Virginia Municipal League

Building Better Communities Through Sound Government

BETTER COMMUNITIES THROUGH SOUND GOVERNMENT

eNews January 29, 2021

eNews: The newsletter of the Virginia Municipal League Friday, January 29, 2021 - 07:06pm

In this issue:

Action Alerts

The Week in Legislation

Budget & Economy

Environment

Health & Human Services

Resources & Opportunities

 

Action Alerts

Marijuana Legalization: Support local opt-in to retail marijuana sales before noon tomorrow!

Neither the House nor Senate bills allow localities to “opt-in” to retail sales

The members of the Senate and House continue to discuss the legalization of marijuana as their respective legislation – SB1406 (Ebbin) and HB2312 (Herring) – make their way through various committees.

The Senate proposal is now before its second committee – the Senate Judiciary Committee’s Subcommittee on Expungement – where legislators are mulling the criminal code and expungement elements of SB1406.

In the House of Delegates, Majority Leader Herring’s bill will come before its first committee – the General Laws Committee’s Subcommittee on ABC and Gaming –  tomorrow when the members will hear testimony on HB2312 and we expect the first vote on the legislation in the House to occur.

Two (bad) trends emerge: Opt-out vs. Pre-emption

Significantly, the Senate version has changed to allow localities to only opt-out by local referendum whereas the House Subcommittee appears willing to endorse a complete local pre-emption by mandating the retail sale of marijuana in all localities. It is not clear from discussions how much support a complete pre-emption of localities has in the House. Fortunately, the patron prefers a bill that offers localities the choice to at least opt-out.

VML opposes both the opt-out by referendum and pre-emption approaches.

Support opt-in by ordinance before 12:00 PM tomorrow (Jan. 30)

VML encourages our members to continue to contact your legislators to let them know that localities should have the opportunity to decide whether to allow retail marijuana sales in their community preferably by passing an ordinance to opt-in to retail sales.

Opt-in by ordinance is the best approach to allow localities to decide whether retail sales are appropriate for their community. Many members have reported concerns over the impact of legalization on their first responders including additional training that may become necessary. Another area of concern is the question as to whether local taxes on retail sales will prove an adequate source of revenue to address local fiscal impacts.

Let legislators know that you support:

  • Local option retail sales
  • Local zoning authority for retail marijuana businesses is retained by localities
  • Local option taxation

Members of the Subcommittee on ABC/Gaming:

Members of the General Laws Committee:

VML Contact: Mitchell Smiley, msmiley@vml.org

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Immunity: Oppose SB1440 (Surrovell)
Law enforcement officers may be sued for reasonable actions

Action needed before 8:00 AM Monday (Feb. 1)

VML urges our members to contact the members of the Senate Judiciary Committee before Monday to express opposition to SB1440 (Surovell) which would have the effect of making it possible for a law enforcement officer to be sued for reasonable actions.

Summary

The language of SB1440 essentially negates the sovereign immunity defense by doing the following:

  • Creates a civil cause of action for the unlawful use of force or failure to intervene by a correctional officer or law enforcement officer who violates Chapter 7.1 of Title 19.2 (regarding use of force, failure to intervene, prohibited practices etc.) during the performance of their duties.
  • Makes an officer’s public or private employer liable if the events occur in the ordinary course of the employers’ business.
  • Provides for recovery of compensatory damages, punitive damages and attorney’s fees and costs.

Concerns / Key Points

  • Law Enforcement Hiring, Retention, and Training
    • This would have a chilling effect on the hiring and retention of law enforcement/correctional officers.
    • It will be impossible to train for an unspecified standard of care.
  • Drastic Increases in Costs
    • Local Government would be vicariously liable for law enforcement and be subject to greater financial risk and increased frivolous litigation.
    • Law enforcement officers would have personal liability.
    • It will be extremely costly if not impossible to insure for this new unlimited liability.
  • Rippling Effects in the Community
    • There would be a chilling effect on use of law enforcement for private or community events and businesses.
      • This includes private security at churches, high school sporting events, concerts, raceways, etc.
    • Substantial obstacle to the provision of needed public services.
      • In terms of officers doing their jobs, maintaining staffing #s, etc.
      • Officers will be less likely to initiate an encounter with a citizen because of the potential for personal liability.
    • Officers cannot be expected to be legal scholars or think through legal arguments when attempting to perform their duties
  • Dramatic erosion of existing laws, which already provide the protections sought by these bills.
    • Officers do not have absolute immunity, and they can be held liable when they violate a clearly established constitutional right.

View/Download additional talking points and information here >

Action Requested

  • The Senate Judiciary Committee members (see below) need to hear from local officials on this issue before 8:00AM on Monday, Feb. 1.
  • We urge local officials to contact to let them know that their locality opposes this erosion of qualified and sovereign immunity for law enforcement.
  • It is important that legislators hear directly from local officials.

