marion will be sponsoring a free round of golf or a bucket of balls on the driving range for anyone interested.

More info and registration available here.

VML Contact: Jessica Ackerman, jackerman@vml.org

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General Assembly reacts to federal tax reforms

The 2019 session of the Virginia General Assembly enacted state tax reform in response to impacts from the Federal Tax Cuts and Jobs Act of 2017 (TCJA). The new state tax law returns (or intends to return) individual income tax revenue resulting from enactment of the TCJA to taxpayers. Most of the additional new business-related tax revenue generated for the state as a result of the TCJA is retained in the state General Fund. This business-related tax revenue is expected to grow to over $400 million annually by FY23.

How the TCJA affected Virginia

The TCJA was the largest federal tax reform legislation in over 30 years – impacting both individuals and businesses. Beginning in tax year 2018, federal tax changes included up to 20 modifications for individuals and up to 30 modifications for business and corporate tax returns. The estimated federal tax impact on Virginia residents and businesses amounted to a reduction of about $4 billion per year in federal tax collections mainly due to a lowering of federal income tax rates. In contrast, the TCJA modified income definitions and rules that created large potential state revenue increases by subjecting more income to Virginia’s unchanged tax rates. Without changes to Virginia tax law, estimated increases to state revenue resulting from the TCJA would have amounted to $594 million in FY19, growing to $950 million in FY24. Individual income tax changes under the new federal law are temporary and expire after tax year 2025. The business tax changes are permanent.

The legislative response

Over the years, Virginia has routinely conformed to small changes in federal income tax laws. However due to the large changes in TCJA, Virginia conformity to the new federal income definitions was a bigger issue than is usually the case and became wrapped up in the larger Virginia tax reform response to TCJA. The enactment of HB2529 / SB1372 conformed Virginia to most new provisions in TCJA beginning in tax year 2018, while also altering several Virginia income tax provisions to provide tax relief.

Under the altered provisions, Virginia will provide a one-time individual income tax refund prior to October 1, 2019 to all taxpayers with tax liability of up to $110 for single filers and $220 for married filers. These refunds are contingent on FY19 revenues increasing as expected, with the refund cost being $420 million. For businesses, $32 million in permanent tax relief is provided beginning in tax year 2018 by 1) a subtraction modification to certain corporate global intangible low-taxed income (“GILTI”) and 2) a partial 20 percent restoration of net interest deductions eliminated in the new federal law. Finally, an additional $80 million is reserved in the Taxpayer Relief Fund in FY19.  In total, $532 million is returned or reserved for taxpayers from FY19 revenues, equaling the estimated individual income revenue resulting from federal tax reform. The remaining $62 million, mostly resulting from federal business provision changes, remains in the state General Fund.

How Virginia spells “tax relief”

The bulk of the new state tax reform is effective in tax year 2019 through tax year 2025 – matching the temporary nature of the federal individual tax changes. For individuals, the Virginia standard deduction is increased from $3,000 to $4,500 for singles and married filing separately, and from $6,000 to $9,000 for married filing joint returns. New state law de-conforms from the federal $10,000 limitation on property tax deductions and allows an individual income tax deduction for the actual amount of real and personal property taxes imposed by Virginia or any other taxing jurisdiction. New state tax law also re-imposes the “Peace” limitation for high income taxpayers. This reduces itemized deductions by 3 percent of the amount by which a taxpayer’s adjusted gross income exceeds the threshold amount ($261,500 for singles; $313,800 for married filers). Finally, any individual taxpayer revenues generated from TCJA above the amount returned must be transferred to the Taxpayer Relief Fund for future tax relief.

The following table presents the estimated state revenue impacts from the TCJA and the corresponding enacted state tax reform.

 

	Estimated Revenue Impact ($ Mil.)
TCJA Impact:	FY 19	FY 20	FY 21	FY 22	FY 23	FY 24
Individual Income	$532	$444	$467	$493	$520	$546
Business and International	$62	$167	$187	$306	$423	$405
Total TCJA Est. Impact	$594	$611	$654	$799	$943	$951
State Tax Reform:
$110 S/$220M Refund	($420)	$0	$0	$0	$0	$0
50% Standard Deduction Increase, Unlimited Property Tax Deduction, Deconform Pease Limitation	$0	($308)	($204)	($208)	($212)	($216)
International GILTI and 20% Net Interest Deduction	($32)	($23)	($24)	($26)	($27)	($28)
Taxpayer Relief Fund	($80)	($113)	($238)	($260)	($281)	($302)
Remaining for State GF	$62	$167	$187	$306	$423	$405

Action taken to build state reserves

For the governor and the legislature, the highest budget priority was adding $835 million to GF reserves from the additional $1.56 billion in new available GF revenues. The logic for these new reserves was to increase the state’s liquidity to order to weather any future economic downturn and to protect Virginia’s Triple A credit rating. As such, the funds were added to the Cash Reserve Fund and the Rainy-Day Fund.

By: James Regimbal, Fiscal Analytics, Ltd.

