eNews Jan 8 2016
Friday, January 08, 2016 - 04:15pm
VML President Ron Rordam announces formation of a Federal Advisory Council
VML’s Federal Advisory Council will be made up of local officials from around the state. The purpose of the Council will be twofold:
- to monitor legislation and engage at the federal level;
- to explore ways to engage the Virginia local government community on federal advocacy issues.
If you are interested in serving on this Council, please contact VML Executive Director, Kim Winn, at kwinn@vml.org prior to February 1.
Push for partisan local elections is back; November elections mandate re-emerges
Legislation has been pre-filed to provide that candidates for local offices be identified by party labels if nominated by a political party or in a primary election (HB 258-LaRock and HB 375-Pogge). Similar legislation introduced in 2012 died in the House at the committee level and in the Senate on the Senate floor. In 2012, local officials from across the state were very concerned about the potential for this type of legislation increasing partisanship at the local level and making it difficult for federal employees in some parts of the state to hold local office due to the Hatch Act.
Legislation also has been introduced to require all municipal elections to be held in November (HB 161-Spruill).
Staff contact: Mary Jo Fields, mfields@vml.org
McAuliffe Budget Analysis
Gov. Terry McAuliffe on December 17 introduced Virginia’s first budget north of the $100.0 billion mark. The 2016-18 Budget Bill (HB/SB 30) calls for spending of $109.2 billion, beginning next July 1.
Of this amount, $68.6 billion, or 63.0 percent, is derived from non-general fund revenues like federal grants and contracts, motor fuel taxes, college tuition, ABC sales, and special licenses and fees. Indeed, it has been the state’s increasing reliance on non-general funds that has fueled appropriations from the 2008-10 biennium through the proposed 2016-18 biennium. While total appropriations will rise by 43.0 percent by the end of the next biennium, non-general fund spending will have jumped by 50.0 percent, meaning general fund spending is slated to grow 32.0 percent.
However, it is the general fund that interests most taxpayers, politicians and local governments. The predominant taxes driving the general fund are income and sales taxes. General fund appropriations help localities pay for K-12 education, public safety, economic development, and health and human services programs.
General Fund Revenues in 2016-18
To understand McAuliffe’s general fund spending plan for the upcoming biennium, a review of FY 2016 is the first order of business. The Governor’s amendments to the FY16 budget recognize $592.0 million in additional general fund resources. (The FY 2015 revenue surplus of $549.6 million is responsible for most of the new resources.)
There is also additional spending planned for the current fiscal year — $169.2 million in operating costs, mostly for Medicaid utilization and inflation. But, the McAuliffe amendments also propose additional appropriations for programs of local interest, including $18.1 million for anticipated expenditure and caseload growth in CSA, $11.3 million to support per diem payments to local and regional jails, and $2.5 million to update sales tax revenues for public education.
After adjusting for the proposed spending, a $426.0 million year-end general fund balance is projected to be available in FY 2017, boosting the December general fund revenue forecast calling for 3.0 percent revenue growth in FY17 and 3.7 percent in FY18. Coupled with transfers to the general fund from ABC profits and other transfers proposed in the Budget Bill, the total amount of general fund resources projected for fiscal years 2017 and 2018 are $19.4 billion and $20.1 billion, respectively.
The modest revenue growth for the new biennium is influenced by more than just business cycle machinations. The numbers also reflect tax policy choices in McAuliffe’s introduced budget such as a $64.0 million reduction in the corporate income tax rate, a $57.8 million partial removal of the accelerated sales tax payment requirement; an increase in the personal income tax exemption costing $42.0 million; and millions in various economic development tax incentives.
However, the most expensive tax choice in the introduced budget was the decision to put a “collar” in the revenue forecast on non-withholding income tax collections, a revenue source noted for its volatility. The collar was put into the forecast after the Governor’s Advisory Council on Revenue Estimates (GACRE) finished its work, and did not reflect the advice given by the Council’s economists and business leaders. The decision removes $188.2 million in FY17 and $194.3 million in FY18 or $382.5 million for the biennium from the revenue forecast.
On the spending side of the ledger, the budget for 2016-18 proposes a net increase of $3.2 billion in operating spending over the new biennium.