Members of the Senate Judiciary Committee:

VML Contact: Michelle Gowdy, mgowdy@vml.org

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The Week in Legislation

Bills reported out of their respective bodies this week

HB2304 (Tyler) / SB1413 (Boysko) – Provision of broadband capacity by Phase I or Phase II electric utilities. Makes permanent the pilot program* under which a Phase I or Phase II electric utility is permitted to petition the State Corporation Commission to provide broadband capacity to unserved areas of the Commonwealth. The bill provides that investor-owned electric utilities may recover costs of, and revenue generated from, providing broadband capacity that serves as an electric grid transformation project in areas unserved by broadband, as defined in the bill. The bill also consolidates the State Corporation Commission petition approval process into one hearing.

*Note – There are slight differences between the two bills in the conditions upon which this program can be utilized.

HB2001 (Helmer) – Building standards for certain state and local buildings. Requires that any executive branch agency or institution or locality entering the design phase for the construction of a new building greater than 5,000 gross square feet in size or the renovation of a building where the cost of the renovation exceeds 50 percent of the value of the building ensure that such building has sufficient electric vehicle charging infrastructure, defined in the bill, and has features that permit the agency or institution to track the building’s energy efficiency and carbon emissions. The bill authorizes the Director of the Department of General Services to grant exemptions to such standards, in writing and with certain terms.

This legislation requires:

  • Agencies to annually report to the Governor the energy efficiency and carbon emissions metrics for each such building built or renovated.
  • Localities to design such building projects according to the same standards; except that a building less than 20,000 gross square feet may instead ensure compliance with Energy Star Certification.
  • Any exemption from the standards granted by resolution of the governing body of a locality be made in writing and explain the basis for granting the exemption. If a locality would like more stringent standards, they can adopt an ordinance stating such.

VML Contact: Michelle Gowdy, mgowdy@vml.org

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Bills currently on the floor of their respective chambers

SB1393 (Marsden) – Replacement and conservation of trees during development. Gives a locality the ability to exceed general requirements in its tree replacement and conservation ordinances in specific circumstances, including development that impacts stormwater permit requirements, recurrent flooding, formerly redlined areas, and comprehensive plan compliance. This bill also contains a reenactment clause and a work group. The work group will report back, and the General Assembly will have to adopt this proposed legislation again for it to become law.

HB2307 (Hayes) – Consumer Data Protection Act. Establishes a framework for controlling and processing personal data in the Commonwealth. The bill applies to all persons that conduct business in the Commonwealth and either (i) control or process personal data of at least 100,000 consumers or (ii) derive over 50 percent of gross revenue from the sale of personal data and control or process personal data of at least 25,000 consumers. The bill outlines responsibilities and privacy protection standards for data controllers and processors. The bill does not apply to state or local governmental entities and contains exceptions for certain types of data and information governed by federal law. The bill grants consumer rights to access, correct, delete, and obtain a copy of personal data and to opt out of the processing of personal data for the purposes of targeted advertising. The bill provides that the Attorney General has exclusive authority to enforce violations of the law, and the Consumer Privacy Fund is created to support this effort. The bill has a delayed effective date of January 1, 2023.

SB1334 (Edwards) – Pilot program for broadband capacity; municipal broadband authorities. Expands the existing broadband pilot program to allow for the participation of municipalities and government-owned broadband authorities in order to provide broadband service to unserved areas of the Commonwealth.

SB1198 (Petersen) – Government Data Collection and Dissemination Practices Act; license plate readers. Prohibits law-enforcement and regulatory agencies from using license plate readers to collect and maintain personal information on individuals without a warrant. The bill provides that license plate data may be collected if intended for prompt evaluation and potential use in investigating suspected criminal activity, civil or regulatory violations, or terrorism. The data may only be retained for thirty days and shall not be subject to any outside inquiries or internal usage except for the investigation of a crime, a report of a missing person or part of an emissions inspection program.

SB1384 (Surovell) – Virginia Public Procurement Act; local arbitration agreements. Allows a participating locality, for any procurement solicitation or contract exceeding $10,000 for goods and services, to require the bidder or offeror to disclose certain information regarding pre-dispute arbitration clauses, defined in the bill, in employment, civil rights, and consumer disputes, and provides that a locality may consider the policies and practices related to arbitration of each bidder and offeror. The bill also provides that a participating locality shall require the bidder or offeror to provide written or electronic submissions to allow the locality to ascertain (i) whether the bidder or offeror requires persons with whom it is in a work relationship or prospective work relationship to sign or otherwise enter into a contract containing a pre-dispute arbitration clause that would cover an employment or civil rights dispute and (ii) whether the bidder or offeror requires consumers to sign or otherwise enter into a contract containing a pre-dispute arbitration clause that would cover a consumer or civil rights dispute as a condition of purchasing products or services, downloading mobile applications, or using websites. The bill authorizes a participating locality to cancel, terminate, or suspend, in whole or in part, the contract of any contractor that has violated a provision of the bill and to declare the contractor ineligible for further contracts with such locality for up to five years.

HB2266 (Ayala) – Alcoholic beverage control; local outdoor refreshment areas. Defines “outdoor refreshment area” and permits the governing body of any locality in the Commonwealth to designate, by ordinance, these refreshment areas in excess of 16 events. The bill also requires the locality, prior to adopting such an ordinance, to create a public safety plan for each outdoor refreshment area.