VML Contact: Neal Menkes, nmenkes@vml.org

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Woodbury named to TSA Committee

VML is pleased to announce that our former president and current Newport News councilwoman Dr. Patricia Woodbury has been named to the TSA’s Surface Transportation Security Advisory Committee (STSCAC).

The STSAC will include 35 voting members. Dr. Woodbury will serve on the subpanel Groups Representing the Users of Surface Transportation. A full list of voting members can be found here.

The committee also will include 14 nonvoting government members from the Departments of Defense, Energy, Homeland Security, and Transportation as well as the FBI and NTSB.

The STSAC will report to TSA Administrator David Pekoske and will provide recommendations on surface transportation security matters, including the development, refinement, and implementation of policies, programs, initiatives, rulemakings, and security directives.

“The knowledge and expertise these leaders bring to the table will play a vital role in TSA’s continued efforts to safeguard the nation’s surface transportation systems,” Pekoske said in a statement.

VML Contact: Rob Bullington, rbullington@vml.org

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An overview of changes to the 2018-20 state General Fund budget

Before we dive into the details of what changes the 2019 General Assembly made to the state General Fund budget, let’s look at the budget/tax highlights.

Additional revenues of nearly $2.8 billion driven by:

• Internet sales taxes of $310 million
• FY18 surplus of $555.5 million
• Federal tax changes of $1.2 billion

Additional appropriations of $1.56 billion allocated in this manner:

• $55 net million for K-12
• $423 million for Medicaid
• $835 million for cash reserves

Additional revenues expected

As part of the 2019 General Assembly session amendments to the 2018-20 biennium budget, General Fund (GF) revenues available for appropriation increased $1.564 billion compared to the budget enacted last May. This is primarily due to the FY18 revenue surplus ($553 million) which was carried forward into FY19.  This FY18 surplus also increased the 2018-20 biennium revenue base.

In addition, federal tax reform is expected to result in additional revenues for Virginia’s state income taxes due to a variety of factors that change taxpayer behavior, such as the cap on federal itemized deductions and the increased federal standard deduction. Without changes to Virginia’s income tax laws, an estimated $1.2 billion in additional revenues for Virginia was expected in the 2018-20 biennium due to the federal tax reform. However, the General Assembly did enact tax reform that reduced the expected dollars for the state treasury from federal tax reform revenue by an estimated $976 million – leaving about $230 million in additional revenue for appropriation in the budget.

Finally, the 2019 General Assembly enacted legislation requiring all internet-based companies above a minimum threshold of transactions to begin collecting sales taxes on July 1, 2019. Beginning in FY20, internet sales tax collections will increase state and local revenues by about $150 million per year ($82.5 million GF).

All together these changes result in GF revenue and transfers growth of 3.2 percent for FY19 and 4.8 percent in FY20.

Taxpayers may (or may not) get the tax refunds promised by the General Assembly

Because the General Assembly did not “count” or “recognize” the federal tax reform dollars in the budget, tax collections will need to increase by 5.9 percent rather than the official 3.2 percent forecast. Otherwise, the tax refunds will be prorated if actual FY19 revenues do not exceed the official forecast by $450 million.

By: James Regimbal, Fiscal Analytics, Ltd.

VML Contact: Neal Menkes, nmenkes@vml.org

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Public safety stakeholders discuss guidelines for 2019 Homeland Security Grant

On Thursday the April 11, the Virginia Department of Emergency Management (VDEM) and the Virginia Modeling, Analysis and Simulation Center (VMASC) at Old Dominion University convened their fifth annual meeting of public safety stakeholders in Glen Allen, VA.

The purpose of these meetings is to allow representatives from local first response agencies and relevant statewide organizations, including VML and the Virginia Emergency Management Association, to provide input on guidelines and potential application categories for the agency’s Homeland Security Grant. For 2019, a total of $7.45 million will be available for grants, of which 80 percent is expected to support local projects.

Based on feedback from attendees and 2018 applicants, proposal criteria are likely to remain largely the same as those from the 2018 application process. Broader guidelines from FEMA, as the federal funding source, are expected in the coming days, though an official date has not been announced. VDEM will announce the release of the grant shortly afterwards, with a preliminary projected deadline of May 15.

VML contact: Jessica Ackerman, jackerman@vml.org

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Help the NLC by completing its census preparation survey for municipalities

The National League of Cities (NLC) is committed to supporting a fair and accurate 2020 Census, which will be underway in less than twelve months. To better understand how municipalities are preparing for 2020 and to better target their resources to support cities, towns and villages, they have asked us to share a quick survey with you. We would appreciate if the relevant member of your staff would complete the survey linked below about your municipality’s 2020 Census preparations.

You can access the survey here: NLC Local Census Preparedness Survey.

NLC will add insights from this survey to their growing list of resources available at nlc.org/census.

NLC Contact: Bryan Griffith, griffithb@nlc.org

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Small scale real estate development workshop to be held in Staunton

On the Thursday, May 16 the Virginia Department of Housing and Community Development (DHCD) and the Virginia Main Street Program, in partnership with Virginia Housing Development Authority will sponsor a day-long session designed to introduce the principles and implementation mechanisms behind neighborhood-based development projects.