| New Expenditures |
FY 2017 ($s in millions) |
FY 2018 ($s in millions) |
|
$10.9 |
$10.1 |
|
($45.8) |
($56.3) |
|
$1,704.0 |
$1,621.0 |
| Total Operating Budget Changes |
$1,669.0 |
$1,574.8 |
General Fund Spending in 2016-18
|
Top 10 Policy Amendments Account For Almost 75% Of New Spending |
||||
|
Agency |
Descriptor |
FY 2017 ($s in millions) |
FY 2018 ($s in millions) |
Biennium ($s in millions) |
| DMAS | Medicaid utilization and inflation |
$327.4 |
$461.7 |
$789.1 |
| DOA | Rainy Day Fund mandatory deposit |
$605.6 |
0 |
$605.6 |
| K-12 | Update costs to SOQ |
$183.2 |
$214.9 |
$398.1 |
| K-12 | Add instructional positions |
$42.7 |
$96.4 |
$139.1 |
| K-12 | Update sales tax revenue for educ. |
$31.3 |
$53.3 |
$84.6 |
| Central Accounts | State employee health insurance |
$45.6 |
$91.7 |
$137.3 |
| Treasury Board | Debt service |
$51.1 |
$56.6 |
$107.8 |
| K-12 | Salary increase for school positions |
0 |
$83.2 |
$83.2 |
| Central Accounts | Salary increase for state employees |
0 |
$76.2 |
$76.2 |
| DCR | WQIF & Nat. Resources Fund |
$61.7 |
0 |
$61.7 |
K-12 Public Education
- $429.8 million for re-benchmarking
- $139.1 million for additional instructional positions; requires local match and cannot be used to support existing instructional positions or central office positions
- $83.2 million for state share of a 2% salary increase in FY18, if the money is available
- $55.1 million to increase VRS retirement rates to 100% of the actuarially required rates in FY18
- $49.7 million to increase at-risk add-on program, if applicable schools submit required corrective action plans
- $40.6 million to restore Planning District 8 COCA for support positions in FY18
- $30.0 million to reduce Literary Fund transfers to pay teacher retirement
- $5.0 million to increase funding for career and technical education credentialing & equipment
- $3.8 million in FY17 for “no loss” funding
Economic Development
- $25.5 million to grow and diversity Virginia’s economy through a regional, collaborative approach emphasizing capacity building, regional population-based allocations, and competitive regional allocations
- $12.0 million to further capitalize the Housing Trust Fund
- $10.0 million financing program to encourage development of healthier food retail in underserved communities (“food deserts”)
Public Safety
- $12.3 million to address salary compression for employees of sheriffs’ offices and regional jails
- $13.4 million for increased HB 599 aid to local police departments
- $3.2 million to establish pilot re-entry programs in local and regional jails
Children’s Services
- $18.5 million for children in foster care or adoptive homes as well as protective services and child support enforcement services
- $4.2 million to support growth in Early Intervention-Part C program operated by Mental Health Department
- $36.2 million to support at-risk children and youth through Children’s Services Act
Mental Health Services
- $5.0 million to establish pilot mental health services programs in local and regional jails
- $4.4 million for mental health specialists for district probation and parole offices and for a cognitive pilot program in local or regional jails for offenders released directly from jails to probation supervision by DOC
Other Issues
- $59.0 million in bond proceeds for DEQ to address wastewater issues
- $24.0 million for Land Conservation Fund
- 2% salary increase for state-supported local employees
Budget Turbulence
As he has attempted in the previous two legislative sessions, Gov. McAuliffe included in his Budget Bill a proposal to expand Medicaid effective January 2017 for non-elderly adults with incomes up to 133.0 percent of the federal poverty level. The proposal would cover some 350,000 Virginians. The estimated net savings are projected at $59.2 million in FY17 and $97.7 million in FY18.
The Governor’s strategy is to link the Medicaid savings to his proposed tax cuts ($106.0 million) as well as to spending on several items of interest to General Assembly members. These include: $12.9 million for the Growth and Opportunity Fund, $16.0 million for the Global Genomics and Bio-information Research Institute, $8.5 million for the Massey Cancer Center, $6.7 million for the state DSS Unisys mainframe computer, $4.0 million for the Commonwealth Center for Advanced Manufacturing, and $3.0 million for the Jamestown-Yorktown Foundation.
Based on the reaction to the governor’s December 17 speech, House and Senate leaders of the Republican-dominated General Assembly seemed unmoved to approve the proposal.
Also of interest to cities, counties and towns is the Governor’s decision to keep the budget language authorizing the state to seize certain amounts of local fines and forfeitures (§ 3-6.05) resulting from violations of local ordinances. By the end of FY18, the Commonwealth will claim half of “excess” fees from local coffers.
Budget Details
Accompanying this narrative is a spreadsheet detailing the various budget items of interest to localities. Unless otherwise marked, the figures are the total general fund appropriation for the items. For example, under the HB 599 program the numbers reflect the total appropriation rather than the incremental increases.
Food deserts tackled in proposed budget
Funding to encourage the development of supermarkets and other healthier food retail establishments in underserved communities is included in the budget proposed by Gov. Terry McAuliffe last month (Item 109 M). The proposed funding is $5 million a year, to be administered by the Virginia Department of Housing and Community Development. The department is required to engage in public-private partnerships in order to leverage more resources.
Important dates in General Assembly session
In addition to VML Day at the Capitol on Jan. 27, here are other important dates and information that you should note:
January 13
General Assembly convenes at noon
Deadline for filing VRS bills or bills/resolutions continuing or creating a study.
January 15
Deadline for requests for drafts or redrafts of bills and budget amendments.
January 22
Deadline for filing bills and resolutions.
January 27
VML Day at the Capitol
February 16
Cross-over day: Each house completes work on its own legislation, except for the budget.
February 19
Houses of introduction complete work on budget.
February 21
House Appropriations and Senate Finance committees present their budgets.
February 25
Last day for each house to act on budget bill of the other house.
March 1
Last day for committee action on legislation.
March 12
General Assembly scheduled to adjourn.
April 20
Reconvened (veto) session.
Top Tools for General Assembly – Finding Your Way
The full 2016 session calendar
Contact information for House members
