Economy - Virginia Department of Planning and Budget by yaofenjin


									                            Overview of Budget Actions
                            for the 2002-2004 Biennium

       he slower-than-expected economic recov-        monwealth has little control over, the new
       ery and resulting decline in state revenues    budget “hole” reached more than $2 billion.
       have brought budget challenges to the          This is over and above the $3.8 billion already
Commonwealth. When Governor Mark Warner               addressed in the current Appropriation Act.
took office in January 2002, the budget shortfall
totaled $3.8 billion for the remainder of fiscal
year 2002 and the upcoming 2002-2004 bienni-          October executive reductions

um. Working together, the General Assembly
                                                             aced with these realities, Governor Warn-
and the Governor agreed on a balanced budget
                                                             er took immediate steps to curb state
for the biennium that cut state spending, used
                                                             spending. He imposed strict spending
half of the state's "rainy day" reserve, authorized
                                                      limits on every state agency and college, and
tuition increases at public colleges and universi-
                                                      restricted all new hiring of state employees and
ties, and froze car tax reimbursements.
                                                      consultants. In addition, he called on state
    None of these actions was easy, but they          agencies to prepare three separate proposals to
allowed Virginia to balance the budget and pre-       cut their budgets by seven, 11, and 15 percent.
serve critical state services.                        The Governor and his Cabinet Secretaries care-
    By late spring, it became clear that the econ-    fully reviewed the detailed plans submitted by
omy was continuing to struggle. Corporate             agencies and received input from state legisla-
scandals and the plummeting stock market pre-         tors, local officials, and interest groups.
vented the economic recovery from building at             In October, the Governor directed state
the pace that had been anticipated. Like almost       agencies to begin implementing budget reduc-
every other state, Virginia saw record declines       tion plans that will save $857.7 million over the
in income tax collections. In fact, Virginia saw      next two years. The total includes $725.1 mil-
the largest decline in state revenues in the 40       lion from the general fund (or a 10.4 percent re-
years the Department of Taxation has kept rec-        duction for the biennium) and $132.6 million in
ords.                                                 nongeneral fund reductions (an 11.6 percent
    In the summer, Governor Warner called for         reduction).
a new revenue forecast for the biennium. The              The reductions affected 118 state agencies
Governor’s Advisory Board of Economists and           and institutions of higher education, averaged
the Governor’s Advisory Council for Revenue           close to 11 percent, and ranged up to 15 percent.
Estimates, which include the state's leading          Excluding state colleges, 63 of the 91 state agen-
business executives and economists, advised           cies will have their budgets reduced by the 15
that the economic forecast should be lowered.         percent maximum amount in at least one year.
In August 2002, the Governor reported that Vir-       (By law, the Governor may not unilaterally cut
ginia faced an additional revenue shortfall of        individual agency spending by more than 15
$1.5 billion for the current two-year budget.         percent over appropriated amounts. Anything
Coupled with necessary spending the Com-
                                                                        OVERVIEW OF BUDGET ACTIONS A-1
above that level requires General Assembly ap-            was reduced by 15 percent. The Library of
proval.)                                                  Virginia has closed one day a week, and
                                                          many local libraries are shortening their
    The reduction plans involved the projected
                                                          hours as well. Some state museums are
layoffs of 1,837 full- and part-time state employ-
                                                          closing one additional day a week.
ees, ranging from senior management to entry-
level. These figures do not include the impact           State support for cooperative extension was
on state colleges and universities, whose Boards          reduced by 12 percent a year, eliminating
of Visitors in November approved final reduc-             147 extension agents, faculty, and support
tion plans, but layoffs in higher education may           positions.
numbers in the hundreds.                                 Funding for state colleges was reduced.
    The reduction plans announced in October              Cuts for each college and university vary,
protected from cuts the most critical govern-             based on tuition level and percentage of
ment services such as State Police and local              students from outside Virginia. State assis-
sheriffs, basic state support for public schools,         tance for students who attend private col-
long-term care for the elderly and disabled, and          leges was reduced by 13 percent.
health care for low-income Virginians.                   State support for community mental health,
                                                          mental retardation, and substance abuse
    As they developed their reduction plans,
                                                          services was reduced 10 percent.
many agencies re-examined long-standing prac-
tices and were able to identify savings that actu-       State funding for commissioners of the rev-
ally improved their effectiveness. For example,           enue, treasurers, and circuit court clerks was
the Department of Environmental Quality and               reduced 11 percent, and funding for com-
the Department of Corrections eliminated re-              monwealth's attorneys was reduced seven
dundant management layers, the payroll pro-               percent.
cessing for over 40 agencies was consolidated            Half of the funding designated for mainte-
into a single small unit at the Department of Ac-         nance and roof repair in state facilities has
counts, and mail service for a number of agen-            been eliminated.
cies using the Department of the Treasury was
                                                         Capital grants for local and regional airport
privatized. Contracts were renegotiated in to-
                                                          improvements were reduced 15 percent.
day's economic environment, when companies
are willing to provide significant discounts to          A planned salary increase for public em-
gain the state’s business. The Department of              ployees in fiscal year 2004 was eliminated.
Social Services was able to save more than                More than 140 other programs saw their
$800,000 each year on a single contract.              funding reduced, including soil and water con-
                                                      servation districts, industrial site development,
    However, it was not possible to avoid re-
                                                      workforce training, animal welfare inspections,
ductions that affected direct services for Virgin-
                                                      tourism promotion, ports and harbors, and Area
ians. Reductions implemented in October in-
                                                      Health Education Centers.
clude the following:
                                                          Virginia’s aggressive response to the fiscal
   Every Department of Motor Vehicles (DMV)
                                                      challenges confronting state government ena-
    office across the state has closed one day a
                                                      bled the Commonwealth to retain its coveted
    week, and 12 branch offices closed perma-
                                                      AAA bond rating in October.
    nently. At the same time, DMV has taken
    other steps to help the public gain access to
    its services. State Department of Alcoholic
    Beverage Control (ABC) stores also reduced
    their operating hours.
   State support for local and regional libraries,
    local and state museums, the arts, public
    broadcasting, and instructional television

