eNews April 19, 2018
Thursday, April 19, 2018 - 01:30pm
In this issue
- VML website moving to new platform: Job postings can’t be added during this weekend
- General Assembly ends topsy-turvy week without finishing the budget
- Elections subcommittee begins operations
- State revenues dip in March but remain strong
- Housing Commission faces ambitious study schedule
- School facility subcommittee formed
- Who really pays for K-12 education?
- Proffer study group gets underway
VML website moving to new platform
Job postings can’t be added during this weekend
VML will be moving its website to a new hosting platform this weekend. During the migration, all existing information/content on the website will be available. The only impact to members during the move will be the inability to submit new job postings on the “Classifieds” page.
The website move will start at 5 p.m. tomorrow, Friday, April 20, and will be completed no later than 6 a.m. Monday, April 23. If, after the move, you see a notice on the website that you are on the wrong site, please exit your browser completely and then start a new session with the browser. This should force your computer to find the new site. If you still have issues after that, please contact Manuel Timbreza at mtimbreza@vml.org for technical assistance.
VML contact: Manuel Timbreza, mtimbreza@vml.org
General Assembly ends topsy-turvy week without finishing the budget
The legislature convened April 18 to consider Gov. Ralph Northam’s vetoes of and amendments to bills passed during the Session. The “rookie” governor scored big in most bills of interest to local governments.
Northam vetoed HB 1204, a bill that would have mandated Arlington and Loudoun Counties to assess certain open-space properties on a use basis rather than fair market value regardless of whether the localities had passed ordinances to participate in open-space use assessments. The governor’s veto went unchallenged.
Gov. Northam’s vetoes of legislation which would have prohibited him from establishing through regulation a carbon dioxide cap-and-trade program (HB 1270); prohibited local governments from requiring contractors to provide compensation beyond the levels required under state and federal law (HB 375); and prohibited localities from adopting any ordinance procedure or policy restricting enforcement of federal immigration laws (HB 1257) were either unchallenged or sustained.
Regarding the wireless infrastructure/zoning bills (HB 1258 and SB 405) and the wireless public rights-of-way fee bills (HB 1427 and SB 823), the General Assembly accepted all of Gov. Northam’s amendments. The amendments to HB 1258 and SB 405 ensure that for-profit wireless carriers are compared to similar users and not to utilities (which are covered by franchise agreements). In addition, the amendments include a reenactment clause that sets up a stakeholders group to develop a plan for expanding access to wireless services in unserved and underserved areas. The amendments to HB 1427 and SB 823 remove city- and town-owned public-rights-of-way from the measures, leaving the cap on fees just for the use of state rights-of-way.
Not all amendments were accepted
The General Assembly defeated Northam’s amendments to the mulch bills (HB 1595 and SB 972). The amendments would have narrowed the scope of the two measures, restricting regulation of the placement of landscape materials to state residential care facilities, assisted living facilities, student residences owned or operated by a public institution of higher education, apartments, and hotels. Northam now has three options. He can sign the bills as passed by the General Assembly into law. He can allow the bills to become law without his signature. Or, he can veto the bills. VML asks members to contact the Governor’s Office to urge him to veto the measures.
The General Assembly also partially accepted and partially rejected gubernatorial amendments on legislation (SB 856 and HB 1539) to rescue the cash-strapped and operationally-challenged Washington Metropolitan Area Transit Authority. The amendments addressing technical changes or clarifying legislative intent were adopted. However, the amendments to raise the grantor’s tax and to bump up the Transportation District Transient Occupancy Tax, although approved by the Senate, were ultimately rejected on a party-line vote in the House.
State budget deadlock continues
Perhaps the most baffling legislative actions taken this week concerned the budget bills (HB 5001 and HB 5002). The House of Delegates convened on Tuesday afternoon and passed HB 5001 and HB 5002 by comfortable margins of 67 to 32 and 67 to 33, respectively. The purpose was to cut through legislative procedures to put the budget bills into conference with the Senate as quickly as possible.
The Senate, however, was in no hurry. The Senate Finance Committee scheduled a meeting for Wednesday afternoon and then abruptly cancelled it without explanation. At this point, it is unknown when the committee will return to Richmond.