The specialized training will cover development of small residential, commercial, and mixed-use properties (1-3 story buildings with less than 20 units). The course assumes participants know a lot about where they live, but not necessarily about real estate development.

The day consists of presentations on finance, design and site selection, a hands-on practice exercise, and networking with local like-minded people. This is the first step to becoming a small developer or creating a supportive ecosystem for small development in your city.

The session will take place from 8:00 AM – 5:00PM at the Stonewall Jackson Hotel & Conference Center in Staunton, VA.

Registration is available here. A short video about the session is available here.

The workshop is presented by the Incremental Development Alliance, a national nonprofit working to build local wealth in neighborhoods through ground-up real estate development.

DHCD Contact: Joy Rumley, joy.rumley@dhcd.virginia.gov

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General Assembly addresses Governor’s amendments and proposed vetoes

The General Assembly returned to Richmond April 3 to address amendments and vetoes proposed by Governor Ralph Northam to bills and budget items approved during the 2019 Session.

Amendments of interest: FOIA and I-81

The General Assembly concurred with the Governor’s recommendations to a FOIA bill, SB1554 (Surovell). As originally approved, the bill would have allowed a court to add a penalty when an improper closed session was held, and the local government attorney was present at the time of certification. The Governor’s amendments removed the reference to the local government attorney being present at the time of certification and included mitigating factors that the court may consider in determining if a penalty should be imposed. 

VML supported the Governor’s amendments, which addressed some of the concerns raised by the City of Fredericksburg (and other local governments), VML, and the Local Government Attorneys Association of Virginia.

The General Assembly also concurred with the Governor’s amendments to HB 2718(Landes) and SB 1716(Obenshain), which are companion bills that establish the Interstate 81 Corridor Improvement Program and Fund. As originally passed by the legislature, the bills would have only created an Interstate 81 Committee that would have been directed to recommend a funding source for I-81 projects. The amendments set out increased statewide registration fees for medium- and heavy-duty trucks along with statewide diesel and road tax rates. This brings these fees and taxes more in line with those of other states along the 855-mile I-81 corridor. 

In addition, as is the case in Northern Virginia and Hampton Roads, the adopted amendments add a 2.1 percent regional motor fuels tax to be imposed along the 325 miles of the I-81 corridor that traverses western and Southwest Virginia. This regional tax hike would apply to all vehicles.

The taxes and fees approved under the bill are expected to generate: 

• $151 million in dedicated funding for the I-81 Corridor Improvement Plan
• $40 million for the I-95 corridor
• $28 million for the I-64 corridor
• $20 million for the Northern Virginia Transportation Authority
• $43 million for the CTB to invest in other Virginia interstates

Vetoed bills of interest

On vetoed bills of interest to local governments, the General Assembly did the following:

• Sustained the Governor’s veto of HB 2270 (Poindexter) that would require that the sheriff, jail superintendent, or other official in charge of a local correctional facility or a regional jail in which an alien is incarcerated must notify U.S. Immigration and Customs Enforcement of the release or discharge of the alien forthwith as soon as the release date is known.
• Sustained the Governor’s veto of SB 1156(Black) thatwould have forbidden localities from adopting “sanctuary” policies.
• Sustained the Governor’s veto of HB 2749(Poindexter) that would have required the Virginia Department of Social Services to report annually to the Chairmen of the Senate Committee on Rehabilitation and Social Services and the House Committee on Health, Welfare and Institutions information regarding the number of reported violations of restrictions on the use of Temporary Assistance for Needy Families (TANF) cash assistance, including the number of reported cases involving multiple violations of such restrictions. 
• Sustained the Governor’s veto of HB 2269(Poindexter) that would prohibit the state from adopting any regulation establishing or bringing about the participation by the Commonwealth in the Transportation and Climate Initiative or any other regional transportation sector emissions program. 
• Sustained the Governor’s veto of HB 2611(Poindexter) that would prohibit the Governor or any state agency from adopting any regulation establishing a carbon dioxide cap-and-trade program or bringing about the participation by the Commonwealth in a regional market for the trading of carbon dioxide allowances.

Budget amendments and changes of interest

On the budget HB 1700(Jones), the Governor proposed 40 amendments. The General Assembly did the following to the amendments of greatest interest to local governments:

