Giesen Perspective

A Brief Update on Negotiations on The Commonwealth” 2006-2008 Budget

DATE: Thursday, June 01, 2006

The Start of the Hurricane Season

The National Weather Bureau has declared today the start of the 2006 Hurricane Season. As most of you know, in Virginia the swirling winds caused by the hot air coming from the budget negotiators at the General Assembly Building have already stirred some mini-hurricanes here in Richmond. Early in the week it looked like the political rhetoric had subsided and progress was being made. My May 24th G.P. indicated this.

The winds have settled down some, but there is still the possibility of storm brewing. The House conferees are balking about the Senate’s insistence that General Funds be used to plan some “…strategic, badly needed capital improvements for higher education institutions, some mental health facilities and other projects for some other agencies.” The House’s position is these planning monies “…will commit the state to build these facilities in the future and thus cost untold billions in General Funds in future years.”

The Senators argue that it is a good business practice to do A & E planning and develop schematic drawings so a more adequate estimate of the cost of a project can be determined. Then the Senators stress, a better decision can be reached as to the cost effectiveness of the project according to the mission of the particular agency or institution requesting the capital expenditure.

That’s the present stalemate.

CONDUCTING THE NEGOTIATIONS

With the disagreement over how to handle these capital expenditures (there is still some effort on the part of a couple House Conferees to build “badly needed projects” with bonds) the conferees have for the past two days been meeting together sporadically. Then they go back to their own floors (the Senator to the 10th floor of the GAB and the Delegates to the 9th floor) and confer with their own. On two occasions Chairman of the House Appropriations Committee, Vince Callahan, has written his counterpart, John Chichester, Chairman of the Senate Finance Committee rather pointed acrimonious letters about the Senators’ position. Naturally, John had to respond in kind. Let me quickly add I have not been privy to any of this correspondence and have only heard about it from members of each negotiating group describing the letter from the other floor.

You should remember there are only about 15 steps between the two floors and the doors into the hall ways on each floor have had the locks removed so access from one floor to the other is relatively simple. Maybe these kinds of letters have been exchanged in previous budget negotiations between the two legislative bodies, but I am not aware of this type of behavior in the past.

Despite these “hot air letters” being sent back and forth between the floors, the staffs of both committees claim the winds have settled considerably and they do not anticipate any hurricane being stirred up this weekend. Some are even looking forward to having some time off before the final push next week.

The Senate, as of four o’clock this afternoon, had sent another capital expenditure proposal down to the 9th floor. All of the negotiators were in the Chairman’s office watching the National Spelling Bee on TV. Of the fifteen plus words presented to the 12 to 14 year olds in the finals, not one of us observers knew one of them. The young participants correctly spelled all but two of those words presented.

After watching these young people in action, one Senator remarked, “Why doesn’t this type of action by our youth get more publicity? This is the good side of younger population, not the shootings and traffic accidents you read about in the papers.” This observation seemed right on the money.

Another comment from a staff person suggested that the negotiators could use part of the spelling bee format to solve their dilemma. Each capital project would be submitted to all the conferees at the same time and if no decision was agreed to within the time limitation then that item would revert back to the introduced budget and the conferees would move on to the next item. Since the Democrat Governor introduced the original budget, these Republican legislators might reach agreements in a more timely fashion! With this process, the amount of wind and the number of letters might both be reduced. OK, so it wouldn’t work, but at least staff is trying to come up with new ideas to decrease the provincialism and acrimoniousness presently being exhibited.

The bottom line is still, the pressure is on and there will be a budget by next Friday. This is my fearless prediction!

Notes from Pete.....

June 5, 2006

After Friday's "one up-mans-ship" the Friday June 9 prediction is, I am very afraid, out the window. The Senators are angry, you might say "very angry!" They claim the House is playing "dirty pool."

The House claims the Senate knows we want $800 million set aside for "transportation capital expenditures!"

The Senate counters--you committed to taking up the transportation issue AFTER we passed the two year budget AND we have it in writing. So here we go again.

The conferees are not likely to meet until Thursday. Today there was no meeting scheduled. Tomorrow there will be caucuses and meetings of the full Senate and House while they debate the two amendments that the Governor put on the Caboose Budget bill. There is no announced meeting of the budget negotiators. It may be a good day for the Governor to get these guys together again in his office or the mansion. Will he do so? Frankly, I don't know. Of course there may not be much time. It is my understanding that the Governor, Senator Chichester and Delegate Vince Callahan are leaving about 3:30 pm on the state plane for their trip to the Big Apple to confer, and report to the Bonding Rating Agencies, and the business executives in NYC.

Fun and Games!

Pete

June 6, 2006

All, After some usual House vs Senate wrangling, Your General Assembly passed HB 5012 (The Caboose Budget Bill).