What does this all mean for local governments? The unfortunate answer is that it is quite likely that the standoff between the governor and the House of Delegates on one side and the Senate on the other will continue through April and beyond. Although there may be movement towards resolving the outstanding issue of Medicaid expansion, the politics surround this budget item remain fluid. At stake in the state budget is over $400.0 million in general fund budget savings.
Local government budgets, once again, face being collateral damage. VML advises members to be cautious and conservative in estimating the amount of state dollars in your budgets. And, do not hesitate to use contingency language if needed. There may be little time to adjust local budgets before the July 1 deadline, if the budget stalemate continues into June.
Elections subcommittee begins operations
The joint subcommittee studying the conduct of elections and redistricting criteria held the first of what undoubtedly be many meetings on April 18. Additional work, however, will not get underway until after the special session on the budget has concluded.
The committee is chaired by Senator Jill Vogel and Delegate Mark Cole, who also chair the Privileges & Elections Committees in their respective legislative bodies. The purpose of the committee will be to review the issues and problems that occurred during the 2017 election. Specifically, the committee will review the issues of absentee voting, post-election audits, Election Day registration, recounts, political campaign advertisements and split precincts.
Senator Vogel stated that the reason and purpose for the committee is to examine fully issues without the pressure of the tight legislative timeframe during a legislative session.
VML will monitor the operations of this Joint committee and keep you informed of the issues of interest to all local governments.
VML contact: Mike Polychrones, mpolychrones@vml.org
State revenues dip in March but remain strong
Despite the budget jujitsu match between the House and Senate, state revenue collections are ahead of the official projections and last year’s collections.
In a presentation last week to the House Appropriations Committee, Secretary of Finance Aubrey Layne reported that total general fund revenue collections fell 3.5 percent in March. On a fiscal year-to-date basis, however, total revenue collections rose 5.2 percent through March, ahead of the annual forecast of 3.4 percent growth.
Layne noted that there was one less deposit day than in March a year ago. Even with one less day of withholding taxes, individual income tax collections have increased 4.2 percent through March, well ahead of the 3.5 percent official estimate.
Non-withholding year-to-date individual income tax revenues are up 16.9 percent compared with the same period last year. The official forecast calls for a 4.3 percent increase.
Sales tax collections in the Secretary’s presentation reflected February’s sales. On a year-to-date basis, sales tax revenues have risen 2.9 percent, lagging behind the 3.0 percent growth estimate.
The last three months of the fiscal year (April-June) are significant collections months. Estimated and final payments from both corporations and individuals come due in April and May, and estimated payments are again due in June.
Based on the strong collections through the first three quarters of FY 2018, general fund revenues can actually dip (0.7 percent) in the fourth quarter and the 3.4 percent revenue growth estimate can still be met.
But, there is no indication in the economic data to suggest that collections in the remaining months of the fiscal year will drop. For the April-June period in FY17, general fund revenues actually increased 1.4 percent.
A strong finish in collections will not change state spending in FY 2018. Revenues in excess of the official forecast are likely to end up in the Rainy Day Fund (or another cash reserve fund) and the Water Quality Improvement Fund for spending in FY19.
A “revenue surplus” is more likely to influence the forecast for the next biennium if the surplus is included as part of the revenue base. The House and Senate budget conferees will eventually have to decide if the bump in the revenue base goes to shore up the Commonwealth’s standing with the bond rating agencies or for other purposes.
VML contact: Neal Menkes, nmenkes@vml.org
Housing Commission faces ambitious study schedule
The Virginia Housing Commission reviewed the list of 21 issues forwarded to it, primarily from legislation that did not survive the 2018 session, at its meeting on April 17.
Issues that the commission will tackle include accessory dwellings, the Manufactured Home Lot Rental Act, nuisances, affordable dwelling units and evictions. A full list is posted at https://leg5.state.va.us/User_db/frmView.aspx?ViewId=5140&s=16.
The commission is divided into three workgroups: Affordability, Real Estate Law & Mortgages; Neighborhood Transitions & Residential Land Use; and Common Interest Communities. Additional information on workgroup members is posted here: https://dls.virginia.gov/commissions/vhc.htm?x=wkg. Delegate Danny Marshall is chair of the commission.