                                                                    OVERVIEW OF BUDGET ACTIONS A-2
Amendments to the 2002-2004                              measures inspections of equipment used in
                                                         retail food stores, gasoline stations, taxicabs,
biennial budget                                          and vehicle weighing stations. The De-

                                                         partment of Mines, Minerals and Energy
       he budget reductions announced in Octo-
                                                         will increase permit and license fees on gas
       ber resolved only about half of the reve-
                                                         and coal mines and mined land reclamation
       nue gapbudget shortfall. In his proposed
                                                         operations. Most of these permit and license
amendments for the 2002-2004 budget, the Gov-
                                                         fees have not been increased in many years.
ernor recommends other actions necessary to
bring state spending into balance with expected         Making program reductions. Recommend-
revenues. In the face of these challenges, Gov-          ed program reductions impact the
ernor Warner has protected funding for direct            cooperative advertising program in the Vir-
aid to education.                                        ginia Tourism Authority and the reforesta-
                                                         tion program in the Department of Forestry.
    Given the magnitude of the budget shortfall,
a withdrawal will be made from the Revenue              Transferring agency responsibilities to an-
Stabilization fund, consistent with constitutional       other department. The Milk Commission
provisions. Two withdrawals totaling $374.4              will be abolished and its responsibilities re-
million will allow the Commonwealth to ad-               assigned to the Department of Agriculture
dress the immediate needs associated with the            and Consumer Services.
revenue shortfall while transitioning the budget         In addition, the Governor’s recommended
so that it becomes more structurally balanced        budget amendments include the following ac-
over the course of the Hebiennium. At the end        tions:
of 2004, $129.1 million will remain in the fund to
                                                        Generating funds by selling the Virginia
guard against future shortfalls.                         Housing Partnership Revolving Loan Fund
   The Governor also proposes necessary                  portfolio. The sale will be made to the Vir-
spending actions in his recommended amend-               ginia Housing Development Authority,
ments to the budget for the 2002-2004 biennium.          which currently assists in administering the
                                                         fund with the Department of Housing and
   The following summarizes the major pro-
                                                         Community Development. The fund assists
posed amendments in each secretarial area:
                                                         low-income families by providing afforda-
                                                         ble mortgages for both single-family and
Commerce and trade                                       multi-family housing. This policy change
                                                         consolidates the state's affordable housing

