Tuesday, February 18, 2014
A closer look at the House and Senate budgets
The Virginia Senate and the House of Delegates recently released competing budgets with broad differences in their spending priorities. The Senate Finance Committee and the House Appropriations Committee met on February 16 to unveil their amendments to the two-year, $96 billion budget that former Governor Bob McDonnell introduced in December.
Below are preliminary analyses of amendments that are of interest to VACo members. Further analysis will be available as the respective houses provide more details.
Jail per diems
The introduced budget created a deficit for the state share of funding for inmates in local and regional jails by $4.8 million. The Senate budget provides $4.8 million to address this deficit in FY2014 but no funding was provided in the House budget to address this FY2014 issue.
FY 2015 – 2016
State Assistance for Police Departments (HB 599)
The Senate Finance Committee maintains all of the increases found in the introduced budget for HB 599 aid to localities. The increase is $7.1 million in the first year (total $179.5 million) and $14.24 million in the second year (total $186.7 million). The House budget strips the increase in the second year so that the first and second years are level funded at $179.5 million.
Court Fines & fees
The introduced budget continued the language from the 2012 Appropriations Act that swept all fines and fees directly into the state’s general fund and then kept one-half of the amounts of local fines and fees that were in excess of 50 percent of total collections. Based on an Inspector General 2013 report, the Senate has amended the threshold from 50 percent to 65 percent, restricted consideration of revenues to fines and forfeitures (excluding fees) and simplified the process for reverting funds. The House does not address this issue.
Community Development and Planning
The House budget includes an amendment that prevents a total cut of $70,000 per year from being spread across the 21 Planning District Commissions. The House eliminates and the Senate maintains proposed funding of $4 million each year for the Housing Trust Fund. The Senate and House provide a one-time allocation of $35,000 for the Commission on Local Government to develop a web-based application to improve the local fiscal impact review process.
Unfunded Teacher Pension Liability
Neither the House nor Senate budget proposals appear to include amendments that would have required the state to accept its proportional share of the unfunded liability in the teacher retirement plan.
Compensation Board Issues
Both the House and Senate remove the “non-supplanting” language found in the introduced budget. The language applied to state funding for a 2 percent salary increase for two entry-level deputy sheriffs positions, a 4 percent salary increase for the entry level deputy court clerk position, and a 2 percent increase for the next level position.
VACo worked with both chambers to remove the “non-supplanting” language because it mandates that cities and counties have to give the salary increase for these positions even if the locally-funded salary is above what the state will recognize, or forgo the state reimbursement. These targeted salary increases, along with an increase for Assistant Commonwealth’s Attorneys are maintained in both budgets. However, the House moved all targeted salary increases for entry-level deputy sheriffs and entry-level deputy clerks to a revenue reserve fund under Central Appropriations with the stipulation that the increases could be provided on January 1, 2015 (instead of July 1, 2014). Similarly, the House moved all career development program related salary increases for constitutional officers to the reserve fund, while the Senate maintains the increases for treasurers and commissioners, and increases the funding from 23.5 percent to 50 percent for Sheriffs/Regional Jails master deputy program and Assistant Commonwealth’s Attorneys, and added funding for 50 percent participation in the second year for the clerk’s programs.
The Senate provides for a 1 percent salary increase effective December 2014 for all constitutional officers and their employees as well as for state employees. The Senate also provides a one-time 1 percent salary bonus in December 2015 for state employees that do not also apply to constitutional officers and their employees. The House provides for a one-time 2 percent salary bonus on July 1, 2015 for both state employees and constitutional officers and their employees (that did not otherwise receive a targeted salary increase either July 1, 2014 or January 1, 2015). The House bonus is again contingent on meeting revenue estimates.
Behavioral Healthcare / Medicaid
The House adds 50 waiver slots for those with intellectual disabilities to be served in communities and 15 for people with developmental disabilities. These slots would be on top of 700 intellectual disabilities waivers and 50 developmental disabilities waivers proposed in the introduced budget. The House budget proposal also directs that the state Medicaid program coordinate services for additional waivers. The proposal would require the state to develop a plan to coordinate care for all waiver services by July 1, 2016. The Senate amendment states that the Commonwealth is overfunding unmanaged waiver slots, so it would reduce state spending by $15.6 million over two years.
Both bodies had different views on how to handle Medicaid expansion under the Affordable Care Act. The House declined to expand Medicaid. The Senate did not expand Medicaid but chose to address medical coverage of lower income residents through a private insurance marketplace referred to as Marketplace Virginia. The Senate cited that under Marketplace Virginia the state saves $137 million in general funds and would recapture approximately $1.7 billion in federal funds.