• Rejected Amendment #4, which would have added back $1.5 million in FY2019 to support education, outreach, and preparation for the 2020 Census.
• Concurred with Amendment #6, which increases by $4 million the funding in FY2019 for the Virginia Housing Trust Fund.
• Concurred with Amendment #12, that clarifies that school divisions that cannot meet the requirements of the 3% salary increase approved in last year’s budget can claim all or a portion of the two percent state salary funding increase appropriated in the 2019 Budget Bill (provided that the local school division provides the salary increase between July 1, 2019, and Sept. 1, 2019). School divisions that qualified for the 3% funding must provide up to an additional 2% in salary increases to be eligible for some or all the new funding approved in this year’s budget bill.
• Concurred with Amendment #19, which adds language directing the Secretary of Transportation to evaluate potential opportunities to lessen the financial burden on commuters using the Downtown and Midtown Tunnels in South Hampton Roads. The findings are to be submitted to the House Appropriations and Senate Finance Committees no later than June 30, 2020.
• Rejected Amendment #36, which would have overridden the General Assembly’s prohibition on any state agency or authority from purchasing or implementing body-worn cameras or body-worn camera systems. This only affects state agencies and authorities; it does not affect localities. The General Assembly approved language this year that requires cities and counties using cameras to work with their Commonwealth’s Attorneys to come up with an agreement regarding additional funding to those offices for the additional work burden created by the use of the camera footage or else abide by a 1:75 ratio of funding one attorney for that office for every 75 cameras used by the local police department. A continued study of the body-worn camera workload issue will also continue this coming year.

VML Contacts:Neal Menkes, nmenkes@vml.org; Janet Areson, jareson@vml.org

 

In this issue:

• Action alert: support Governor’s FOIA bill amendments
• VML policy committee nominations now open
• Budget battle looms
• 2019 VML “If I were mayor” essay contest winners announced
• Governor revives transportation funding debate
• What is the connection between the national emergency at the southern U.S. Border and Virginia?
• Measuring economic growth is less a science than it is an “art” form
• Governor breaks out veto pen
• Solar debate heats up in Spotsylvania
• February’s job report shows small gains and losses
• Mandatory police retirement criteria survey
• “What Works Cities” offering eligible municipalities tickets to Tom Tom festival in Charlottesville
• 2019 VTA conference to be held in Portsmouth

 

Support Governor’s amendments to FOIA bill

Please urge your delegation to support Governor Ralph Northam’s proposed amendments to SB1554 (Surovell). These amendments address some of the concerns raised by the City of Fredericksburg (and other local governments), VML, and the Local Government Attorneys Association of Virginia.

As passed by the General Assembly, SB1554 allows (but does not require) a court to add an additional penalty when an improper closed session was held, and the local government attorney was present at the time of certification.

The Governor’s amendments remove the reference to the local government attorney being present at the time of certification and include mitigating factors that the court may consider in determining if a penalty should be imposed. The amendments are (language to be deleted is in red; new language is in italics):

In addition to any penalties imposed pursuant to subsections A and B, if the court finds that a member of a public body voted to certify a closed meeting in accordance with subsection D of 2.2-3712 and at the time of such certification an attorney representing the body was present and such certification was not in accordance with the requirements of clause (i) or (ii) of subsection D of 2.2-3712, the court may impose on the public body, whether or not a writ of mandamus or injunctive relief is awarded, a civil penalty of up to $1000, which amount shall be paid into the Literary Fund. In determining whether a civil penalty is appropriate, the court shall consider mitigating factors, including reliance of members of the public body on (i) opinions of the Attorney General, (ii) court cases substantially supporting the rationale of the public body, and (iii) published opinions of the Freedom of Information Advisory Council.

VML thanks Governor Northam for this amendment and thanks the local officials who have supported it.

Action

Please contact your delegates and senators and ask them to support the amendments.

Talking point

Local governing bodies should be able to rely on opinions of the Attorney General, court cases and published opinions of the FOIA Advisory Council in making decisions on the certification of closed meetings.

VML Contact: Michelle Gowdy, mgowdy@vml.org

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VML policy committee nominations now open

The VML 2019 policy process is getting underway. Information and nominations forms are being sent to every VML member locality this week.

Each year VML’s six policy committees meet to learn about top issues facing local governments, discuss those issues, and determine policy positions that are then approved by the membership at the annual business meeting.

The policy committees will all meet on a single day in the Richmond area in late July; the date and location are being finalized and will be announced very soon.

VML has six policy committees:

• Community & Economic Development
• Environmental Quality
• Finance
• General Laws
• Human Development & Education
• Transportation

Participating in a policy committee is a great opportunity to learn about and discuss issues of concern with local government colleagues from across the states. Members hear from state agency or legislative branch representatives on issues and get a chance to share perspectives with them on those issues.

If you are new to VML, you can see more information about each policy committee, including last year’s statements and meeting information on VML’s website.

If you have any questions about the policy committee process, please email or call Janet Areson at VML, jareson@vml.org; 804-523-8522.

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Budget battle looms

In his budget message to the legislature, Gov. Ralph Northam pointed out that of his 40 proposed budget amendments, twelve will change spending, 27 are language-only, and one amendment increases available resources to the state.

The amendments address technical, clean-up items as well as substantive policy issues that are important to the governor’s political base.

For localities, the review must go beyond the amendments in the budget package. The review must also acknowledge the items the governor chose not to include.

For example, in the Introduced Budget Bill, Northam proposed to restore the $2 million the General Assembly decided last year to transfer from the Communications Sales and Use Trust Fund in FY20 to the state general fund. Unfortunately, the General Assembly acted yet again to take the $2 million, and this time the governor decided not to gamble that the General Assembly would honor its commitment to localities. It is quite likely that either the General Assembly or Gov. Northam will take the $2 million in FY21 and another $2 million in FY22 in next year’s budget deliberations.