VML contact: Michelle Gowdy, mgowdy@vml.org
School facility subcommittee formed
Sen. Bill Stanley, chairman of the Senate Local Government Committee, announced on April 17 the creation of a school facility modernization subcommittee that will have as one goal the introduction of legislation on school infrastructure for consideration during the 2019 session, as well as a “blueprint” for assisting the City of Richmond with the implementation of SB750, passed during the recent session.
The committee will hold meetings around the state, review state laws affecting the financing of school facilities, work with the federal government on creative solutions, and establish an advisory committee.
Members of the committee include Charles Carrico, Sr., Bill DeSteph, Jr., Sioban Dunnavant, Barbara Favola, David Marsden, Jennifer McClellan, Glen Sturtevant and Scott Surovell. Marsden and Sturtevant will serve as co-vice chairs.
Additional information is posted at https://mailchi.mp/8bab2b04f50b/school-facility-modernization-subcommittee?e=e56fc6bf8d.
As an editorial note, instead of using the Literary Fund for school construction, the state has used for many years Literary Fund dollars to replace state general fund appropriations previously used for teacher retirement. Although the Commonwealth does very little now to pay for school capital costs, there is certainly fertile ground for exploration on expanding the state role. The committee should also examine how local efforts to make up for state underfunding of public education’s operating costs have left localities with even fewer resources to tackle this very large infrastructure issue. See the next story for more on this!
Who really pays for K-12 education?
The quick answer is the taxpayer, but digging down, the local taxpayer shoulders the largest share.
Local governments paid 51.3 percent of operating expenditures for public education in FY16-17, according to data recently released by the Virginia Department of Public Education. Property taxes are the largest revenue source for local governments.
The state (including the state retail sales and use tax dedicated to public education) put up 41.5 percent, while the federal contribution totaled only 7.2 percent.
According to the state Appropriation Act, the state’s share of the cost of the Standards of Quality is set at 55 percent, and the local share is set at 45 percent. How do local governments, therefore, end up financing more than half? Over the years as state revenues waxed and waned, the state changed the funding formulas to reset its contributions to match expected state tax collections. In effect, these formula changes, particularly those enacted during the Great Recession, depress the true cost of meeting the Standards of Quality. For example, the state has set an artificial cap on the number of support positions that are recognized in the funding formula. Also, school divisions in most localities hire more teachers at salaries that are higher than those recognized by the state formulae.
The end result: Local governments are the major funding “partner” for K-12 education.
Remember, too, that these figures relate only to operating costs. Local governments shoulder virtually all capital costs. In other words, localities don’t make the rules. We just pay for them.
The data for FY17 can be found in Table 15 of the Superintendent of Public Instruction’s Annual Report, which is available in a PDF or Excel format on the Virginia Department of Education’s web site at https://www.doe.virginia.gov/statistics_reports/supts_annual_report/2016-17/index.shtml. Those figures are derived from the annual school reports submitted by the divisions.
Proffer study group gets underway
As previously reported, the Committee on Senate Local Government created a “proffer party” which met for the first time on April 17th to begin to discuss proffers overall. The basic upshot of the meeting was that local governments and homebuilders were told to meet and develop sensical changes to the proffer statute.
VML contact: Michelle Gowdy, mgowdy@vml.org
VML legislative staff and assignments
Michelle Gowdy – Local government authority, planning and zoning, legal matters, housing, Freedom of Information, telecommunications and technology. mgowdy@vml.org; 804-523-8525
Janet Areson – Health and human services, and the state budget. jareson@vml.org; 804-523-8522
Mike Polychrones – Environment, land use, natural resources, elections and transportation policy. mpolychrones@vml.org; 804-523-8530
Neal Menkes (under contract) – Taxation and finance, the state budget, transportation funding, retirement, education funding and community and economic development. nmenkes@vml.org; 804-523-8523
Roger Wiley (under contract) – Courts, criminal law, civil law, and procurement. roger@heftywiley.com; 804-780-3143
Chris LaGow (under contract) –Insurance and workers’ compensation. chris@lagowlobby.com; 804-225-8570
