A digest of news from the General Assembly of interest to local governments
April 19, 2012
Budget | Education | Eminent Domain | Environment | Finance/Taxes | FOIA |
Human Services | Land Use | Local Authority | Personnel | Public Safety |
Retirement/Benefits | Transportation | Miscellaneous
General Assembly OKs most McDonnell
While the General Assembly shot down a handful of amendments submitted by
Gov. Bob McDonnell to legislation passed during the 2012 session, most of the
governor’s recommended changes sailed through on Wednesday.
In addition, the legislature agreed to vetoes of seven bills, including HB 878
(Sickles). This bill would have allowed an increase in the license tax on resident owners
of motor vehicles that do not display Virginia license plates and are otherwise not exempt
from the requirement to display license plates.
The intent of the bill was to encourage people moving into the state to register
their cars in Virginia in order that personal property taxes could be levied. The House
overrode the veto, but the Senate did not. The veto stands.
General Assembly adopts budgets
Governor has 7 days to offer changes
Passage came a day later than scheduled, but the General Assembly on
Wednesday adopted the budget for the next biennium, as well as amendments to the
budget for the remainder of the current fiscal year.
Instead of adjourning the special session on the budget, the legislature recessed,
which should shorten the time before it meets again to consider any gubernatorial
amendments to the spending plans. Once the budgets (HB 1300 and HB 1301) are
enrolled and sent to him, Gov. Bob McDonnell will have seven days in which to send
down amendments. The enrolling process is complicated and could take at least a week.
As a result, the legislature is expected to take up the governor’s amendments the first or
second week in May. Local officials have a very short time in which to forward
comments to the governor about amendments that would like him to make to the budget.
The budget includes many items of interest to local governments, some of which
were bitterly opposed:
At a glance …
Local aid to the state
The General Assembly endorsed the governor’s approach to reduce the amount of
money cities and counties will be required to revert to the state each year. Localities are
currently giving the state $60 million in aid; in FY13 this will be reduced to $50 million,
and to $45 million in FY14. While every little bit helps, the fact remains that local
governments are still propping up the state budget at a time when state revenues are
increasing steadily and revenues remain stagnant in most cities, towns and counties.
VRS: Local retirement rates
The budget adopted by the General Assembly allows political subdivisions to
phase-in employer rates certified by VRS over three biennia. On Monday, VRS e-mailed
local employers explaining that if the amendments are approved by McDonnell, local
employers will have the following options regarding the contribution rate for the defined
benefit retirement plan in the biennium beginning July 1, 2012:
Pay the rate certified by the VRS Board of Trustees for the 2012-2014 biennium
and sent to localities in December 2011; or
Pay either the current rate certified by the VRS Board for FY 2011-2012 or 70
percent of the VRS Board-certified rate for 2013-2014, whichever is higher.
Acting on the assumption that McDonnell will approve these amendments, VRS
also is sending a resolution packet to localities by the end of next week that will confirm
contribution rate options, the rates for group life insurance and the health insurance credit
and a resolution guide.
Rate options by employer for FY13-FY14 and a copy of the budget bill language
(Item 468 H.1) are posted at http://www.varetire.org/Contribution-rates.asp.
VRS: Teacher retirement rates
HB 1301 sets the employer contribution rate for teachers at 11.66 percent for the
The adopted budget adds $112.1 million in additional direct aid in FY13 and
$100.5 million in FY14 over the introduced budget. Earlier today, the Virginia
Department of Education released its memorandum that includes additional information
on required state and local shares by school divisions.
Fines and fees
As local governments feared, the General Assembly agreed to an unprecedented
proposal to seize local fines and fees and keep a portion for the Literary Fund (Items
40#2c, 139#8c, 3-6.04#2c).
Under this plan, all fines and fees from General District Courts, Juvenile and
Domestic Relations District Courts, Combined District Courts, and the Magistrate System
would be deposited directly into the State Treasury. The Auditor of Public Accounts
(APA) would determine those localities in which total fines and fee collections exceed 40
percent of the total collections (the Senate’s original proposal called for 30 percent).
Using the APA’s calculation for FY11, the State Comptroller would deduct half
of the amount in excess of 40 percent from any current payment of local fines and fees
and deposit it into the Literary Fund. Only after that would the state return to local
governments their remaining revenue. The language directs the comptroller to return the
remaining collections monthly.
VML is sending a separate e-mail today to its member local governments about
this issue and the need to immediately act along with the Virginia Sheriffs Association in
asking McDonnell to veto this onerous provision.
Environment: Additional funds for sewage treatment plants
A total of $87.6 million will be deposited into the Water Quality Improvement
Fund (WQIF) for wastewater treatment plant upgrades.
The unfunded commitment that Virginia has made to reimburse local
governments for required sewage treatment plant upgrades is currently $104.4 million
and will continue to grow as local governments install additional pollutant removal
technologies to comply with the EPA-mandated Chesapeake Bay cleanup plan.