I   n the area of commerce and trade, budget re-
    ductions include the following actions:
                                                         programs within the Virginia Housing De-
                                                         velopment Authority, creating greater effi-
    Eliminating or reducing pass-through                ciencies and providing effective opportuni-
     funding and grants. The budget recom-               ties to address low-income housing needs in
     mends reductions in pass-through funding            Virginia. The sale will generate revenue es-
     for the Virginia Advanced Shipbuilding and          timated at $40.8 million for the general fund.
     Carrier Integration Center, Tredegar Na-            Additional proceeds from the sale will be
     tional Civil War Center, equine research,           available to further subsidize mortgage
     and coyote damage control. Affected grant           loans made by the authority in order to as-
     programs include the workforce services             sist lower-income families.
     program for regional partnerships and solar        Providing additional funding for health
     photovoltaic manufacturing incentive                and safety positions. Additional positions
     grants.                                             in the Department of Labor and Industry
    Implementing several fees to replace gen-           will be used to monitor compliance with
     eral fund program support. The Depart-              federal health and safety program stand-
     ment of Agriculture and Consumer Services           ards.
     will begin charging a fee for weights and
                                                                    OVERVIEW OF BUDGET ACTIONS A-3
Education                                                ecutive management support, and capturing
                                                         savings in current programs.
G    overnor Warner’s proposed budget
     amendments fulfill one of his top priorities:
to preserve the current funding for K-12 public
                                                         In addition, the Governor’s recommended
                                                     amendments for education include the follow-
education. His recommendations exempt                ing actions:
Standards of Quality funding from any across-           Enhancing early reading and remediation
the-board or targeted cuts, and provide over             initiatives. The Governor has assessed
$86.9 million in additional support over the bi-         many of the current incentive-based educa-
ennium for public education programs. The                tion programs and now proposes using
additional funding includes $43.0 million to ad-         available resources from some of these pro-
dress significant growth in student enrollment           grams to bolster the state’s early childhood
and $44.6 million in additional Lottery pro-             intervention programs as well as the state’s
ceeds, offset by some technical updates in fund-         support for remediation activities. Specifi-
ing. These additional resources represent the            cally, the Governor establishes a Student
Governor’s commitment to investing in our                Achievement Program using current re-
public education system, its teachers and prin-          sources from dropout prevention, health in-
cipals, and our children.                                centive, and technology assistance activities.
   Recommended reductions in the area of ed-                  This new Achievement Program will fo-
ucation include:                                         cus these resources on established programs
                                                         that data-driven research has shown result
   Reducing funding for the arts. Funding for
                                                         in improved student achievement. These
    grants and administrative personnel at the
                                                         programs include: early reading, at-risk
    Virginia Commission for the Arts will be
                                                         four-year-olds, K-3 class size reduction, and
                                                         SOLtandards of Learning remediation activ-
   Eliminating state support for the Virginia           ities. The Governor’s intent is to provide
    Women’s Institute for Leadership Program.            additional state resources to the students
    This program was originally created to fi-           who need it most. The Governor has in-
    nance female cadets at Mary Baldwin Col-             cluded a waiver process to allow schools to
    lege at a time when the Virginia Military In-        continue dropout prevention, health incen-
    stitute (VMI) did not admit women. VMI               tive, and technology assistance activities if
    began accepting female cadets in 1997, elim-         they can demonstrate the effectiveness of
    inating the purpose for which state funding          their programs.
    was provided. Although this specialized
                                                        Distributing additional Lottery proceeds to
    student financial assistance funding for the
                                                         school divisions. The Governor provides
    Mary Baldwin College cadets is eliminated,
                                                         nearly $44.6 million in additional Lottery
    the students will become eligible for Tuition
                                                         proceeds. School divisions can use this
    Assistance Grants.
                                                         funding to address their most critical needs,
   Reducing state support for the Virginia              including school construction, class-size re-
    Corps of Cadets. General fund support for            duction, and technology improvements.
    operating expenses is currently provided             This is the distribution of additional Lottery
    through Virginia Military InstituteVMI for           proceeds for FY2003 and FY 2004.
    the Virginia Corps of Cadets at Virginia
                                                        Continuing the Governor’s PASS initia-
    Tech and at Mary Baldwin College. Fund-
                                                         tive. The Governor created Partnership for
    ing for the program will be phased out over
                                                         Achieving Successful Schools (PASS) to
    two years.
                                                         provide special attention and assistance to
   Reducing the Department of Education                 Virginia's at-risk schools. PASS has targeted
    operations. The Department of Education              more than 100 academically warned schools
    will achieve savings by streamlining agency          that, due to their struggles with student per-
    operations by reducing staff, eliminating ex-        formance on the Standards of Learning ex-

