April 16th, 2020

The Avoli Report

Governor Northam has proposed numerous amendments to the State Budget as well as some of the bills passed by the General Assembly in light of the COVID-19 crisis. When we reconvene next Wednesday, April 22, we will consider his suggested changes. I’ll highlight the most significant proposals below.

Budget Bills:

HB 29: The 2020 budget bill has 37 amendments, mostly dealing with providing authority and flexibility to address the current crisis, such as:

• Provisions to move the May 5 local elections to November. This move would result in the destruction of thousands of ballots already cast for the upcoming elections. Piling this into the budget bill is a way to circumvent the Governor’s powers as enumerated in the Constitution of the Commonwealth. The Constitution states that elections for Mayor and City Council will be held in May unless changed locally by ordinance of the locality per its charter. The Governor has the authority to move May elections by no more than 14 days by Executive Order.
• Provisions for public bodies to meet electronically when circumstances related to an emergency make it impractical to meet in a single location, when the purpose of meeting is to discuss or transact the business statutorily required or necessary to continue operations (see Language)
• Language to authorize temporary borrowing to ensure liquidity (see Language)—The Treasury Board would be authorized to borrow $500 million for the State, and another $250 million for the benefit of counties, cities and towns. Localities also would be authorized, in addition to current authorities, to borrow funds to help manage the cash flow impact of actual or potential reductions of tax and other revenues or increases in expenses related to COVID-19.
• Provisions to allow the Superintendent of Public Instruction to grant temporary flexibility or waivers for certain deadlines and requirements that cannot be met due to the state of emergency or school closures, and to waive required local effort (RLE) and local match requirements for FY20 (this also was done for FY21).
• Temporary flexibility for the Department of Social Services to make immediate changes to program eligibility and enrollment.

On the money side of things, the biggest savings proposed by governor in his FY20 amendments comes by deferring a voluntary deposit of $602 million to the revenue reserve fund. He also proposes to increase funding for the Department of Emergency Management and other affected agencies by over $55 million, and also is recommending $50 million to provide funds for unbudgeted expenses related to COVID-19, including any state match that may be required to secure federal assistance.

HB 30: There are 144 total amendments to the FY21 and FY22 budget bill. 49 of these amendments are language-based to add flexibility like HB 29. All-in-all, 83 amendments to HB 30 put a hold on increases in new, discretionary spending until we can assess the General Fund revenue shortfall caused by the economic effects of COVID-19. Because it is too soon to accurately reforecast revenues for the upcoming biennium, these amendments freeze over $2 billion in spending for the FY21-FY22 biennium for until we can accurately assess the new revenue picture. How do these amendments affect us locally? Funding for the following areas has been “unallotted,” or put on hold by the Governor’s amendments:

• Additional compensation for state and state-supported local employees ($264.8 million over the biennium).
• Salary increases for SOQ-funded teachers and support personnel ($287.2 million over the biennium).
• At risk students ($61.3 million).
• Increasing the number of K-12 school counselors ($21.7 million in FY21 and $28.4 million in FY22).
• State Aid to Localities with Police Departments ($8.6 million each year).
• Virginia Telecommunications Initiative ($16 million each year).
• Virginia Housing Trust Fund ($23 million each year).
• Fund local departments of social services prevention services ($30 million over the biennium).
• Permanent support housing funding ($25.5 million over the biennium).
• Supplemental deposit to the Water Quality Improvement Fund ($25.4 million in FY22).
• Permitting functions in DEWQ ($18.1 million).
• Land Conservation Fund ($5.5 million each year).
• Staffing in Commonwealth’s Attorneys offices ($2.8 million over the biennium).
• Planning District Commissions ($294,00 each year).
• Aid to local libraries ($1 million each year).
• Training funds for Children’s Services Act ($50,000 each year).