HB2131 (Lopez) – Alcoholic beverage control; license application; locality input; corrective action. Adds the chief administrative officer of a locality to the list of persons who may be sent notice of certain license applications by the Board of Directors (the Board) of the Virginia Alcoholic Beverage Control Authority. The bill requires the Board to give reasonable consideration to any objection or recommendation submitted by the locality. The bill also expands the definition of criminal blight, for which the locality may require a property owner to take corrective action, to include a condition existing on real property that endangers public health or safety and is caused by (i) the regular presence on the property of persons in possession of controlled substances, (ii) the discharge of a firearm under certain conditions, and (iii) repeated violations of state laws or local ordinances involving acts that pose a risk of danger to persons or private property.

HB1919 (Kory) – Local green banks. Authorizes a locality, by ordinance, to establish a green bank to promote the investment in clean energy technologies in its locality and provide financing for clean energy technologies, defined in the bill. The bill establishes certain powers and functions of a green bank, including developing rules and procedures, financing and providing loans for clean energy projects, and stimulating demand for renewable energy. The bill requires the green bank to be a public entity, quasi-public entity, or nonprofit entity and requires the locality to hold a hearing and publish notice in a newspaper of general circulation prior to establishing the green bank.

HB2326 (Williams Graves) – Regulation of child-care services in localities. Expands to include all cities the authority related to the regulation of child-care services that is currently available to certain Northern Virginia localities. This will have the effect of granting all cities authority by ordinance to regulate child-care facilities that provide regular care to one or more children not related by blood or marriage.

HB1778 (Ward) – Removal of clutter from property; civil penalty. Provides that a locality may by ordinance require the removal of clutter from property, or may, whenever the governing body deems it necessary, after reasonable notice, have such clutter removed by its own agents or employees, in which event the cost or expenses thereof shall be chargeable to and paid by the owners of such property and may be collected by the locality as taxes are collected. The bill defines “clutter” as including mechanical equipment, household furniture, containers, and similar items that may be detrimental to the well-being of a community when they are left in public view for an extended period or are allowed to accumulate. Violations of the bill are subject to the existing civil penalty applicable to violations of provisions relating to the removal of trash, garbage, refuse, litter, and similar substances from property.

HB2053 (Samirah) – Department of Housing and Community Development; stakeholder advisory group; accessory dwelling units. Directs the Department of Housing and Community Development (Department) to convene a stakeholder advisory group to evaluate the construction of internal, attached, and detached accessory dwelling units as a strategy to address the Commonwealth’s growing demand for affordable and market-rate housing. The bill requires the stakeholder advisory group to report its findings and recommendations, including any legislative recommendations, to the Director of the Department, the Secretary of Commerce and Trade, the commissioners of the Virginia Housing Development Authority, and the Virginia Housing Commission no later than November 1, 2021.

HB2114 (Ransone) – Hearing notice by localities. Expands from only localities in Planning District 23 to all localities a provision that provides that in any instance in which a locality has submitted a timely notice of public hearing to a newspaper published or having general circulation in the locality and the newspaper fails to publish the notice, such locality shall be deemed to have met certain notice requirements so long as the notice was published in the next available edition. Under current law, this provision that was created by the 2020 Regular Session and only applies to localities in Planning District 23 will expire on July 1, 2022. The provision in the bill as it applies to all localities will also expire on July 1, 2022.

VML Contact: Michelle Gowdy, mgowdy@vml.org

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Legislation currently sitting in a money committee

SB1275 (Marsden) / HB1818 (Heretick) – Workers’ compensation; presumption of compensability for certain diseases. Adds salaried or volunteer emergency medical services personnel to the list of persons to whom, after five years of service, the occupational disease presumption for death caused by hypertension or heart disease applies. This is a local option by resolution and may contain a minimum number of hours worked.

SB1342 (Vogel) – Workers’ compensation; presumption of compensability for COVID-19. Establishes a presumption that COVID-19 causing the death or disability of firefighters, emergency medical services personnel, law-enforcement officers, and correctional officers is an occupational disease compensable under the Workers’ Compensation Act. The bill provides that the COVID-19 virus is established by a positive diagnostic test for COVID-19, an incubation period consistent with COVID-19, and signs and symptoms of COVID-19 that require medical treatment. The bill provides that such presumption applies to any death or disability occurring on or after March 12, 2020, caused by infection from the COVID-19 virus, provided that for any such death or disability that occurred on or after March 12, 2020, and prior to December 31, 2021, the claimant received a diagnosis of COVID-19 from a licensed physician, after either a presumptive positive test or a laboratory confirmed test for COVID-19, and presented with signs and symptoms of COVID-19 that required medical treatment.

SB1375 (Saslaw) – Workers’ compensation; presumption of compensability for COVID-19. Establishes a presumption that COVID-19 causing the death or disability of firefighters and emergency medical services personnel is an occupational disease compensable under the Workers’ Compensation Act. The provisions of the bill will be effective retroactive to March 1, 2020.