                                                                   OVERVIEW OF BUDGET ACTIONS A-4
    ams, are to receive enhanced services from          Freezing inflation adjustments for provid-
    visiting academic review teams. Thirty-four          ers. Inpatient hospitals, nursing facilities,
    of these schools have also been designated           and health maintenance organizations rou-
    PASS Priority Schools and will receive addi-         tinely receive an inflation adjustment in the
    tional intervention and follow-up to track           reimbursement rates they charge for provid-
    the progress made by students, teachers,             ing services to Medicaid clients. Maintain-
    and administrators.                                  ing reimbursement rates at 2003 levels will
   Providing enrollment funding and other               save nearly $57 million.
    technical updates. Many of the actions im-           The Governor is also recommending fund-
    pacting K-12 funding are routine technical       ing necessary to respond to important health
    updates to current funding formulas, in-         and human resources priorities, including the
    cluding adjustments to account for student       following:
    enrollment, sales tax, participation in cate-
                                                        Funding Medicaid use and cost of services.
    gorical and incentive-based accounts, and
                                                         Medicaid enrollment continues to grow, as
    the latest inflation information.
                                                         does the cost of the services provided. Med-
                                                         icaid has been one of the fastest-growing
Health and human resources                               programs in the state budget. New funding
                                                         of more than $142 million will ensure that

T   he Department of Medical Assistance Ser-
    vices, which has the largest appropriation of
health and human resources agencies, found the
                                                         quality care is provided to Virginians served
                                                         by the Medicaid program.

most opportunities to achieve programmatic              Improving transportation for Medicaid re-
savings within the secretariat. These reduction          cipients. The Governor recommends nearly
strategies limit any undue impact on health care         $9 million to ensure medically necessary
for needy Virginians. Recommended reduc-                 transportation services for Medicaid clients.
tions in the area of Health and Human Re-               Addressing the needs of Virginians with
sources include the following actions:                   mental illness. The Governor recommends
                                                         additional funding for medications for Vir-
   Streamlining office staffing. Redundancy
                                                         ginians coping with mental illness in the
    in staff roles and functions will be eliminat-
                                                         community. Nearly $4 million is also rec-
    ed at the Department of Social Services in
                                                         ommended to place clients in private psy-
    central and regional offices, thereby promot-
                                                         chiatric beds, so they can avoid being admit-
    ing more efficient operations.
                                                         ted to state hospitals and typically have a
   Implementing savings strategies for medi-            shorter length of stay.
    cations. By establishing a preferred drug
                                                        Stabilizing children in a family setting.
    list, increasing the co-payment on certain
                                                         Foster care and the adoption of special
    medications, requiring prior authorization
                                                         needs children can be further strengthened
    on certain prescriptions, and bringing the
                                                         by providing additional funding to ensure
    pharmacy dispensing fee in line with com-
                                                         that these children will quickly move into
    mercial insurers, Virginia will save over $17
                                                         permanent home environments. The Gov-
    million in 2004.
                                                         ernor recommends nearly $7 million to en-
   Using other funding streams in appropri-             sure that the state fulfills its obligation to
    ate programs. Federal funds, such as Tem-            these children in need.
    porary Assistance for Needy Families
                                                        Restructuring mental health services. An
    (TANF) and block grants, will substitute for
                                                         estimated $13 million in facility-based men-
    general fund support for certain programs
                                                         tal health services will be restructured and
    in the Virginia Department of Health. The
                                                         reinvested in community-based care.
    state will also take advantage of other ongo-
    ing state revenue sources, such as fees.            Improvinge access to healthcare. Nearly
                                                         $30 million from the general fund and a like

                                                                    OVERVIEW OF BUDGET ACTIONS A-5
     amount of matching federal funds is includ-          Plantation Farm Foundation will be merged
     ed in special payments to soften the impact          into other agencies. The Science Museum of
     of reimbursement rate freezes, thereby im-           Virginia will assume the Museum of Natu-
     proving access to health care for low-income         ral History’s responsibilities of housing an-
     Virginians. Payments would be made to                imal and earth science samples and provid-
     hospitals, nursing homes, and health                 ing public exhibits and publications. The
     maintenance organizations that serve as sole         Department of Conservation and Recreation
     community providers or serve a large pro-            will take over the Chippokes Plantation
     portion of Medicaid clients or clients of the        Farm Foundation’s responsibilities of man-
     Family Access to Medical Insurance Security          aging the Chippokes Farm and Forestry
     Plan.                                                Museum.
                                                          In addition to these reductions, the Gover-
Natural resources                                     nor recommends that the Marine Resources
                                                      Commission begin to collect previously as-