Transportation: Use of surplus
The budget uses the FY11 year-end surplus designated for transportation as
$9.9 million to Mass Transit Trust Fund, which provides direct aid to local transit
$28.7 million to initially capitalize the Intercity Passenger Rail Operating and
Capital Fund. The fund was created in 2011 to pay operating and capital costs for
Amtrak intercity regional service. By 2013 the state will be required to cover
$28.7 million to the Virginia Transportation Infrastructure Bank. The bank
provides direct loans to private and governmental entities for the construction and
capital maintenance of the state’s transportation and transit infrastructure.
Effectively restricts a governor from applying more than two-thirds of an
unencumbered year-end surplus for transportation. McDonnell’s transportation
bill (SB 639 / HB 1248) designates up to 100 percent of an unencumbered general
fund surplus for transportation.
Transportation: Long-range planning & road maintenance study
Transportation legislation adopted the last day of the regular session requires all
localities to submit comprehensive plan updates to VDOT for a consistency review with
the state’s Six-Year Plan. Under this requirement, plans that are found inconsistent may
result in the Commonwealth Transportation Board reallocating funds previously allocated
to the non-conforming project. The budget exempts the 83 local governments that own
and maintain their own highways from having funds reallocated from any projects within
their network of roads.
Notably absent in the final budget is language authorizing the Secretary of
Transportation to study the desirability and feasibility of transferring road maintenance
responsibilities to certain counties. McDonnell proposed the study and may amend the
budget to include it.
Line of Duty
There was no change to the provision that requires localities to decide by July 1
whether to participate in the VRS Line of Duty Fund, or to pay for the Line of Duty Act
benefits through some other mechanism (such as participating in a pool or by self-
insuring). The budget allows localities that opt out of the VRS fund to be responsible for
paying their own benefits, thus eliminating one current unnecessary administrative step.
In addition, localities that drop out of the VRS fund will not be responsible for paying
administrative fees to VRS for management of the fund. The State Police, however, will
still determine eligibility and localities will be subject to administrative fees charged by
the state in regards to that process.
Comprehensive Services Act
The General Assembly agreed to restore $2.2 million in each year of the new
biennium for supportive services to CSA children in special education programs.
State salary increases/bonuses
The adopted budget reserves $77.2 million for a one-time 3 percent bonus for
state employees on Dec. 1, 2012.
The budget sets aside $54.7 million from the general fund, which is to be used for
salary increases in the second year, provided there is not a downward revision of the
revenue forecast for FY13 and FY14. The increase would be for a 2 percent salary
increase for state classified employees on July 10, 2013 (at a cost of $39.1 million), and
state-supported local employees on Aug. 1, 2013 (cost of $15.6 million).
Retirement / Benefits
Phase-in of ‘5 for 5’ approved
As expected, the General Assembly approved Gov. Bob McDonnell’s amendment
to allow local governments participating in VRS to phase-in over five years the
requirement that all local employees pay the 5 percent member contribution for
Most local governments now pay that contribution on behalf of their employees.
Under SB 497 (Watkins) as amended, current local employees will have to begin paying
at least 1 percent of the 5 percent contribution beginning this July. Local employers are
required to give an offsetting salary increase. The phase-in must be completed in 2016.
Employees hired on or after July 1, 2012 must immediately pay the 5 percent member
On Monday the Virginia Retirement System sent an e-mail to local employers
saying that additional information on SB 497 would be provided by the end of next week.
Staff contact: Mary Jo Fields, email@example.com
Changes to hybrid retirement plan approved
Gov. Bob McDonnell submitted numerous amendments to the legislation
establishing a hybrid pension plan for many state and local employees hired on or after
Jan. 1, 2014. The General Assembly approved all of the amendments, most of which
were technical in nature.
SB 498 (Watkins) makes sweeping changes to retirement benefits. Benefits for
current retirees are not affected. The most far-reaching change, the creation of the hybrid
plan, does not take effect until Jan. 1, 2014. The hybrid retirement plan will include a
defined benefit component and a defined compensation component for employees hired
after Jan. 1, 2014, except for hazardous duty employees covered under an enhanced
Other provisions of SB 498 apply to state and local employees beginning Jan. 1,
2013. Most of the changes affect employees who are not vested in the system as of that
date. Hazardous duty employees receiving law enforcement benefits are affected by
some, but not all, of the changes.
The bill also requires the state to phase in over three biennia full funding of the
retirement contribution rates certified by VRS for state employees and teachers.
The General Assembly adopted an amendment yesterday that requires localities,
effective Jan. 1, 2014, to either participate in a disability program that VRS will develop
for local government, or to provide comparable benefits on its own.
A VRS comprehensive overview of the legislation is posted on the VML website
Staff contact: Mary Jo Fields, firstname.lastname@example.org
Re-enactment requirement added to substance
abuse grant program
The General Assembly concurred with Gov. Bob McDonnell’s amendment to
postpone implementation of HB 271 (Peace) that would establish a Substance Abuse
Recovery Support Services Grant Program to provide grants to recovery support services
providers. This amendment requires that the bill be re-enacted by the 2013 General
Assembly in order for it to go into effect.
Staff contact: Janet Areson, email@example.com