Both bodies addressed funding for mental health. The House recommended an additional $48 million for mental health services. Of these funds, $23.7 million would go to state mental health hospitals while $24.3 million would go to community-based mental health services, specifically for 17 new crisis intervention centers. The Senate endorsed funding in the introduced budget that included a mental health package of $38.6 million along with an additional $20 million for community-based services. Both budget proposals would continue the work of the Medicaid Innovation and Reform Commission created last year. The Senate plan would remove requirements that the panel vote to approve Medicaid changes and expansion.
CSA and prevention programs
The Senate provided budget language placing the State Executive Council under the Administrative Process Act. Additionally, the Senate restored $450,000 to the Comprehensive Health Investment Program (CHIP). The House included $700,000 per year of additional funding for Healthy Families while the Senate budget included no increase.
The House budget directs the Secretary of Transportation to report to the General Assembly by December 2014 on ways to provide additional assistance for local projects. The House also includes budget language ensuring that local maintenance funding is distributed in a fair and equitable fashion based on objective measures of need.
The Senate budget includes $4.5 million to improve the rural road network around the new Powhatan State Park.
The Senate budget also directs the Department of Transportation to study possible disparities in paving and maintenance of secondary roads in the Richmond District. The proposed pilot project was prompted by legislation to give Chesterfield County the ability to operate its own secondary road system at the same state reimbursement that Henrico County receives for its roads. The legislation was carried over until next year.
Both bodies’ amendments contain contingency language for planning work on a replacement I-64 high-rise bridge in Chesapeake.
The competing budget bills also aim to appropriate funding for plans related to dredging the Hampton Roads Harbor and Elizabeth River channels to 55-foot and 45-foot depths, respectively.
The Senate and House differ on light rail. The Senate budget amendment includes $10 million to study extension of light rail to Norfolk Naval Station and west up the Peninsula, whereas the House budget does not.
Direct Aid to Public Education – Non-Personal Support Costs
The introduced budget shortchanged state funding for non-personal support costs (utilities, insurance, etc.) by $38 million a year. The House budget does not restore the funding but the Senate budget restores $28.7 million in FY2015 and $30 million in FY2016.
Direct Aid to Public Education – Cost-of-Competing
The introduced budget did not include cost-of-competing adjustments for support personnel in Northern Virginia (cost of $32.4 million a year). The House restores $5.4 million in FY 2015 and specifies no local match is required. The Senate restores $5 million in FY 2015.
Opportunity Educational Institution
The introduced budget included $600,000 for the OEI. The House reduces that amount to $150,000 and the Senate eliminates the entire amount.
Environment and Agriculture
The House provided an additional $31.5 million for the cost/share grant program administered by the Department of Conservation and Recreation for the implementation of agricultural best management practices (BMPs).
The House authorizes the issuance of $38 million in bonds to support the Stormwater Local Assistance Fund (SLAF), which provides grant monies to localities for the installation of urban BMPs to control stormwater runoff. The Senate advances the authorization that was included in the introduced budget in FY2016 to FY2015 for $20 million in bonds to support SLAF.
The House adds $1.5 million each year to the Biofuels Production Fund, which provides grants for producers of “neat” biofuels. Additionally, the House budget reduces by $1 million the amount proposed in the introduced budget for wind energy.
Other items of environmental and agricultural interest contained in the House and Senate budgets are as follows:
• Provides language requiring the Soil and Water Conservation Board (instead of the Department of Conservation and Recreation) to assume responsibility for distributing grant monies from the Natural Resources Commitment Fund (a subfund of the Water Quality Improvement Fund).
• Eliminates $1.13 million in funding each year for “specific dam rehabilitation projects.”
• Language authorizing the Department of Environmental Quality (DEQ) to improve the statewide digital state mapping used by localities for implementation of Watershed Improvement Plans associated with the Chesapeake Bay Total Maximum Daily Load program.
• Provides $4.4 million additional funding for forest firefighting equipment through Virginia’s Master Equipment Lease Program.
• Language that directs the DEQ to conduct a study on stormwater program fees and to report its findings and recommendations to the General Assembly by January 1, 2015.
• Provides $2 million for the Dam Safety Program to address the substantial repairs needed for certain flood control dams maintained by Soil and Water Conservation Districts.
• Language authorizing the Waste Management Board to adjust waste management registration fees to inflation.
• Language authorizing DEQ to use available funding to work with Virginia Geographical Network to support local stormwater programs and manage recurrent coastal flooding.
• Language requiring each locality imposing a stormwater utility fee to submit an annual report to DEQ by October 1 on how fee revenues are utilized.