The amendments changing language in HB 30 impact local governments as follows:

• Delaying the issuance of a report on the study of collective bargaining for state employees one year, until November 1, 2021.
• Allowing the existing transportation Six-Year Improvement Program, approved in June of 2019, to remain in effect through June 30, 2021, or until a new program can be adopted based on updated revenue forecasts reflecting the impact of COVID-19.
• Allowing DHCD to waive or eliminate the match requirement for certain homeless prevention funds (current match is 25%). DHCD may use its allocation of Housing Trust Fund awards to address both homelessness assistance and other housing issues.
• Restoring language giving DMV the authority to apply a $10 surcharge on processing applications for REAL ID driver’s licenses. This language was inadvertently removed during the development of the biennial budget. Without this surcharge, the DMV would be unable to support additional personnel hired to issue the REAL ID credentials.
• Providing authority for the governor to appropriate COVID-19 related federal funding.
• Authorizing the governor to appropriate any revenues deposited to the COVID-19 Relief Fund. Such appropriations shall be used for the purposes of responding to the impacts of the COVID-19.
• Providing authority for the governor to withhold and “unallot” more than 15% of any amounts appropriated in order to address an imbalance between projected state general fund revenues and appropriations that is the result of increased spending and/or the loss of revenue due to the COVID-19.

Amendments to Legislation passed by the General Assembly:

Equal Revenue Authority: The legislature approved a pair of bills (HB 785 and SB 588) to provide additional revenue authority for local governments. The governor has proposed several amendments, the most significant of which would delay, until May 1, 2021, implementation of approved changes to the transient occupancy tax (which would allow them up to 5% in any county that has not already received legislative approval).

Collective Bargaining: The governor proposes to delay the effective date of the local option collective bargaining bills (HB 582 and SB 939) until May 1, 2021.

Minimum Wage: HB 395  and SB 7 provided for an increase in the minimum wage beginning next January. The governor proposes to delay such increase until May 1, 2021.

Omnibus Transportation Bills: HB 1414 and SB 890 are the omnibus transportation bills. The governor proposes several technical changes, but one change appears to decrease the distribution of recordation taxes to $20 million effective this July, rather than the decrease taking effective July 1, 2021, as contained in the approved bills.

Illegal Gaming/COVID Relief Fund: As passed, HB 881 and SB 971  prohibit the playing or offering for play of any skill game, by including them in the definition of “illegal gambling. The governor proposes to delay the prohibition by one year, and to create a COVID-19 Relief Fund, with moneys remaining in the Fund at the end of the fiscal year to be used by the Governor solely for responding to the State’s needs related to COVID-19.

Elections: The General Assembly passed SB 740 to each require county and city precinct to be wholly contained within a single congressional district, Senate district, House of Delegates district, and local election district. The governor proposes to allow the use of existing districts if the State does not establish new districts by June 15 in the pertinent year.
Also, SB 316, as passed by the legislature, would change the date of June primary elections from the second to third Tuesday in June. The governor’s amendment stipulates that the legislation be enacted again next year in order to take effect.

Local Firearms Regulation: HB 421  and SB 35 will allow localities to regulate firearms in public buildings, parks, recreation centers, and during permitted events. Proposed amendments clarify the exemption for activities at institutions of higher education.

Casino Gambling/School Construction: HB 4 and SB 36, as passed, allow five economically-distressed ciites to hold a referendum for city residents to decide if they want to allow casinos in their jurisdiction. The governor proposed an amendment to  assign the state’s portion of new tax monies on gambling revenues to fund public school construction, renovations and upgrades.

Procurement: HB 358 and SB 182, as passed, authorize public bodies, when engaged in procuring products or services or letting contracts for construction, manufacture, maintenance, or operation of public works, to require bidders to enter into or adhere to project labor agreements on the projects. The governor proposes to delay the effective date of the bills until May 1, 2021.

Peer-to-Peer Rentals: SB 735, as approved by the legislature, provided a framework for the operation and taxation of peer-to-peer vehicle rentals. The governor proposes to delay the effective date of the various tax provisions included in the bill by three months, until October 1. The Department of Taxation will likely be developing guidelines to implement the bill’s provisions.

Robots: SB 758 , as passed, revises existing definitions to allow “personal delivery devices” weighing up to 500 pounds and authorizing them to operate on sidewalks. Neither a locality nor the State may prohibit their use, but may adopt requirements to maintain safety for such roadway operation. The governor proposes an amendment that requires such devices to yield the right-of-way to pedestrians.

The General Assembly reconvenes next Wednesday, April 22 to consider Northam’s proposals. The House and Senate can vote only to either accept or reject each of the Governor’s proposals. No more amendments can be proposed by either body and a simple majority in each chamber will prevail. Both chambers must accept a recommendation for it to be approved and passed into law. While the Senate plans to meet at the Science Museum of Virginia, we in the House are unsure exactly where we will be meeting, although we are expecting to meet in an outdoor venue.

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