A second example concerns the 599 Program for local police departments. This financial assistance program is supposed to increase in tandem with the growth in state general fund revenues. The Introduced Budget Bill did include appropriation increases in fiscal years 2019 and 2020, but those extra dollars were based on a projected increase less than the forecast for state revenues. The General Assembly did not address this and neither did the governor in his proposed budget amendments.

A third example is the Virginia Telecommunication Initiative. Spending in FY20 for VATI jumps from $4 million to a fuel-injected $19 million. The issue centers on how the money will be spent. The General Assembly and Gov. Northam have limited the program’s scope to “facilitate the extension of broadband networks by the private sector.” Even public-private partnerships projects must conclude with the private sector owning and operating the completed projects. What happens to those areas of the state where the private sector has little or no interest in operating broadband services?

The Northam budget amendments address several issues of keen local interest

The governor proposes an additional $4 million in FY19 for the Virginia Housing Trust Fund to expand opportunities for more affordable housing. His budget proposals also include $1.5 million in FY19 to support education, outreach and preparation for community participation in the 2020 Census. This information is critically important for political re-districting and for determining the allocation of federal grant dollars to the states.

Gov. Northam is also proposing new policy language directing the Secretary of Transportation to evaluate potential opportunities to lessen the financial burden on the commuting public at the Downtown and Midtown Tunnels in South Hampton Roads. The findings are to be submitted to the House Appropriations and Senate Finance Committees no later than June 30, 2020.

Another proposed amendment would strike the legislature’s action on the hot-button issue of body-worn cameras. The General Assembly had approved policy language prohibiting any state agency or authority from purchasing or implementing body-worn cameras or body-worn camera systems. This was the legislature’s response to the protests from the Commonwealth’s Attorneys who complained that neither the state nor localities were providing resources sufficient to address the increase in caseload times resulting from their body-worn video reviews.

Perhaps the most important amendment zeroes in on teacher salaries. The governor’s amendment makes clear that those school divisions that cannot meet the requirements of the 3 percent salary increase approved in last year’s budget can claim all or a portion of the 2 percent state salary funding increase appropriated in the 2019 Budget Bill (provided that the local school division provides the salary increase between July 1, 2019, and September 1, 2019). School divisions that qualified for the 3 percent funding must provide up to an additional 2 percent in salary increases to be eligible for some or all the new funding approved in this year’s Budget Bill.

VML Contact: Neal Menkes, nmenkes@vml.org

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2019 VML “If I were mayor” essay contest winners announced

The Virginia Municipal League (VML) has announced the statewide winner and seven regional winners of the annual “If I Were Mayor” Essay Contest. The contest, hosted by VML, drew hundreds of entries from seventh graders throughout the state. The challenge to the students was to describe what they would do if they were mayor of their hometown.

The winners are:

• Statewide winner: Maci Mitchell of Hamilton Holmes Middle School in King William (also Region 8 winner)
• Region 1: Virginia Elizabeth Stockner of E.B. Stanley Middle School in Abingdon
• Region 2: Maria Angle of Clifton Middle School in Covington
• Region 3: Kaitlyn Hull of Kate Collins Middle School in Waynesboro
• Region 4: Sadie Henshaw of Kenston Forest Middle School in Blackstone
• Region 5: Lily Konopka of Ronald Regan Middle School in Haymarket
• Region 6: Haylee Burnett of Auburn Middle School in Warrenton
• Region 7: Samera Blowe of James S. Russell Middle School in Lawrenceville

All the regional winners demonstrated a remarkable level of maturity in their essays. The judges were very impressed with their concern for their communities and how thoughtfully they presented solutions to the issues most affecting their fellow residents.

Of the statewide winning entry from Maci Mitchell, VML President Anita James Price said: “Not only well written, but her bullet points were well thought out as well! The items she identifies are certainly ones that her community clearly needs and have captured her attention. Education and infrastructure were topics that many of the writers identified, but Marci also recognizes the lack of health care in her town and makes it a priority. Congratulations to this future Mayor!”

In addition to a plaque, each regional winner will receive a check for $150. The statewide winner will receive a plaque and $250. Plans for presentation of the plaques and checks are forthcoming.

All winning essays can be read at https://www.vml.org/education/essay-contest/

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Governor revives transportation funding debate

The Governor’s Office released this week an announcement that Gov. Ralph Northam is proposing a series of amendments for the Reconvened Session on April 3 to HB 2718 and SB 1716. These measures establish the Interstate 81 Corridor Improvement Program and Fund.

As originally proposed, the two identical bills would have authorized tolls along I-81 up to $0.17 per mile per segment for medium- and heavy-duty trucks with three or more axles. The money would have been used to carry out the I-81 Corridor Improvement Plan, which was approved by the Commonwealth Transportation Board (CTBO) late last year. The Plan identified $2 billion of potential, prioritized capital improvement projects for the I-81 corridor.