I   n the area of natural resources, recommended
    reductions include the following actions:
                                                      sessed royalties and continue the assessment
                                                      and collection of royalties for habitat encroach-
    Reducing general fund support for various        ment and the use of state-owned bottomland.
     nonpoint source pollution reduction pro-         This action will generate additional revenue for
     grams. Affected programs include devel-          the Commonwealth.
     opment of total maximum daily load plans,
     the implementation of local tributary strate-
                                                      Public safety
     gies, and the Conservation Reserve En-

     hancement Program.
     Replacing general fund program support           F  or public safety agencies, the Governor’s
                                                         recommended amendments include the fol-
                                                      lowing reductions:
     with increased fees. The Marine Resources
     Commission will increase fees on certain            Reducing the operating budget of the State
     fishing licenses.                                    Police. The recommended budget reduces
    Eliminating or reducing pass-through                 the operating budget of the Department of
     funding and grants. Proposed reductions              State Police by five percent, primarily
     affect pass-through funding for Soil and             through administrative and programmatic
     Water Conservation Districts and the Vir-            efficiencies. In consultation with the super-
     ginia Outdoors Foundation, grants under              intendent of State Police, the Governor is as-
     the Threatened Sites program, and Litter             sured that there will be no reduction in the
     Control and Recycling Fund grants to locali-         number of troopers patrolling Virginia’s
     ties and citizen water quality monitoring            highways or responding to emergencies.
     grants.                                              Over the past year, the number of vacant
                                                          trooper positions has been cut almost in
    Reducing agency operations. The proposed
                                                          half, from 120 to 64.
     reductions affect a select number of state
     parks and natural areas, and the natural her-       Reducing the general fund appropriation
     itage stewardship program. The Marine Re-            for operating costs at local detention cen-
     sources Commission will reduce general               ters. The opening of the expansion of the
     fund support for the marine police, and the          Virginia Beach Juvenile Detention center
     Department of Historic Resources will close          will be delayed until 2005 and therefore
     a branch office. In addition, layoffs will oc-       funds for start-up and equipment will not
     cur and branch offices will be closed at the         be needed until then.
     Museum of Natural History.                          Reducing wage employees in ABC stores.
    Merging certain agencies’ responsibilities           The hours worked by part time employees
     with other departments. The Virginia Mu-             at the Department of Alcoholic Beverage
     seum of Natural History and Chippokes                Control (ABC) stores can be decreased, re-

                                                                    OVERVIEW OF BUDGET ACTIONS A-6
    ducing operating costs while not impacting           the sales, estimated at $3.2 million, will be
    sales. The cost savings generated by this ac-        deposited into the general fund.
    tion will enhance ABC profits to the general        Implementing new DUI fee to support
    fund.                                                breath alcohol program. The Governor
    In addition to these reductions, the Gover-          proposes to charge a new fee of $100 to per-
nor’s recommended amendments include the                 sons convicted of driving under the influ-
following actions for Public Safety agencies:            ence (DUI). The revenues from this fee will
                                                         be used to support the Department of Crim-
   Replacing out-of-state inmate revenue.
                                                         inal Justice Services’ breath alcohol pro-
    Additional funding is provided to the De-
                                                         gram, with any surplus revenues deposited
    partment of Corrections to offset a decrease
                                                         to the general fund. The funds that present-
    in the amount of revenue the state projects it
                                                         ly support the breath alcohol program pro-
    will receive for housing inmates from other
                                                         vided by the Department of Alcoholic Bev-
    states and the federal government. This in-
                                                         erage Control (ABC) can be transferred to
    crease will enable the agency to continue its
                                                         the general fund to support other state sub-
    operations without closing any prisons.
                                                         stance abuse treatment programs.
   Developing re-entry program. To help in-
    mates make a smoother transition into the
    community, additional funding and posi-          Technology

