eNews June 10, 2022
Friday, June 10, 2022 - 02:37pm
This edition of eNews is sponsored by:
Through our comprehensive network of hospitals, primary and specialty physician practices and other complementary services, we work together to provide quality care close to home for nearly 1 million Virginians. Read more >
In this issue:
- Big Picture: Cutting taxes and increasing spending in uncertain economic times
- Analysis of budget items: Natural Resources, Transportation, Marijuana
- Virginia Freedom of Information Advisory Committee discusses electronic meetings, creates HB980 subcommittee
- Broadband Service to New Development stakeholder group meets, considers challenges to broadband expansion
- Graduate Certificate in Local Government Management information sessions
- In case you missed it: VDEM Hurricane Briefing materials now available
- VML now accepting entries for 2022 Innovation Awards
VML Events
Webinar: Presenting Virginia’s new broadband 
availability map – Thursday, June 16
The Virginia Department of Housing and Community Development (DHCD) has launched a statewide broadband availability map indicating broadband coverage, including maximum broadband speeds available in service territories in the Commonwealth.
VML invites officials and staff from our members to join representatives from DHCD as well as Virginia Tech’s Center for Geospatial Information Technology for an in-depth look at this valuable new tool for Virginia’s local governments.
This free webinar will be held Thursday, June 16 from 2:00 PM – 3:00 PM.
Registration is required. Register here >.
VML Contact: Rob Bullington, rbullington@vml.org
Budget
Big Picture: Cutting taxes and increasing spending in uncertain economic times
After two months of delay, the General Assembly passed a state budget on June 1st and sent it to Governor Youngkin for his review and likely amendments. The word around Richmond is legislators hope to return June 17th (next Friday) to vote on whatever Governor Youngkin proposes though his amendments to the compromise budget.
The compromise budget under review by Governor Youngkin includes proposed general funds of $31.7 billion in FY 2023 and $28 billion in FY 2024. The budget includes $3.7 billion in revenue reductions from tax cuts and $9 billion in increased operating funds.
Over the biennium, the major tax cuts included in the 2023-2024 budget are:
- Elimination of the Accelerated Sales Tax – $202.8 million
- Refundability of the Earned Income Tax Credit (15% of federal EITC) – $315 million
- Exemption of Veterinarian Drugs from Sales Tax – $8.8 million
- Tax Rebate ($250/$500) – $1.05 billion
- Standard Deduction (Increase from $4,500/$9,000 to $8,000/$16,000) – $1.64 billion
- Elimination of State Sales Tax on Groceries & Personal Hygiene Products – $372.4 million
- Income Tax Subtraction on Military Pensions – $301 million
In March 2020, only two years ago, a lead Senate budget negotiator called on then-Governor Northam to convene a Special Session immediately – if not sooner – to reduce spending on an emergency basis to respond to the pandemic. In that message, this Senate leader pointed to “unanticipated expenses, as well as revenue projections that may now be too robust”.
What a difference two years makes!
Last week, the Senate and House agreed to a bipartisan budget that includes $3.7 billion in tax cuts and $9 billion in spending increases. Governor Youngkin may add a billion more in a mix of tax cuts and new spending by next Wednesday.
During economic downturns, governments (state and local) face twin challenges of trying to stabilize public revenues and build a public response that necessitates the expenditure of public funds.
Thanks to multiple rounds of federal cash sent directly to individuals, businesses, and governments, Virginia’s state government – like 46 out of the other 49 state governments – experienced a surplus at the end of the last fiscal year.
Budgets will always be about priorities, but they are especially so when the bear economic cycle returns, as it always does.
If Virginians want to improve the public education system, improve public safety, improve workforce training, AND improve our woeful state behavioral health system, AND lower costs on families, Virginia’s policymakers need to be responsible enough to endorse a plan that the Commonwealth can afford to pay.