However, the final versions of the bills did not identify any specific revenue source for the Fund.

The governor’s amendments would increase statewide registration fees for medium- and heavy-duty trucks along with statewide diesel and road tax rates. The idea is to bring these fees and taxes more in line with those of other states along the 855-mile I-81 corridor.

In addition, as is the case in Northern Virginia and Hampton Roads, a 2.1 percent regional motor fuels tax would be imposed along the 325 miles of the I-81 corridor that traverses western and Southwest Virginia. This regional tax hike would apply to all vehicles.

If approved by the General Assembly, the taxes and fees would provide:

• $151 million in dedicated funding for the I-81 Corridor Improvement Plan
• $40 million for the I-95 corridor
• $28 million for the I-64 corridor
• $20 million for the Northern Virginia Transportation Authority
• $43 million for the CTB to invest in other Virginia interstates

VML urges its members to carefully review the amendments and to contact their delegations to support the proposed changes.

VML Contact: Neal Menkes, nmenkes@vml.org

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What is the connection between the national emergency at the southern U.S. Border and Virginia?

If you answered “money,” go ahead and pat your back.

The House of Representatives failed this week to override President Donald Trump’s veto of a resolution that would have terminated his declaration of a national emergency at the southern U.S. border.

The House vote fell short, 248 to 181, of the constitutionally-required super majority to overturn the president’s action. The House ballot precluded the necessity of the Senate voting on the override. The Senate had voted earlier this month, 59 to 41, to disapprove Mr. Trump’s national emergency.

The issue remains unsettled as several states have joined together to file a federal lawsuit challenging the national emergency. The House of Representatives could, under the provisions of the National Emergency Act, consider another resolution to derail Trump’s national emergency, but this is unlikely.  The House has other options, including the federal budget and defense authorization processes to block the transfer of military construction funds to the border barrier project.

So, what does it mean for Virginia?

Virginia runs a risk of losing nearly half a billion dollars in military construction projects to build the barriers at the southern border.  Some $493 million in military projects have been approved by Congress but not yet contracted by the Pentagon. White House and congressional aides identified $130 million in future defense construction that are at most jeopardized.

Vulnerable Defense Projects	Amounts
Norfolk/Portsmouth New Hazardous Materials Warehouse	$41 million
Arlington Cantonment Area Roads	$30 million
Portsmouth Ship’s Maintenance Facility	$26.1 million
Pentagon Exterior Infrastructure and Security Upgrades	$23.7 million
Langley/Eustis Cyber Ops Facility	$10 million

 

White House officials have said the use of military dollars would be a last resort measure. There is also a reluctance to take funding away from military housing. Criminal forfeitures and drug enforcement funds could be more easily accessed.

Other potential projects are situated in Arlington, Quantico, Fort Belvoir, Joint Base Langley Eustis, Dam Neck, Portsmouth, Norfolk, and AP Hill.

VML Contact: Neal Menkes, nmenkes@vml.org

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Measuring economic growth is less a science than it is an “art” form

Economic growth is traditionally reported as an increase in Gross Domestic Product (GDP) which is then compared to different time periods (e.g., monthly, quarterly or annually) of the value of the goods and services produced in the country.

President Trump claimed last week that the GDP grew 3.1 percent in 2018, after adjusting for inflation.  He was right. And, he was wrong. It all depends on your perspective. Or, as the phrase popularized by Mark Twain goes, “there are lies, damn lies and statistics.”

On February 28, the U.S. Bureau of Economic Analysis reported that real GDP increased 2.9 percent to $18.6 trillion in 2018, compared with an increase of 2.2 percent in 2017.

Mr. Trump’s number was based on a calculation done by the White House Council of Economic Advisers that compared the fourth quarter of 2018 with the fourth quarter of 2017. That calculation allowed the president to assert that the nation’s economy grew by 3.1 percent, although the U.S. Commerce Department later downgraded that number to 3 percent. In fact, President Trump believes his growth rate number was depressed because of the Federal Reserve Bank’s monetary decisions. The President blames the Federal Reserve’s decision to increase interest rates four times last year as the reason the increase in GDP did not exceed 4 percent.

How much will GDP grow in 2019? Good question.

The Council on Economic Advisers published their projections last week, predicting for this year a 3.2 percent growth rate. Their projections assume that the President and Congress will agree on a $1 trillion infrastructure plan, another round of tax cuts, additional rollbacks in labor regulations (many of which are at the state level and not subject to Congress), and new trade agreements. Are all these items likely to happen? Will any of them happen?

The Federal Reserve Bank, the Congressional Budget Office, and a survey of private sector economists belonging to the National Association for Business Economics are all projecting significantly slower growth rates over the next 10 years compared with the White House’s projection. The most recent projection from the Federal Reserve Bank predicts 2.1 percent economic growth in 2019 and 1.9 percent in 2020, indicating that the boost from the federal tax cuts and spending are wearing off. The National Association for Business Economic reports economic growth at 2.4 percent this year and 2 percent next year.