SB1469 (Barker) / HB2322 (Herring)* – Establishing an Opioid Abatement Authority. Establishes the Opioid Abatement Authority. The Authority, with the assistance of the Office of the Attorney General, would administer the Opioid Abatement Fund, which would receive moneys from settlements, judgments, verdicts, and other court orders, or related agreements, concerning claims regarding the manufacturing, marketing, distribution, or sale of opioids that would be used to provide grants and loans to Virginia agencies and certain localities for the purpose of treating, preventing, and reducing opioid use disorder and the misuse of opioids in the Commonwealth.

*These bills are in slightly different forms and are a recommendation of the Office of the Attorney General.

HB2288 (Williams Graves) – Virginia Public Procurement Act; construction contracts; requirement to submit list of subcontractors. Requires bidders or offerors on contracts for construction of $250,000 or more to submit along with their bid or proposal a list of all subcontractors, regardless of tier, that the bidder or offeror will use on the contract to perform work valued at $50,000 or more, including labor and materials. The bill requires such list to include certain information about each contractor. The bill also requires the bidder or offer to submit (i) a statement declaring that the bidder or offeror has reviewed the qualifications and performance history of each subcontractor and found such qualifications and performance history to be sufficient to qualify the subcontractor to perform the subcontract work and (ii) a statement indicating that the bidder or offeror has received a written statement from each subcontractor verifying that such subcontractor (a) has not defaulted on any projects within the last three years, (b) has not been suspended or disbarred by any public body within the last three years, and (c) is not currently in bankruptcy. This bill applies to localities with a population of over 50,000 and is optional for others.

HB2228 (Guzman) Workers’ compensation; injuries caused by repetitive and sustained physical stressors. Provides that, for the purposes of the Virginia Workers’ Compensation Act, “occupational disease” includes injuries from conditions resulting from repetitive and sustained physical stressors, including repetitive and sustained motions, exertions, posture stress, contact stresses, vibration, or noise. The bill provides that such injuries are covered under the Act. Such coverage does not require that the injuries occurred over a particular period, provided that such a period can be reasonably identified and documented and further provided that the employment is shown to have primarily caused the injury, considering all causes.

VML Contact: Michelle Gowdy, mgowdy@vml.org

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Bills going to a study

HB1917 (Mugler) – Publication of certain notices on locality’s website. Provides that in any instance in which a locality is required to publish certain notices related to local planning and zoning in a newspaper having general circulation in the locality, the locality may instead choose to meet such requirement by publishing the notice on the locality’s website. This bill requires VML, VACo, the Press Association and two members of the House Counties, Cities and Towns Committee to evaluate local government legal notices and methods of publication with the intent of recommending more uniform notice requirements. It also has attached a reenactment clause.

HB2045 (Bourne)* – Civil action for deprivation of rights; duties and liabilities of certain employers in employing or contracting for the services of law-enforcement officers. Creates a civil action for the deprivation of a person’s rights by a law-enforcement officer and provides that a plaintiff may be awarded compensatory damages, punitive damages, and equitable relief as well as reasonable attorney fees and costs. The bill provides that sovereign immunity and limitations on liability or damages shall not apply to such actions and that qualified immunity is not a defense to liability for such deprivation of rights. Finally, the bill provides that any public or private entity that employs or contracts for the services of a law-enforcement officer owes a duty of reasonable care to third parties in its hiring, supervision, training, retention, and use of such officers under its employment or contract.

*Thank you to everyone who helped get this bill sent to the Crime Commission! Expect a lot of meetings over the summer!

VML Contact: Michelle Gowdy, mgowdy@vml.org

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Local planning commission bill carried over for next year

SB1249 (Stuart) – Local planning commissions; review deadlines. Adds rezoning or generalized development plans, special use permits, and special exception applications to various review deadlines and requirements for local planning commissions.

VML Contact: Michelle Gowdy, mgowdy@vml.org

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Budget & Economy

Budget crunch time for localities: The General Assembly needs to hear which budget issues you support or oppose

Budget Committees to report their amendment packages next Sunday

The information below was prepared by VML staff and identifies the budget amendments submitted by General Assembly members that you should discuss with your delegations.

Health and Human Resources:

  • Item 302#1s (Deeds) Under Department of Health – Would phase in the increase in local matching funds for those localities that would experience decreased state funding as a result of an updating of the cooperate health budget rate formula after FY22. The phase in would allow affected localities to contribute half the required increase in FY23 and the full increase in FY24. Under the proposed budget, localities would be held harmless only one year – FY22.

VML worked with VACo to seek this amendment.

  • Item 302#1s (Deeds)and Item 302#2h (Hudson)  Under Department of Health – Would phase in the increase in local matching funds for those localities that would experience decreased state funding as a result of an updating of the cooperate health budget rate formula after FY22. The phase in would allow affected localities to contribute half the required increase in FY23 and the full increase in FY24. Under the proposed budget, localities would be held harmless only one year – FY22.

VML worked with VACo to seek this amendment.

  • Item 292#1h (Sickles) Under CSA Program – Would add $2.3 million the second year from the general fund and language exempting local governments from providing the local match for residential service costs that heretofore have been funded through Federal Title IV-E, which is a state-federal partnership, and are being shifted to Medicaid, which requires a local match.

VML worked with VACo to seek this amendment.