Local governments will be watching and hoping that the budget ultimately adopted this year can do that. Otherwise, it’s all just happy talk (and free lunches still aren’t real).
VML Contact: Carter Hutchinson, chutchinson@vml.org
Analysis of budget items: Natural Resources, Transportation, Marijuana
Use the links below to go to each item:
- Natural Resources: Good news for localities
- Transportation: Bad news for localities
- Marijuana: A mixed bag
Natural Resources: Good news for localities
Investments in the Water Quality Improvement Fund. Significant investments in water quality improvement are included the biennial budget including a $256.6 million deposit to the Water Quality Improvement Fund as part of Item 374 #3c. This appropriation fully funds Agricultural Best Management Practices in the first year of the biennium with a $256.6 million deposit in the Natural Resources Commitment Fund.
This investment is important for Virginia to meet its nutrient and sediment reduction commitments to help clean up the Chesapeake Bay made as part of the Watershed Implementation Program III. This appropriation fully funds the Agricultural Best Management Practices Needs assessment in the first year of the biennium. This is an essential sector that has not been fully funded in prior budgets and will allow the agricultural sector to help Virginia meet the 2025 nutrient and sediment reduction commitments. Fully funding Agricultural Best Management Practices will reduce the overall amount nutrients and sediments in waters across Virginia with the bulk of the funds (approximately 60 percent) directed towards farms in the Chesapeake watershed. This will help waterways across the Commonwealth (whether they flow into the Chesapeake Bay or not) while also assisting locally owned facilities do their part to reduce nutrient and sediment in Virginia’s waterways.
Stormwater Local Assistance Fund (SLAF) gets funding. The Biennial budget (Item C-80#1c) includes $25 million in funding for SLAF. The biennial budget capitalizes SLAF at a lower rate than the introduced budget proposed and holding funds flat in the first year of the biennium at $25 million. SLAF provides grants to localities for water quality and supply projects and is intended to provide localities with grants to assist with the significant costs of upgrading stormwater infrastructure across the Commonwealth. SLAF is an important program for localities seeking to reduce sediment runoff particularly in the Chesapeake Bay Watershed as part of the Commonwealth’s commitments under the third Watershed Implementation Plan.
Transportation: Bad news for localities
Local maintenance payments boosted by $30 million over 2 years. Item 453 #2c and Item 456#2c redirects $15 million of non-general funds from VDOT’s maintenance payments for state-maintained roads in each year of the biennium to local road maintenance resulting in a net increase of $30 million over the biennium. This will serve to increase the base rate for local maintenance payments for localities that maintain their own roads and right of ways.
Locally maintained roads were identified by the Joint Legislative Audit and Review Commission (JLARC) report from November 2021 as of inferior quality to those maintained by VDOT. JLARC noted in their report that there is not adequate data to compare locally maintained roads to state maintained roads and as a result there is a study of local road conditions included in language in the caboose (Item 451#1c) and biennial budgets (Item 456#1c).
The budget language directs VDOT to evaluate the conditions of locally maintained streets but not at the expense of local maintenance payments thanks to companion amendments included in the conference budget. While there is still more work to do to address the road maintenance payment disparity, VML thanks the legislators who carried budget amendments on behalf of localities.
Revenue reductions due to the sales tax exemption on groceries. Transportation Revenues see a reduction under the new biennial budget now before Governor Youngkin. Items 435 #1c, 436 #1c, 440 #1c, 445 #1c, 447 #1c, 448 #1c, 449 #1c, 456#2c, 464 #1c, are the individual amendments reducing $190 million over the biennium from the Departments of Aviation, Motor Vehicles, Rail and Public Transportation, Transportation, and authorities including the Port, Rail, and Space Flight. This is a result of the General Assembly’s actions to eliminate the state portion of the sales levied on food for human consumption and personal hygiene products (aka “the Grocery Tax”) without replacing any of these funds for transportation.