    tions are provided to initiate a new program         o begin implementation of the new infor-
    between the state’s Department of Correc-            mation technology strategic plan, the Gov-
    tions and local jails. Jails will be asked to    ernor proposes a major restructuring of the
    participate in this pilot program. Instead of    technology secretariat. An integral part of this
    being released directly from a prison upon       plan is the establishment of the Virginia Infor-
    the completion of their sentences, inmates in    mation Technologies Agency. The agency will
    this program will be transferred to a jail in    assume the core functions of the Department of
    their home communities about three months        Information Technology, the Department of
    prior to their release. After participating in   Technology Planning, and the Virginia Infor-
    transition programs, they will be put in the     mation Network Providers Authority. The de-
    work release program, and will receive fol-      centralized information technology operations
    low-up counseling upon release from the          of all Executive Department agencies, other than
    jail. . This will free up prison space and al-   institutions of higher education, will also be
    low local jails to transfer state-responsible    consolidated and the new agency will provide
    prisoners sooner.                                direct technology support to these agencies.
   Providinge additional operating funds at
                                                         The Governor expects a savings of about
    Culpeper Juvenile Correctional Center. To
                                                     $37.4 million resulting from improved utiliza-
    meet the new operational plan of housing
                                                     tion of the state’s information technology assets.
    female juveniles at the Culpeper Juvenile
                                                     Of this amount, $23.4 million will be transferred
    Correctional Center, additional operating
                                                     to the general fund and the remaining $14.0 mil-
    funds are recommended.
                                                     lion is recommended to cover separation and
   Selling staff houses. The Department of          start-up costs associated with the consolidation
    Corrections has moved away from a policy         and to fund the following cost saving initiatives:
    requiring wardens and assistant wardens to
    live within 15 minutes of the prison where          Centralized network management. The
    they work. With this policy change, the              Governor proposes a redesign of the state’s
    agency no longer needs to help provide               computer networks. Improved network
    housing to these employees. The recom-               management will simplify users’ access.
    mended budget directs the agency to sell the         The net savings from this initiative is ex-
    residences it owns outside the boundaries of         pected to increase in the future.
    correctional facilities. All the proceeds from

                                                                    OVERVIEW OF BUDGET ACTIONS A-7
   Help desk consolidation. The Governor               provided by the Department of Motor Vehi-
    recommends that the Commonwealth estab-             cles, the department will expand its use of
    lish a consolidated help desk to improve            licensed agents. This will include utilizing
    services to state agencies and reduce costs.        local Treasurers and Commissioners of the
   License consolidation. The Governor pro-            Revenue as licensed agents. In addition, the
    poses centralizing the available price infor-       department will provide more automated
    mation on computer software, hardware,              terminals at its offices to allow on-line
    and services. Consolidation of contracts and        transactions by customers, and employ rov-
    improved management of both software li-            ing teams in vans to administer driver’s li-
    censes and maintenance services will gener-         cense tests in rural areas.
    ate cost savings.                                  Adjusting transportation revenue. Tech-
                                                        nical adjustments were made within all of
Transportation                                          the transportation agencies to reflect the
                                                        most recent revenue estimates. Appropria-
I n the area of transportation, the Governor’s
  recommended reductions include the follow-
ing actions:
                                                        tion levels presently listed in the budget
                                                        were based on optimistic revenue assump-
                                                        tions. Revised transportation revenue esti-
   Discontinuing consultant contract for               mates, made in the spring, were more con-
    statewide asset management program. The             servative to reflect the current economic
    Department of Transportation’s Inventory            conditions. Given this, the transportation
    and Condition Assessment System (ICAS)              agencies were operating on a budget that ac-
    project was intended to define and develop          tually had less funding than what was noted
    a methodology for recording the inventory           in the Appropriation Act.
    of the department’s transportation infra-
                                                            The most recent transportation esti-
    structure assets with condition ratings. The
                                                        mates, though, have shown an increase over
    department will generate savings by not
                                                        the Springspring forecast. However, the in-
    continuing the contract to capture asset in-
                                                        crease is still less than what is in the Appro-
    ventory data statewide beyond Phase I.
                                                        priation Act. To present an accurate por-
   Eliminating sheet metal shop, carpentry             trayal of the current transportation revenue
    shop, and automotive shop. The Depart-              estimates and to account for General As-
    ment of Transportation will eliminate dupli-        sembly actions, appropriate appropriation
    cative shop activities that are already per-        adjustments were made for all transporta-
    formed by another agency under contract.            tion modes.
   Reducing funding for the traffic manage-
    ment system. The Department of Transpor-        General government
    tation will eliminate funding for the opera-
    tions of its traffic management system.
    Funding needed to allow continued opera-
                                                    R   eductions included in the Governor’s
                                                        amendments in the area of administration
                                                    and finance include:
    tions will be provided from other existing
    sources.                                           Transferring certain agencies’ responsibili-
   Using turnover and vacancy savings. The             ties to other departments. The Commission
    Department of Transportation will eliminate         on Local Government, the Human Rights
    100 vacant positions over the biennium.             Council, and the Virginia Liaison Office are
                                                        to be abolished and their responsibilities re-
    In addition to these reductions, the Gover-         assigned to other state agencies. The Com-
nor’s recommended amendments in the area of             mission on Local Government’s responsibili-
transportation include the following:                   ties to assist local governments analyze
   Enhancing the availability of Department            annexation proposals and the impact of
    of Motor Vehicles services. To help the             state legislation on local governments will
    public gain greater access to the services          be transferred to the Department of Housing