  • Item 69#3h (Hope) Under Compensation Board – Would provide $10.6 million in state funds the second year to increase per diem payments for local-responsible and state-responsible inmates held in local and regional jails. The amount reflects the 18.75 percent increase in the Consumer Price Index since the current rates were set by the 2010 Session of the General Assembly.

VML worked with VACo to seek this amendment.

  • Item 408#1h (Tyler) State assistance to local law enforcement (HB 599 funds) – Would increase Aid to Localities with Police Departments (“HB599 Funding”) by $1.7 million the first year and $7.9 million the second year to reflect the estimated general fund growth rate reflected in House Bill 1800 as introduced.

VML supports the amendment.

Transportation:

  • Item 451 #1s (Sen. Ebbin) and Item 451 #2s (Sen. Saslaw) – Increases urban road maintenance $9 million over the biennium.

VML supports the amendments.

Natural Resources:

  • C-70 #1s (Hanger) and C-70 #2h (Bulova) – Provides $39.8 million in bond proceeds for the Water Quality Improvement Fund to address point source pollution.

VML supports the amendments.

  • C-70 #1h (Bulova) and Item C-70 #2s (Hanger) – Provides $50.9 million in bond proceeds for the Stormwater Local Assistance Fund (SLAF).

VML supports the amendments.

  • Item 107 #1h (Hope) Tree Preservation Work group – Policy language amendment requires that the Department of Forestry convene a working group comprised of local government officials and other impacted parties to recommend changes to the tree conservation statutes. A report will be forwarded to the Chair of the House Agriculture, Chesapeake and Natural Resources and Senate Agriculture, Conservation and Natural Resources Committees no later than November 1, 2021, and will include recommendations for draft legislation.

VML supports the amendment.

Local Finance:

  • Item 114 #7h (Mugler) and Item 114 #4s (Stuart) – Policy language amendments that direct the Commission on Local Government to undertake a review of the effects of mandatory property tax exemptions on local governments and recommend potential options for mitigating their fiscal impacts.

VML supports the amendments.

Economic Development:

  • Item 113 #3h (Lopez) – Increases state contributions to the Virginia Housing Trust Fund by $9.3 million and $15.0 million, respectively, in fiscal years 2021 and 2022.

VML supports the amendment.

  • Item 114 #10h (Hurst) and Item 114 #3s (Edwards) — Policy language amendments enabling a broadband authority, or other public body, or non-profit organization to be eligible to receive Virginia Telecommunication Initiative (VATI) funds and also be the broadband service provider.

VML supports the amendments.

  • Item 115 #1s (Locke) and Item 115 #1h (Price) – The amendments restore $250,000 each year that was unallotted and subsequently reduced during the 2020 Special Session for the Enterprise Zone program.

VML supports the amendments.

Education:

  • Item 145 #18h (Aird) and Item 145 #9s (McClellan) – The amendments provide $414.5 million the second year to eliminate the support cap methodology. This proposal adopts the Board of Education’s revision to the Standards of Quality.

VML supports the proposal.

  • Item 145 #12s (McClellan) – The amendment provides $61.9 million in FY22 to implement the Board of Education’s revision to the Standards of Quality that consolidates the At-Risk Add-On and Prevention, Intervention, and Remediation funds into a single, expanded At-Risk Add-On fund, called the “Equity Fund”.

VML supports the amendment.

  • Item 145 #4s (Hashmi) – The amendment provides $19.7 million in FY22 to increase the staffing requirements for English Learner (EL) teachers to differentiate the distribution of positions based upon the proficiency level of students in each school division. This implements the Board of Education’s prescribed revision to the Standards of Quality.

VML supports the amendment.

  • Item 145 #14s (McClellan) – The amendment would implement SB1257 and pay for the state share of costs to implement the Standards of Quality revisions as prescribed by the Board of Education. The comprehensive measure provides $462.3 million which is the full state share of SOQ expenses to address several educational programs, including Early Reading Initiatives, additional principals and assistant principals, more school counselors, etc.

VML supports the amendment.

VML Contact: Neal Menkes, nmenkes@vml.org

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Senate panel gives “thumbs down” to proposed Constitutional Amendment exempting veterans’ groups from paying property taxes

The Senate Finance and Appropriations Committee voted earlier this week to postpone indefinitely for the remainder of the 2021 Session consideration of SJ297. This proposal would have authorized the General Assembly to exempt property owned by certain veterans’ and service members’ services organizations from real estate and personal property taxation.

Context

Until calendar year 2003, the General Assembly reserved for itself the authority to exempt from local taxation, real and personal property, owned by certain nonprofit organizations and used for religious, charitable, patriotic, benevolent, cultural or public park or playground purposes. A three-fourths vote was required in each Chamber to approve each tax-exempt application.

Virginians approved a constitutional amendment in 2002 to give localities the authority to decide these local taxation issues. Legislation in the 2003 Session (HB1750) established a process for localities to follow when exempting such organizations. §58.1-3651 spells out that process which includes public hearings prior to adopting a tax exemption ordinance for the applicant.

If SJ297 had succeeded it is likely that more service organizations would have sought to further amend the Virginia Constitution to receive similar preferential treatment on local taxation. In FY2019, local property tax collections totaled roughly $14 billion.