Over the biennium, the elimination of the Grocery Tax results in a reduction of $190 million with a nearly $55 million reduction in the first year and a $135 million reduction in the second year. While state transportation revenues are distributed according to funding formulas in the Code of Virginia, according to these formulas the proposed funding reduction does not impact transportation funding. The bulk of the reductions in the budget are from the Commonwealth Transportation Fund with the primary reductions seen in the VDOT construction budget (82 percent) and the Department of Rail and Public Transportation’s budget (11.5 percent). Budgets for the Department of Aviation, the Port of Virginia, and the Spaceport are also reduced. Notably, road maintenance funding is untouched in this proposal which is welcome news given the significant maintenance needs facing the Commonwealth’s roads.
If this budget is passed it will affect programs at the above-mentioned transportation agencies. It’s worth noting that there are sufficient revenues in the first year of the biennium to put towards specific programmatic expenditures to initially offset some of these reductions. Beyond that, however, it remains to be determined what the extent of those impacts will be to transportation needs that already fall short. For reference, Round 4 of SMART Scale had less than $2 billion available to fund projects but saw nearly 400 projects submitted for potential funding with a total price tag of $7.8 billion. Any reductions in transportation funding, such as this one, will only serve to further widen the gap between identified transportation needs and available resources.
While the immediate pinch of this revenue reduction may be softened during the coming fiscal year it is likely to increasingly bite into various transportation programs in subsequent years as the total revenues available to meet the growing transportation maintenance and construction needs will remain constrained.
Eliminating dedicated revenues from transportation funding without replacing those revenues is a dangerous precedent that removes valuable resources to meet the significant transportation needs of the Commonwealth. VML will continue to advocate for appropriate funding to provide necessary and appropriate resources for localities to maintain and expand necessary transportation assets.
Marijuana: A mixed bag
Some positive moves, but none that directly benefit localities. Item 4-14 #4c of the budget includes new labelling and age restrictions on hemp derived CBD products and new criminal penalties for the public possession of marijuana. While none of these affect localities directly, the budget does create new positions at the Virginia Department of Agriculture and Consumer Services for enforcing some of the new CBD requirements. This will provide new state resources to enforce requirements related to hemp products.
The budget amends the Code of Virginia by requiring that hemp derived CBD products (this includes the now ubiquitous Delta-8 products) be sold only to individuals 21 or older. These budget amendments are similar to the Governor’s amendments to SB591 (Hanger) which failed in the Senate during the reconvened session.
The key distinction between the budget language and SB591 is while the Budget has nearly the same effect, it goes further by providing new staff for enforcement by the state of new CBD product packaging and labelling requirements. Hemp and CBD products must comply with new packaging and labelling requirements which ban the use of trademarked likenesses on packaging and requires that all products sold include an ingredients and content list and that any food products are prohibited from being sold in the shape of a human, animal, vehicle, or fruit.
The budget language also directs relevant state agencies and the Office of the Attorney General to convene a task force and issue a report by November 15, 2022 on necessary regulations and statutes for the sale of industrial hemp extracts and products containing tetrahydrocannabinol. Finally, the budget language also establishes a new misdemeanor offense for possession in public of more than 4 ounces of marijuana but less than 1 pound as well as making technical amendments to the possession and cultivation statutes.
This budget language does not re-enact the 2021 legalization statute which was required for the local authority to hold a referendum, enact zoning ordinances, or establish other marijuana related local ordinances. VML will continue to update members on the work of the task force and its forthcoming report. We can expect more legislation introduced during the 2023 session of the General Assembly as legal retail sales could still start as early as January 1, 2024.