The House took an unusual step in rejecting the Governor's amendment (concerning the demolition of the 8th Street office building) as being "not specific nor severable" there by allowing the bill to be sent back to the Appropriations Committee for consideration. By this action the House avoided voting on the Governor's line veto on the reduction in the appropriation for the Richmond Arts Center. It also allowed the Committee to amend the bill to have an extra $31 million for the car tax relief. Localities have worked to collect delinquent accounts and have exceeded the forecasts for this item as developed by the Dept. of Taxation. This insures all localities will be fully reimbursed for the taxes paid on accounts back tax years.

This under estimation came to light through the Secretary of Finance's office and the amendment was recommended by her in a letter to the money committee chairmen.

The House also adopted another recommendation of the Secretary to increase the revenue estimate for FY 2006 by $105,000,000. This would obviously go to the bottom line since no new appropriation items would be considered. It would then flow to the carry forward for the 2006-2008 biennium budget. The Senate rejected this amendment. The Senate Conferees had already considered a reforecast amount of $128 million in its deliberations of HB 5002 (the 2006-2008 budget bill.

Under hard questioning from some Democrats, Delegate Phil Hamilton admitted these funds would be used in the negotiations on the biennial budget regardless in which budget bill they were included. Phil was handling this bill on the floor because its patron, Delegate Vince Callahan had already left for NYC along with Senator Chichester and His Excellency, Governor Tim Kaine. To talk to the bonding agencies tomorrow in the Big Apple.

The House finally accepted the Senate's amendments on a 63-16 vote. Note by the end of the day only 31 Senators and 79 Delegates were still present at the Patrick Henry Building.

One side light, the Administration personnel were not worried by the rejection of the Governor's veto. He has another shot at the bill before he has to sign it. (He has seven days to act!)

The Governor also had a "call in press conference at 3:15 this afternoon." It was only for the press so yours truly was told when I tried to get into the conference room where the media had gathered. Sources tell me I didn't miss anything since the Governor only stressed that he had the constitutional responsibility to keep the state government functioning, despite what the AG might think. He did, so I understand, have one strong comment, stating emphatically that, "... he was certain the writers of the Virginia Constitution did not intend for one branch of government to be able to suck the blood out of the other two branches by inaction!"

He also stressed the Assembly should get its work done. He noted the conferees had told him they would have a budget by this Friday and he expected them to keep their word.

Maybe the conferees heard about this. Those that were left in Richmond (9 of the 11--only the chairmen were missing) started meeting as soon as the two houses adjourned. The two bodies return at noon next Tuesday.

Pete

June 7, 2006

All, The budget conferees have surprised me again. I predicted they would not meet until tomorrow when their respective chairmen returned from their trip to NYC with the Governor. Even with out Vince and John the other conferees have been meeting. They held an extended session after the other legislators went home last evening (the session adjourned at about 4:46pm) and the negotiators started their meeting about 5:15, so I am told.

Eight of them (in addition to the chairmen, Kirk Cox had to teach this morning) were back at it this morning, took a two hour break for lunch then were joined by Kirk and went back into executive session. It is my understanding, that they are expected to be joined by Vince and John after their return at about 5pm this evening. Also, the Speaker arrived at the GAB at about 1:46pm this afternoon. He's not a conferee, but I guess he's interested in what they are doing!

Only intelligence I could obtain is there have been some small steps forward on capital outlay considerations. No specifics. Except they have not tackled the most recent "suggestion by the House that $800 million be set aside for transportation capital." Maybe they'll take that up when the chairmen return.

Side bar on the effect of these protracted negotiations. Betsey Daley, Exec. Dir. of the Sen. Fin. Comm., had scheduled the family vacation at the beach this week! Her husband, son & friend, and Sister and family are enjoying the sun and she's enduring the heat of the conferees discussing money.

Pete

June 8, 2006

All, The good news is the conferees are still meeting. The bad news is they are making very little progress.

The main section of the budget on which they have been concentrating for the past week and a half is the capital outlay. According to a reliable source last Friday they were nearly in agreement (as noted earlier there were only about 20 projects out of over 250 on which they still had some differences). Then came the $800 million bomb shell from the House. So the Senators went home. Since starting to meet again on Tuesday, there have been “ups and downs” but on the core capital outlays they now seems to be just a little further apart than they were last Friday.

As I understand it, twice today some of the Senators tried to bring up the $800 million for transportation, and the Delegates balk at discussing that, “…at this time.” So they keep making a step forward and then two back, and then another couple of steps forward and then one back. “Up and down, up and down” as one observer put it. Still they are talking and meeting face to face. They are even walking up and down the 15 steps between the 9th and 10th floors of the GAB.

Last night the conferees and staff members left the GAB at about 9:27pm and returned this morning at 8:30. They have been trying for some common ground all day. Most of the staff members feel it’s going to be another “late night.”

Another side bar that indicates they will go into the evening is the action of Kirk Cox who coaches his 12 year olds baseball team. He had his wife pick up all of the equipment from his van in the “gravel parking lot” around 4pm this afternoon. He told her not to expect him home early. Since Kirk is teaching in the morning then coming to the GAB for the negotiating sessions, he’s beginning to look a little weary!

Keep tuned.

Pete

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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.