An economic slowdown could negatively affect the Commonwealth’s own financial health, particularly if the President and Congress clash over defense spending and trillion-dollar budget deficits in next fiscal year’s budget. Economic growth is critically important to ensuring sufficient resources to pay for government services without resorting to new taxes.

VML Contact: Neal Menkes, nmenkes@vml.org

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Governor breaks out veto pen

Gov. Ralph Northam vetoed 17 bills passed in this legislative session (by way of comparison, he vetoed 20 measures from the 2018 Session). The General Assembly will have the opportunity on April 3 to override the governor’s vetoes.

Several of the vetoed bills are of interest to local governments. These include:

• HB 2270 and SB 1156:  Require that the sheriff, jail superintendent, or other official in charge of a local correctional facility or a regional jail in which an alien is incarcerated must notify U.S. Immigration and Customs Enforcement of the release or discharge of the alien forthwith as soon as the release date is known. Localities could not adopt “sanctuary” policies. According to his veto message, Northam’s action was based on preserving local authority in managing local and regional correctional facilities and preserving a good working relationship between local law enforcement agencies and immigrant communities.
• HB 2749:  Directs the Department of Social Services to report annually by December 1 to the Chairmen of the Senate Committee on Rehabilitation and Social Services and the House Committee on Health, Welfare and Institutions information regarding the number of reported violations of restrictions on the use of Temporary Assistance for Needy Families (TANF) cash assistance, including the number of reported cases involving multiple violations of such restrictions. Gov. Northam called the bill a solution looking for a problem, asserting that there is no evidence to suggest TANF violations are an issue in Virginia.
• HB 2269 and HB 2611:  Prohibit the state from participating in any Transportation and Climate Initiative or establishing a carbon dioxide cap-and-trade program without each chamber of the General Assembly first adopting a resolution to do so by a two-thirds vote. In his veto message, Gov. Northam stressed that the state should not be limited in its ability to protect both the environment and human health.

VML Contact: Neal Menkes, nmenkes@vml.org

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Solar debate heats up in Spotsylvania

The largest solar “farm” east of the Rocky Mountains could be coming to Virginia, spreading across 10 square miles with 1.8 million panels soaking up the sun’s rays.

The state has already approved the project sponsored by sPower, which is the largest private owner of operating solar assets in the United States. (sPower is owned by a joint venture partnership between The AES Corporation (NYSE: AES), a worldwide energy company headquartered in Arlington, Virginia, and the Alberta Investment Management Corporation, one of Canada’s largest and most diversified institutional investment fund managers.)

Total solar output in Virginia has leaped from just 17 megawatts in 2014 to more than 320 megawatts as of last August. The sPower project would produce 500-megawatts with most of the energy used to power Microsoft’s nearby cloud data centers.

The General Assembly passed legislation in the 2018 Session (SB 966) to encourage greater solar and wind development to a level of 5,000 megawatts. Supporters claim that the proposed project would generate $17 million in tax revenue over its 35-year life span.

The project’s fate now rests with the Spotsylvania Board of Supervisors. Local opposition has focused on the project’s scope, location next to residences, and loss of forest land. The board has repeatedly put off voting given the amount of controversy.

The “green” technology debate is not restricted to Congress and the statehouse. It is an issue that will increasingly show up on the meeting agendas of Virginia’s, cities, towns and counties.

VML Contact: Neal Menkes, nmenkes@vml.org

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February’s job report shows small gains and losses

Virginia’s seasonally adjusted unemployment rate ticked up 0.1 percentage point in February to 2.9 percent. This was 0.3 percentage point below last February. The number of unemployed increased by over 2,000 to 124,559, marking the fourth consecutive monthly increase.

The second (trade and transportation) and third (private education and health services) largest industry divisions led the way in job losses.

However, the labor participation rate also ticked upwards from 65.1 percent to 65.2 percent, meaning more Virginians were entering and staying in the workforce. The labor force expanded for the eighth consecutive month, reaching a new record-high total of 4,354,967 workers. Professional and business services, which is the largest industry sector, had the largest over-the-year gains at 1.7 percent or 12,900 jobs. Leisure and hospitality grew by 2.4 percent or 9,600 jobs, and manufacturing experienced the third largest over-the-year job gains at 3.2 percent or 7,600 jobs.

The job numbers are important because the state’s general fund relies heavily on individual income tax withholding. This revenue source comprises over 60 percent of the Commonwealth’s general fund. As employment increases so does tax revenue.

VML Contact: Neal Menkes, nmenkes@vml.org

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Mandatory police retirement criteria survey

The Virginia Municipal League, on behalf of the Virginia Association of Chiefs of Police, is asking our member municipalities to help us determine how many have mandatory retirement requirements for law enforcement officers.

If you have not already done so, please complete this very short online survey.

Your participation is appreciated.