VML Contact: Mitchell Smiley, msmiley@vml.org
General Laws
Virginia Freedom of Information Advisory Committee discusses electronic meetings, creates HB980 subcommittee
During a meeting this week, the Virginia Freedom of Information Advisory Committee (FOIA Council) reviewed the draft of the HB444 (Bennett Parker) which is the best practices document for hosting electronic meetings. As a reminder, under HB444 virtual meetings are limited to local public bodies that are not: local governing bodies, school boards, planning commissions, architectural review boards, zoning appeals boards, or any board with the authority to deny, revoke, or suspect a professional or occupational license. Qualifying entities are permitted to meet twice, or 25 percent of the time (whichever is greater) in each calendar year.
During the meeting the FOIA Council also created a subcommittee to review HB980 (Williams Graves) which was proposed legislation to add email addresses as information that would be exempt from disclosure when furnished in confidence to the local governing body with respect to complaints in local investigations. The types of complaints are expanded as well.
The agenda and materials from this week’s meeting are available here.
As HB980 is the only bill referred to the FOIA Council this year, I expect (or I hope!!) their meeting schedule will be light.
VML Contact: Michelle Gowdy, mgowdy@vml.org
Broadband Service to New Development stakeholder group meets, considers challenges to broadband expansion
The Broadband Service to New Development stakeholder group created by HB445 (Murphy) / SB446 (Boysko) met this week. During this meeting, the group identified challenges based on presence of infrastructure based on where last mile broadband networks do (or do not) exist and talked about how stakeholders can facilitate and coordinate installation of broadband networks.
Prior to the meeting, the group was provided three questions for review and comment:
- What are some of the challenges facing your organization (or the state as a whole) in building broadband in new residential or commercial development?
- How do these challenges impact your organization (state) when it comes to building broadband? To what degree do they hinder broadband access?
- To the extent possible, can you identify why these challenges exist?
This group had a lively discussion and will continue their work on Friday July 22nd and Thursday September 1st. The group’s report is due to the Broadband Advisory Council by September 30, 2022.
The presentation from this week’s meeting, their workplan, and meeting schedule are available here >.
VML Contact: Michelle Gowdy, mgowdy@vml.org
Opportunities & Resources
Graduate Certificate in Local Government Management information sessions
The Graduate Certificate in Local Government Management will be holding 7 information sessions this summer. Please register via the zoom link below and share with your staff and/or members.
All sessions are held at 12 noon
Dates:
- June 15, 2022
- June 22, 2022
- June 29, 2022
- July 6, 2022
- July 13, 2022
- July 20, 2022
- July 27, 2022
Register in advance for the meeting that best suits your schedule:
https://virginiatech.zoom.us/meeting/register/tZYvceGvqD8sHdzgfxggFWcpcyYq4dYgxaMv
After registering, you will receive a confirmation email containing information about joining the meeting.
Contact: Stephanie Davis, Ph.D., Collegiate Assistant Professor and Program Director, Graduate Certificate in Local Government Management, sddavis@vt.edu
In case you missed it: VDEM Hurricane Briefing materials now available
The Virginia Department of Emergency Management (VDEM) held a 2022 Hurricane Season Briefing for VML and VACo members on Friday, June 3rd at 9:00 AM. This briefing reported updates related to hurricane readiness, response, and recovery.
The materials from this session are now available on VML’s website here, or can be accessed using the below links:
For more information, please visit the Virginia Department of Emergency Management (VDEM) at http://www.vaemergency.gov.
VML Contact: Rob Bullington, rbullington@vml.org
VML now accepting entries for 2022 
Innovation Awards
It’s time again to celebrate local government achievements!
It’s time again for our local government members to spotlight programs and individuals that have made a big difference by creating innovative solutions to address emerging needs.
Award-winning projects typically demonstrate innovative ways of delivering services, addressing community needs, or significantly improving an existing service.
One winning project from the category winners will be selected for the top prize – the coveted President’s Award!
All entries must be received via e-mail by 5:00 p.m., Monday, Aug. 15, 2022. The awards will be presented at VML’s Annual Conference in Richmond in October.
More details and a link to the official entry form are available here >.
VML Contact: Manuel Timbreza, mtimbreza@vml.org
