Giesen Perspective

The Giesen Perspective—The Budgets March on!

DATE: Friday, February 27, 2006

THE BUDGETS

The Appropriations Acts are about ready for the “negotiation phase” of the 2006 General Assembly. The budgets—HB 29 and 30 in the House side and SB 29 and 30 in the Senate—were all passed on Thursday. The deliberations became much more traditional than other earlier activities which we discussed last week. You may remember that on Crossover day the House of Delegates just did not do as tradition would have dictated it should have done. On the budget bills, however, their procedures got back to more normal deliberations.

The Senate only took a little over one hour to pass both of its bills, while the House members held true to form and took about six hours. Both the Senate Finance and the House Appropriations Committees had given “briefings for the members” on the contents of their respective bills on Wednesday and Thursday. This has become “standard operating procedure” for the staffs of the committees in an attempt to lessen the number of questions and amendments during the floor debates.

The Senators only had one objection to the overall budget and then took only about 10 minutes to resolve that before voting 39-1 to pass the bill as presented by the Finance Committee. The one “no” vote was a procedural one in case a reconsideration was required. It was cast by a member of the Finance Committee by a prearranged choice.

In the House, the Appropriations Committee stuck together as it generally does. Thus there were some of the Democrat members who supported HB 30 since they had a hand in crafting it. On the 69-30 vote all of the no votes came from Democrats, most of who were opposed to the transportation package that was included in the bill.

Let me give you a bit of history. “In the old days” of the Byrd Machine politics in Virginia, the Appropriations Committee had the responsibility for the budget bill as introduced by the Governor. There was no duplicate budget bill in the Senate. So the big debate on the budget took place in the House. Now you understand the Appropriations Committee held its hearings and questioned the agency heads and others in open committee session. But then when it started to discuss possible amendments to the Appropriations Act (which, of course, only members of the committee had proposed), the committee members always voted to go into “executive session.” The bill was then reported and the members who were not on the “powerful appropriations committee” had to scramble to determine what was and wasn’t in the reported bill. On the day the full House deliberated on the budget bill, there were literally hundreds of amendments offered by members. The “special order” to consider the budget bill usually started at 8 am and frequently lasted until the wee hours of the next morning. And to think the size of the budget was only about $1 billion at that time.

OK, enough reflection on the past. This was just to give you some idea of how things have changed. The one thing that hasn’t changed -- - rarely is an amendment offered on the floor of either house to the budget bill adopted.

Now back to the present and the marching saga of the 2006 budget deliberations.

The bills have now been communicated to the other end of the Patrick Henry Building. (Ordinarily I would have said the capitol, but as you may remember from past Giesen Perspectives, this year the Assembly is meeting in the temporary quarters of the old State Library now fondly referred to as the Patrick Henry Building.) The procedure is to have each house amend the other’s bills to look like their own. Of course, these substitute bills will be rejected and a conference will be set up. This should happen by the middle of next week and the official negotiations can begin.

The Size Of The Budget Bills.

In the reported budget bills, there are presently no summaries on the expenditure side. Thus it is difficult to determine exactly how far the two bodies are apart in total without adding up each item. Most lobbyists and advocacy groups are concentrating on their particular area of interest. However, one can get some idea of the magnitude of the problem facing the “negotiators” on the budget from the figures given for the revenue side of the ledger.

	Governor’s Introduced Budget Dec. 16, ’05	Senate’s Version February 23	House’s version February 23
First Year
Gen. Fund	$17,423,260,542	$17,570,982,166	$18,046,923,164
Non GF	21,264,047,872	22,213,941,991	21,632,693,854
Totals	$38,687,308,414	$39,784,924,157	$39,679,617,018
Second Year
Gen. Fund	$16,995,988,103	$16,894,120,508	$16,907,823,324
Non GF	18,396,146,387	19,275,331,516	18,750,833,477
Totals	$35,392,134,490	$36,169,452,024	$35,658,656,801

Total for 06-08
Gen. Fund	$34,419,248,645	$34,465,102,674	$34,954,746,488
Non GF	39,660,194,259	41,489,273,507	40,383,527,331
Totals	$74,079,442,904	$75,954,376,181	$75,338,273,819

Remember these revenue figures include some transfers from one agency to another and estimated balances carried forward from the 2004-2006 biennial appropriations. For instance in the non-general funds (NGFs) there is a carry forward in the first year of $2,538,258,284. This represents funds on hand that are already committed to projects such as highway contracts and construction underway on college campuses.

Considering all factors, the Governor and the House budgets both contain about $72 billion in expenditures; the Senate version of the budget takes into consideration its increase in special dedicated sustainable tax revenues for transportation and shows expenditures totaling $73.3 billion. It is interesting to me that the media has been talking about a $74 billion budget ever since the Governor introduced his version on Dec. 19, 2005. This did give it a bigger boost from the $63 billion ’04-’06 budget. Maybe the budget is just getting too big for 20 second sound bites or short news stories. Heck, it’s getting too complicated to report even in my wordy Giesen Perspectives!