                                                                   OVERVIEW OF BUDGET ACTIONS A-8
    and Community Development. The Human                  reviews architectural, mechanical, and safe-
    Rights Council’s responsibilities to investi-         ty specifications for the state’s building ren-
    gate allegations of discrimination in em-             ovation and construction program. The
    ployment, housing, and public accommoda-              Governor proposes permitting this bureau
    tion will be reassigned to the Office of the          to charge state agencies and institutions of
    Attorney General.                                     higher education a fee for its services.
         The Virginia Liaison Office’s responsibil-      Reduction in rentReducing rent plan ser-
    ities to coordinate on federal issues, resolve        vices. Savings will result from lower rental
    state-federal administrative problems, and            rates for state agencies served by the De-
    provide information on significant federal            partment of General Services (DGS) in the
    regulations and legislation to state and local        Capitol Square area. DGS will reduce ser-
    officials will be transferred to the Governor’s       vices to these agencies.
    Office. In addition, the Virginia Public             Supporting the Charitable Gaming Com-
    Broadcasting Board’s responsibilities to allo-        mission with general fund dollars. The
    cate state funding for public broadcasting,           Charitable Gaming Commission oversees
    instructional television for K-12 students,           raffles and bingo games permitted to raise
    and radio reading services for print-                 money for charitable purposes. This action
    handicapped Virginians are being consoli-             proposes to support the commission’s work
    dated into the Office of the Secretary of Ad-         from the general fund. All of the agency’s
    ministration.                                         fee income will subsequently be deposited
   Reducing aid to localities distributions for          to the general fund.
    alcoholic beverage control profits and wine          Useing Criminal Injuries Compensation
    taxes. These distributions will be reduced            Fund monies for Line of Duty Act pay-
    by 25 percent in 2003 and 50 percent in 2004          ments. The payments will cover death and
    as a result of an increase in the amounts             health insurance benefits under the Line of
    transferred to the general fund for expenses          Duty Act. The Act provides for payments to
    incurred for the care, treatment, study, and          surviving spouses and dependents of cer-
    rehabilitation of alcoholics by the Depart-           tain public safety officers killed in the line of
    ment of Mental Health, Mental Retardation             duty and for certain public safety officers
    and Substance Abuse Services and other                disabled in the line of duty, and the spouses
    state agencies.                                       and dependents of such disabled officers.
   Reducing funding to sheriffs. The Com-                In addition to these reductions, the Gover-
    pensation Board will reduce by five percent       nor’s recommended budget also includes the
    over the biennium the funding it provides to      following spending amendments and technical
    local sheriffs. The reduction should result in    adjustments:
    no layoffs of the sheriffs’ law enforcement
                                                         Initiating a new tax compliance effort, a tax
    personnel that are funded by the state.
                                                          amnesty program, and a federal debt setoff
   Restoring funds for commonwealth’s at-                program. These programs will increase tax-
    torneys. An increase in the amount of the             payer compliance and enhance equitable
    fee collected for the Intensified Drug En-            application of the law to help assure the
    forcement Jurisdiction Fund of one dollar,            Commonwealth receives taxes that are
    from $2 to $3, has been included in order to          owed. The biennial cost of these programs
    decrease the October 15 reduction in the              is $12.4 million from the general fund.
    commonwealth attorney's offices from seven            Through these programs, revenues associat-
    percent to five percent -- in keeping with the        ed with the general fund will increase by
    reductions in the sheriffs’ offices.                  $58.5 million. Localities and the Transporta-
   Converting the Bureau of Capital Outlay               tion Trust Fund will also receive increased
    Management into an internal service fund.             revenues as a result of these programs.
    The Bureau of Capital Outlay Management