Similar measure currently in the House

HJ614, currently sitting in the House Privileges and Elections Committee, is another proposed constitutional amendment that would adversely affect local revenues. This measure would authorize the General Assembly to exempt real property taxation of a surviving spouse of a member of the armed services who died while serving or a veteran who died from a service-connected disability or illness.

The committee may take up the measure next week.

Currently, the Virginia Constitution mandates such tax relief, but restricts eligibility to the surviving spouse of a member of the armed forces who was killed in action. HJ614 would expand eligibility, increasing forgone revenue beyond the $48.1 million estimated by the Commissioners of the Revenue in FY2018. Virginia is the home to over 700,000 veterans. Some 18,000 Virginia veterans and surviving spouses qualify for the mandated property tax exemptions, according to the Commissioners of the Revenue.

VML Contact: Neal Menkes, nmenkes@vml.org

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Senate committee wrestles with changes to state tax code to conform with federal tax policy

Consider for a moment the query Hamlet never paused to ponder: “To conform or not to conform, that is the question.”

Of course, Hamlet was in Denmark and was royalty (and is fictional), so it may not have mattered much to him either way.

Closer to home, the answer to this question carries more weight because it is likely to determine the amount of state income tax revenue the General Assembly leaves Gov. Northam as he begins his final year in office.

At stake are hundreds of millions of dollars. Some of which are already accounted for in the budget that Gov. Northam submitted in mid-December.

Background

On December 27, 2020, President Trump signed the Consolidated Appropriations Act, 2021 (“CAA”) into law. The CAA contains both the COVID-Related Tax Relief Act of 2020 (COVIDTRA) and the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (TCDTR). In addition to providing for stimulus payments of $600 per taxpayer and qualifying child, the CAA also contains numerous tax provisions and extenders.

Northam’s budget bill does conform with certain CARES Act tax provisions, and his Secretary of Finance, Aubrey Layne, told the Senate Finance and Appropriations Committee that the governor would agree to additional conformities.

Thus, if the General Assembly accepted Northam’s ideas, the hit to the state general fund would be $43.2 million and $77.2 million, respectively, in fiscal years 2021 and 2022. However, members in both the House of Delegates and Senate have expressed interest in conforming the state tax code with additional federal tax policies. The table below identifies the items the Northam Administration rejected along with the estimates from the Virginia Department of Taxation as to the costs. Potential costs for the biennium, if all items were accepted, range from $355 million to $515 million.

Legislators’ consternation has also focused on the tax treatment for the Payroll Protection Program (PPP). Under the federal legislation, enrollees in the PPP are eligible for a double tax benefit if certain conditions are met. PPP recipients are treated more favorably than companies that did not receive such loans, including those that received CARES Act money directly from the state or from local governments for Rebuild VA Grants and similar programs.

Secretary Layne shared the table below with the Senate Finance and Appropriations Committee members.

Because 87,010 borrowers (representing 80 percent of the PPP loans) went to corporate and non-corporate entities who borrowed $100,000 or less, the Secretary felt the table was a fair representation.  He offered several ideas to address, at least partially, the fiscal impact of conforming state tax policy with the federal action.

In response, the Chair of Senate Finance and Appropriations, Janet Howell, announced that she had put together a special six-member subcommittee to examine the issue and options with the objective of presenting a recommendation for the full committee’s consideration next Tuesday (Feb. 2). The full Senate will have to act next week to meet the legislative “crossover” deadline.

The bottom line

The outcome of next week’s Senate Finance and Appropriations Committee meeting will affect the spending side of the state budget. Unlike the federal government, the Commonwealth does not spend what it does not have. The fate of local government budget requests may very well depend on these revenue decisions.

Stay tuned.

VML Contact: Neal Menkes, nmenkes@vml.org

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Virginia’s economic recovery takes on a “K-shape”

A K-shaped recovery occurs when, following a recession, different parts of the economy recover at different rates, times, or magnitudes. A K-shaped recovery leads to changes in the structure of the economy or the broader society as economic outcomes and relations are fundamentally changed before and after the recession. This recovery is called K-shaped because the path of different parts of the economy when charted together may diverge, resembling the two arms of the Roman letter “K.”

It is quite likely that Virginia is experiencing such an economic recovery. Individual withholding taxes have averaged 2.9 percent in FY21 which is slightly above the 2.7 percent forecast. This is occurring even as payroll employment numbers dip. The unemployment rate continues to decline but the number of Virginians on long-term unemployment stays steady.

For the filing week ending January 23, the figure for seasonally unadjusted initial claims in Virginia was 18,312 which is 13.1 percent less than the week prior. Continued weeks claimed totaled 67,298, which was a 5.4 percent increase from the previous week and 45,637 higher than the 21,661 continued claims from the comparable week last year. Over half of claims that had a self-reported industry were in the accommodation/food service, administrative and waste services, retail trade, and healthcare/social assistance industries.

Teasing out the data seems to support the notion that those workers who fall into lower income categories – and do not have the ability to shelter-in-place to earn their paychecks – are bearing the brunt of last year’s 3.5 percent nationwide economic downturn. According to statistics from the Federal Reserve, the businesses that have been hit hardest disproportionately employ women, people of color and workers without college educations.