VML Contact: Rob Bullington, rbullington@vml.org

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“What Works Cities” offering eligible municipalities tickets to Tom Tom festival in Charlottesville

Bloomberg Philanthropies’ What Works Cities initiative “helps cities use data and evidence to tackle their most pressing challenges and improve residents’ lives.” Completing a Certification assessment is the first step to joining the program, which is open to any U.S. city with a population of 30,000 or higher. Participating cities are eligible for a broad range of exclusive, pro bono support from What Works Cities to continue building a more effective local government.

This month, What Works Cities has teamed up with the Tom Tom Festival to provide new cities that complete a Certification assessment by April 3 with free tickets to the Civic Innovation Conference, on April 10, in Charlottesville, VA. The day-long forum offers opportunities to connect with fellow changemakers across sectors, including from What Works Cities, and continue to grow your ability to make lasting, data-driven impact on today’s most important challenges.

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2019 VTA conference to be held in Portsmouth

City and county officials, legislators, transit agencies, and business sponsors and exhibitors will gather at the Renaissance Portsmouth-Norfolk Waterfront Hotel on May 29 and 30 for a focus on “all things transit” at the 2019 conference of the Virginia Transit Association.

Presentations from industry experts on technology innovation, ridership promotion, mobility advancements, statewide resiliency, and business connections will be at the forefront. Portsmouth Mayor John Rowe will give welcoming remarks on behalf of the City of Portsmouth. The keynote speaker will be Nat Ford, CEO of the Jacksonville Transportation Authority, who will share insights into how his city achieved its vision of a vibrant, revitalized, and better-connected downtown.

Registration is open through the VTA web portal (https://vatransit.com/2019_Annual_Conference) through mid-May.

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• eNews April 12, 2019   In this issue: VML policy committee meeting date set Upcoming VML events in Southwest Virginia General Assembly reacts to federal tax reforms Woodbury named to TSA committee Changes to the 2018-20 state General Fund budget Public safety stakeholders discuss 2019 Homeland Security Grant NLC census preparation survey Small scale development workshop in Staunton   […]
• eNews April 4, 2019 General Assembly addresses Governor’s amendments and proposed vetoes The General Assembly returned to Richmond April 3 to address amendments and vetoes proposed by Governor Ralph Northam to bills and budget items approved during the 2019 Session. Amendments of interest: FOIA and I-81 The General Assembly concurred with the Governor’s recommendations to a FOIA bill, SB1554 (Surovell). As […]
• eNews March 29, 2019   In this issue: Action alert: support Governor’s FOIA bill amendments VML policy committee nominations now open Budget battle looms 2019 VML “If I were mayor” essay contest winners announced Governor revives transportation funding debate What is the connection between the national emergency at the southern U.S. Border and Virginia? Measuring economic growth is less […]
• eNews March 15, 2019   In this issue: Upcoming VML events in SWVA Transportation finance analysis Revenue collections and job numbers National economic news hard to read President’s budget proposal promises plenty of pyrotechnics Woodbury nominated for membership on STAC committee May is Building Safety Month Earth Day 2019 resources for localities   Upcoming VML events in Southwest Virginia […]
• eNews Feb. 28, 2019 – Budget Analysis Edition   Budget “onion” peeled The conferees released their 234-page budget conference report on February 23. Democratic and Republican delegates spent that Saturday arguing over a proposed change to the procedural rule to allow a floor vote on the report without first waiting 48-hours. Legislators finally decided that 24-hours would suffice for their individual reviews of […]
• eNews Feb. 25, 2019   In this issue: Budget conference report adopted FOIA training bill FOIA penalties bill Bills of interest: Final status report Jail health standards bills approved Transportation round up Natural Resources round up Cultivating neighborhoods & small-scale development lecture   The short session was long on amendments to the Commonwealth’s biennial budget As usual, some amendments […]
• eNews Feb. 22, 2019   In this issue: Several issues remain in limbo Funding agreement for I-81 improvements falls through Supreme Court decides excessive fines case against states and local governments EPA soliciting committee nominations Grant writing workshop being held near Richmond   Several issues remain in limbo Stay tuned for a wrap-up eNews next week With the House […]
• eNews Feb. 22, 2019 – Action Alert Call to oppose the local redistricting commission requirement in HJ615 Most cities and towns in Virginia hold nonpartisan elections. The proposed constitutional amendment HJ615 would introduce partisanship into otherwise nonpartisan electoral processes by requiring localities with district- or ward-based elections to adhere to the same requirements as the Commonwealth by establishing their own commissions. VML […]
• eNews Feb. 21, 2019 – Action Alert Updated: Help keep personal property tax relief for disabled veterans a local option HJ676 and SJ278 would amend the Constitution of Virginia to provide a personal property tax exemption for one motor vehicle (automobile or pickup truck) owned by a disabled veteran or spouse. As passed by the House of Delegates, HJ676 authorizes the General […]
• eNews Feb. 19, 2019   In this issue: Action Alert: Call to oppose parking fines bill Bill affecting localities with small police departments heads to the floor Problematic revenue sharing bill reported Assessment appeals study moves forward Bills that are headed to final passage Procurement bills bite the dust Sidewalk bill resurfaces Bills that ran into trouble today Motorized […]