                                                                     OVERVIEW OF BUDGET ACTIONS A-9
   Continuing Personal Property Tax relief.         torneys for indigent defendants in criminal cas-
    Car tax reimbursements to local govern-          es. The latest forecast of anticipated future costs
    ments will continue at the existing level of     of the Criminal Fund identified the need for the
    70 percent. Additional funding is required       additional funding.
    due to an increase in new car purchases and
    higher assessed values on used vehicles.
   Providing for increased state employee
    health insurance premiums. Additional
    funding is recommended to cover the em-
    ployer share of a premium increase in state
                                                     T   aking advantage of the downturn in the
                                                         economy nationwide and the resulting
                                                     availability of low long-term interest rates, the
    employee health insurance resulting from         amended budget uses debt financing to fund
    the rising costs of medical claims such as       capital projects. These projects will maintain
    prescriptions.                                   existing state facilities and provide new facilities
   Providing funding for local and regional         to meet the growing demand of the citizens of
    jail per diem payments. Based on the most        the Commonwealth. The use of debt financing
    recent inmate forecasts, additional state        will supplant $86.6 million in general fund ap-
    funding is provided to local and regional        propriations.
    jails for housing local and state responsible         The amended budget includes $90.0 million
    inmates.                                         in capital projects funded by the Virginia Public
   Providing funding for increases in insur-        Building Authority. Of this amount, $27.9 mil-
    ance premiums for constitutional officers.       lion is debt financing for previously funded pro-
    Additional funding is provided to offset ad-     jects. The remaining $61.1 million funds new
    ditional costs for general liability insurance   projects or supplements to existing projects, in-
    for sheriffs, commonwealth’s attorneys,          cluding $54.5 million for the renovation of Vir-
    treasurers, commissioners of the revenue,        ginia’s State Capitol. Originally constructed
    regional jail superintendents, and clerks of     between 1785 and 1788, the State Capitol houses
    the circuit court.                               the oldest legislative assembly in the Western
   Providinge for increases in state agency         Hemisphere. The funds provided for this pro-
    property insurance. The premiums paid by         ject will be used to replace obsolete mechanical,
    state agencies for property insurance will       electrical, and plumbing systems, correct struc-
    increase due to recent world events, and         tural deficiencies due to more than 200 years of
    additional funding is recommended to cov-        wear and tear, and restore the building’s interi-
    er these costs.                                  or finishes.
   Providinge funding for debt service on               The amended budget also includes $63.9
    supplanted general fund projects. The            million in state-supported projects funded by
    debt service for interest and principal pay-     the Virginia College Building Authority
    ments will increase because some capital         (VCBA). Of this amount, $58.6 million is debt
    projects that were funded from the general       financing for previously funded projects. The
    fund will now be funded from bonds.              remaining $5.3 million funds new projects or
                                                     supplements to existing projects.
Judicial                                                 In addition to the state-supported VCBA

I n the judicial area, the Governor recommends       debt, the amended budget includes $99.8 mil-
  an increase in funds for criminal indigent de-     lion in self-supporting projects to be funded
fense. Additional funds are provided to pay the      from revenue bonds permitted under Article X,
court costs of low-income persons. The Crimi-        Section 9(d) of the state constitution. Of the
nal Fund is a descriptive title for the various      amount for 9(d) projects, $49.7 million repre-
statutes that require the payment of court costs     sents new spending and the remaining $50.1
and allowances. The major expenditure in this        million provides supplements to projects ap-
fund is for the services of court-appointed at-      proved in the 2002 general obligation bond act.

                                                                  OVERVIEW OF BUDGET ACTIONS A-10
The recommendations also include $10.5 million
in self-supporting 9(c) revenue bonds for reno-
vations to housing facilities at Longwood Uni-

                                                  OVERVIEW OF BUDGET ACTIONS A-11

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