Federal Reserve Chair Jerome H. Powell also linked broader economic recovery to beating the pandemic, saying that there is “nothing more important to the economy right now than people getting vaccinated.”

The challenge for the long-term stability and growth of Virginia’s economy is moving beyond a K-turn to a more uniform and shared economic recovery.

VML Contact: Neal Menkes, nmenkes@vml.org

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Environment

Beneficial wastewater bills make progress; support encouraged

HB2129 (Lopez) was approved by the House Appropriations Committee early Friday morning and will move on to the full Appropriations committee next week.

This legislation will provide local wastewater authorities with greater certainty in meeting the WIP III nutrient reduction targets and is anticipated to save localities $150 million or more over the current approach outlined by the WIP III. This legislation provides specific nutrient reduction targets facility by facility which will provide specified reduction schedules that will allow for wastewater facilities to anticipate and plan for needed improvements as well as a funding source from the Commonwealth of Virginia to assist localities in meeting these requirements. These projects will be eligible for funding from the Water Quality Improvement Fund.

In the other chamber, SB1354 (Hanger) has identical language.

Benefits for localities

This legislation provides a more economical path for localities and the Commonwealth to meet the nutrient reduction targets as a member of the Chesapeake Bay Compact with the goal of cleaning up the Bay.

We ask members to support this legislation in conversations with your legislators.

VML Contact: Mitchell Smiley, msmiley@vml.rog

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Health & Human Services

Senate Rules Committee reports study of auxiliary grant program; creation of Behavioral Health Commission; designation of Liberty Amendments Month

Today, the Senate Rules Committee moved on three pieces of legislation of interest to local governments.

The committee amended and reported SJR293 (Spruill), a request that the Joint Commission on Health Care (JCHC) study the auxiliary grant program. The City of Chesapeake asked Senator Spruill to submit this measure and VML spoke in support of the resolution.

The auxiliary grant program is a federal-state program that has been around for decades. Local governments have a stake in it because cities and counties pay a 20 percent match for each auxiliary grant.

This study would offer a good opportunity to assess the limitations of the auxiliary grant program and whether there are other funding streams available to Virginia that could better and more fully address the needs of vulnerable adults.

Also, today the committee amended and reported SB1273 (Deeds), which would create a Behavioral Health Commission in the legislative branch. This Commission would succeed the Joint Subcommittee Studying Mental Health in Virginia, chaired by Senator Creigh Deeds, that has been active since 2014 and has initiated a number of bills and budget items addressing behavioral health issues in Virginia.  This new permanent commission would continue the work of the Deeds’ subcommittee.

VML supports this continuation of study and oversight.

Finally, the committee reported SJR323 (Locke), which would designate June 19 through the third Monday in July, in 2021 and in each succeeding year, as Liberty Amendments Month in Virginia. This resolution was initiated by the Town of Vienna in recognition of four separate amendments to the U.S. Constitution that delineate freedoms and rights for all citizens.

VML supports the resolution.

VML Contact: Janet Areson, jareson@vml.org

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Some CSA bills continue their journey through the General Assembly

The Senate Finance & Appropriations’ Health and Human Resources subcommittee held over for a week SB1313 (Mason), a bill addressing the use of Children’s Services Act (CSA) funds for certain special education purposes and creates a workgroup to develop a plan for the transition of funds for private special education placements now under CSA to the Virginia Department of Education (VDOE).

We expect additional amendments to the bill when it comes up on Monday, Feb. 1. VML appreciated the previous amendments made by the patron, but we continue to have concerns with certain language in the bill and have communicated those concerns to the members of the Senate Finance and Appropriations Committee.

The House Education Committee reported and referred HB2117 (VanValkenberg) to House Appropriations; it was reported by the Appropriations subcommittee on Jan. 29. Currently, HB2117 is parallel to SB1313.

VML supports the flexibility of local governments/school systems to serve children in public school settings (as is feasible) and the fact that it could be more cost-effective to serve them in their community than in private school settings.

HB2212 (Plum), which is currently on the floor of the House, would require the director of the Office of Children’s Services to provide for the effective implementation of the Children’s Services Act (§ 2.2-5200 et seq.) in all localities through regular monitoring of local performance measures and child and family outcomes; using audit, performance, and outcomes data to identify local programs that need technical assistance; and work with underperforming local programs to develop a corrective action plan for submission to the Office and the State Executive Council for Children’s Services.

VML does not have a position on the bill; we believe that the real work would come when the State Executive Council and OCS addresses actual implementation of it.

CSA related budget amendments

There are several budget amendments addressing components of CSA and implementation of certain recommendations from the Joint Legislative Audit and Review Commission (JLARC) study of CSA and special education private day services that was released in November 2020.  These include:

Item 138#1h (Plum) – Would require the Department of Education to develop a detailed plan for how it would administer Children’s Services Act (CSA) pool funds to pay for services and supports for Virginia students with disabilities who are at-risk of, or are in, out-of-school placements, as determined by their Individualized Education Plan team, due to the disability’s impact on their learning. The plan shall address how the funds will be used to pay for services and supports in public schools to (i) prevent out-of-school placements for students who would otherwise be at risk of such a placement and (ii) transition students who are in out-of-school placements back to their public school. The plan would also address how DOE would make these funds equally accessible to all divisions and how students would be determined eligible for these funds. The plan and recommendations would be due by November 1, 2021.