You can see the differences, however, even in the revenue picture. The House used larger estimates of GF revenue than did the Senate. Both show lower revenues in the second year. The entire bond proceeds in each budget and the unreserved balances are calculated in the first year. So the first year revenue is normally larger than the second. Over all, there is still over a $1.3 billion difference between the Senate and the House versions. The successful negotiations will depend on whether they can reconcile their differences over the transportation issues.

Transportation

Both budgets contain the transportation plans developed by the house of origin. Thus what happens to the various pieces of transportation legislation may be academic. Nonetheless, the capital watchers are following them. The House has a number of bills dealing with their three step approach to solving the transportation crises. Three of those have passed the full Senate and one was passed out of committee Thursday. These are the bills that give the state greater flexibility in partnering with the private sector and local governments to build transportation facilities primarily roads. Others are for the Assembly to gain more oversight over the transportation agencies and create greater accountability for these agencies. The bill dealing with raising abusive driver fines and fees is still in Senate Finance Committee.

In the meantime, the comprehensive package developed by the Senate is contained in one bill—SB 708. A Subcommittee of the House Finance Committee heard the bill Friday morning and then took an unexpected action. Most of the “experts” on the General Assembly actions felt the committee would kill the bill. In fact, reliable information had it that the house Republican leadership had recommended this action. The subcommittee instead after some comments by a couple of influential members, tabled the measure “so that it can remain in play and we can have all of the possible actions on the table.” Who knows there may be room for some compromises yet? Reliable pundits say watch for more action on the bill Tuesday before full Committee.

NEGOTIATIONS?

After saying this about the possibility of some compromises on the transportation issue, the reality of the rather strong feelings on both sides comes to mind. One Senator, for instance, observed, “… the group steering the House’s transportation stance is like the captain of the Titanic. We know there is danger ahead (for our economic well being and the safety of our people) but we’ve been told this ship is unsinkable and we believe it!” Then there is the comment of the House Appropriations Committee Chairman that, “…the cumulative effect of Virginia’s growing economy means that what started out as $1.8 billion in new revenue growth now appears to be closer to $4.9 billion over the biennium, or 275% greater than the original biennial forecast.” Remember the $4.9 figure to which Vince refers is the total anticipated revenue in ’06-’08 above that originally forecasted for ’04-06. The tax increases enacted in ’04 did not become effective until half way through the ’04-‘06 biennium. So you would expect the revenue to be greater for the up coming biennium. There is also the unreserved balance in the GFs of $1.4 billion which has been collected in ’04-’06 due to our exceptional economy. The debate is whether this economic expansion will continue. If it doesn’t what happens to the transportation funding which the House is drawing from General Funds?

The conclusion of the House members has, of course, been, “…with growth like that who needs a tax increase? If the growth happens to be in a different part of the budget, so what? We’ll shift it around and use it where the emergency happens to be?”

This could be a longer than expected session. A very unscientific survey of members from both parties (the House and the Senate) indicates to me there is a fast growing feeling they ain’t going home by March 11.

STUDIES OR GUNS?

One closing thought -- The National Rifle Association (NRA) has been a very strong force in this session of the General Assembly. (As if it hasn’t in sessions past?) There has been more than- the-usual number of “gun bills.” Some of them would take away the authorities of local governments and educational institutions to control the carrying or use of guns in their jurisdictions. Others would expand the rights of people to use guns in most every situation you could imagine – or even not imagine!

The mind set of the legislators on the issue of the right to own and use guns can best be judged by a comment to me by a rather influential “rural” delegate. We were riding up the elevator together and since I knew this person was on the House Rules Committee and that committee was about to meet to decide on all of the Senate Study Resolutions, I inquired, “Are you heading to Rules?” “Eventually,” came the reply, “but first I have to go to Militia and Police, after all guns come before studies!” Now, this was said in a tongue-in-cheek manner. But, you know, maybe there’s a message in the comment?

Links to Previous Giesen Perspectives:

Arthur R. Giesen, Jr., fondly known as Pete, served in the Virginia House of Delegates for over 30 years. He represented the citizens of the Central Shenandoah Valley surviving four different district realignments. During his career he represented Augusta, Bath, Highland and part of Rockingham County and the Cities of Staunton and Waynesboro.

Following his career as an elected official, Pete assisted Lt. Governor John H. Hager as his Chief of Staff.

Pete now keeps an eye on Virginia government and assists many clients with his unique perspective on the workings of the Virginia General Assembly and its relationship with the other branches of state government.