Item 293#1h (Plum) – Would require that all local CSA programs serve children who meet criteria established by the Office of Children’s Services and the State Executive Council for the “non-mandated” eligibility category. Services for these children would be paid with both state CSA funds set aside each year by the State Executive Council from the CSA pool of funds and local government matching funds.

This amendment implements recommendation number 11 of the JLARC study, which found that about half of localities do not use CSA funds to serve non-mandated children* who could benefit from CSA-funded services.

*Note –The number of those localities not using non-mandated funds is not news; it has been the case for several years. There are reasons why these funds are not used, including the required local match and the limited scope of funds available from the state which means that once those funds are expended, 100 percent of the cost shifts to the local government.

VML has concerns about how this language would be enforced given the limited amount of state funds available and potential for greatly expanded local expenditures as a result.

Item 293#2h (Plum) – Would require the Office of Children’s Services (OCS) to develop and submit a plan to modify its staffing and operations to ensure effective local implementation of the Children’s Services Act. The plan should detail how OCS will monitor local performance measures and child and family outcomes; use audit, performance, and outcomes data to identify local programs that need technical assistance; and work with underperforming local programs to develop corrective action plans. The plan should include any new or different staff positions required, how those positions will be used to monitor and improve effectiveness, and the estimated cost of implementing these changes. The plan would be due to the Committees no later than November 1, 2021, in advance of the 2022 General Assembly session.

Note: This would assist with implementing the requirements laid out in Delegate Plum’s HB1212.

VML Contact: Janet Areson, jareson@vml.org

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VDH funding bill moves forward; Localities urged to support phased in approach to enhanced match

HB1963 (Bagby) puts into Code the long-standing state-local cooperative health budget that funds local departments of health. This keeps the local match in the range of 18 to 45 percent. It also directs the Department of Health to biennially review to the General Assembly on the local matching fund amount for each city and county and determine whether the amount should be revised as a result of changes to a locality’s revenue generation capacity.

VML has no position on the bill because it simply codifies current practice and does not address any potential changes to the formula.

Support budget amendments to phase in enhanced match

VML supports two budget amendments that would phase in the matching rate changes proposed in Governor Northam’s budget. The proposed budget would give a one-year hold harmless for those localities whose local match rates would increase.

The budget amendments introduced on behalf of VML and VACo are Item 302#1s (Deeds)  and Item 302#2h (Hudson).

Taken together, these would phase in the increase in local matching funds for those localities that would experience decreased state funding as a result of an update to cooperate health budget rate formula after FY22.

The phase in approach would allow affected localities to contribute half the required increase in FY23 and the full increase in FY24. Under the proposed budget, localities would be held harmless only one year – FY22.

VML urges localities to talk to their legislators to support of these amendments.

VML Contact: Janet Areson (jareson@vml.org)

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Resources & Opportunities

Entries for VML’s 2021 “If I Were Mayor” essay contest are due by Feb. 22

Every year, the Virginia Municipal League (VML) is pleased to award deserving 7th grade essayists across the Commonwealth with a cash prize, an official plaque, and recognition. If you know of a 7th grade class from a member locality that should participate, send this link to a teacher or principal:

2021 “If I Were Mayor” essay contest description and instructions here >

This year’s theme is “What I’ve Learned” and we are asking students to tell us what has worked for them, and what hasn’t, during a school year like no other.

Read the full description here >

Prizes and Recognition

Regional winners selected from around the state will each receive a $150 cash prize and plaque. One statewide winner chosen from the regional winners will receive a $250 cash prize and plaque. The runner-up from the region that receives the statewide award will become that region’s winner.

Winning essays will be featured in the May issue of VML’s magazine Virginia Town & City.

How to enter

All entries must be received by end of day on Monday, February 22nd. There are 2 ways to submit your entry:

Fill out and submit our online form available here >

You can do this yourself or you can have your teacher or someone else help you. Copy and paste your essay into the “Essay” box in the form. After VML receives your entry, your teacher will get a confirmation email.

OR

Mail your essay with a filled-out paper entry form (see back of this flyer) attached to:

VML, Attn: 7th Grade Essay Contest
P.O. Box 12164
Richmond, VA 23241

Who is eligible?

Any 7th grade student living and/or attending school in a VML member locality (Full list available here).

VML Contact: Rob Bullington, rbullington@vml.org

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ZenCity offers data analysis of what’s driving dissatisfaction with vaccine rollout across the U.S.

VML Community Busines Member ZenCity has a new blog post that our member may find interesting.

The piece, “4 resident pain points around vaccine rollout” touches on the leading sources of frustration being shared by residents across the U.S. with their local vaccination strategies. The blog employs data to identify trends and offers insight on resolving the pain points.

ZenCity Contact: Director of Urban Policy & Partnerships, Assaf Frances, frances@zencity.io

 

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