As most of you “interested persons” know that Virginia’s General Assembly only took one extra day in its “regular session” to complete the Commonwealth’s business this year. Thus, late on Sunday the fourteenth of March, all of the legislators headed back to their districts where they could tell their constituents they passed a “balanced” budget, closed a $4.2 billion shortfall in revenue, and didn’t raise any taxes!
Yet, the budgetary process isn’t completed. The Governor has until April 12 to study what the Budget Conferees did to his predecessor’s introduced budget, to evaluate which of his recommended changes they adopted, and what kinds of mischief they played with revenue estimates, fees and cuts to various state agencies. On the second Tuesday in April (the twelfth) Governor McDonnell will send any amendments or line item veto’s he might recommend to the Clerks of the two houses for distribution to the members. The Assemblymen will return to Richmond for their scheduled one-day reconvened session - often referred to as the “veto override session” - on Wednesday, April 21.
The fact this session of the GA was only extended one extra day is a tribute to the push given by the leadership of both houses to the conferees “to compromise so we don’t have to go into an extra week.” While the legislators don’t like to admit it, the pressure from the Governor’s office and his meetings with the conferees as well as the leadership from both parties helped move the process along. Once the budget is introduced, it does become the province of the legislative branch, but the formal and informal powers of the executive branch cannot be underestimated.
There is a rather oft quoted comment by a New York judge in a 1866 judicial opinion which declares, “No man’s life, liberty, or property are safe while the legislature is in session.” So now that your legislature has adjourned sine die you can relax for the rest of the year; OR, maybe, for only part of the year - see below.
Let me give you just a little history on the “tightness” of the final legislative day to finalize the budget.
There were “thirteen conferees” - remember the Chairman of the Senate Finance Committee (SFC) Chuck Colgan, D-Manassas, indicated he would rely on the Senate Minority Leader, Tommy Norment, R-Williamsburg, to help with the budget negotiations. Although Norment was only officially on the Conference Committee for HB 29 (the Caboose Budget for FY2010), reliable sources indicated he sat in on most of the discussions on HB 30 (the 2010-2012 Appropriations Act). A side note: this “insertion” made the Conference Committee an interesting mix of four House Republicans, one House Democrat, one House Independent, four Senate Democrats, and three Senate Republicans, all of them with reasonably strong personalities! It is a tribute to the chairmen of the House Appropriations Committee (HAC) and the SFC that this group ever reached enough compromises to have a Conference Report on the HB 30, and only one day late!
The negotiators finally reached their last compromise (on the education cuts, as I understand it) about 1:30 a.m. on Sunday (the 14th). The Staffs of both money committees then did an “all-nighter.” When the conferees and staff members met with the “rank and file” members at 3 p.m. Sunday afternoon, the pass-outs telling the actions of the conferees were still literally “hot off the press.” The Senate had one meeting for all of its members AND the public. The House Conferees briefed the Delegates gathered in their two caucuses.  In this day and time, the caucus meetings are normally held in “executive session.” Such was the case on the 14th so most of the lobbyists and interested citizens could listen to the Senate version of the reports.
The Conferees met the major goals of the two legislative committees - a balanced budget, the reinstatement of the $950 million per year reimbursement to the localities for the car tax, and no “tax” increase. The method of making up the $1.9 billion required by putting back the money for the NO CAR TAX that Gov. Kaine had deleted; reversing some other “cuts” he had made; and, including the extra money for economic development requested by the new Republican Governor, was a mixture of some new revenue, some “fee” increases (although less than proposed by Kaine), and some expectations of new funds from the federal government.
In brief:
The new revenue-official increase in anticipated General Fund tax for the biennium…………$118,000,000.
Conference amendments - proposed by the Senate-extra interest income…………$36,100,000.
Expected lower use of Land Preservation Tax Credits…………$42,200,000
The new fees - Conferees agreed on nine different increases for…………$95,416,939.
(Kaine’s introduced budget had a total of $145 million in new fees and the Senate version of the budget, $330 million)
K-12 Reductions by conferees, net (over and above cuts made by Kaine)…………$250,000,000.
Health and Human Resources …………$360,200,000.
(Anticipate these net cuts will largely be mitigated by the receipt of $370.4 million in enhanced Federal Medical Assistance Percentage (FMAP), requiring less of state GF match)
VRS adjustments for contributions to all programs - Total approximately $905,800,000.
(The media has reported the contribution rates were adjusted to saved the GF $621 million. These computations do not include other VRS programs which are being ‘underfunded’ by this budget-such as Other Post Employee Benefits (OPEB), the Virginia Sickness & Disability Program (VSDP), and the State Employee Health Insurance Program (VEHIP).)
Across the board reductions in aid to localities…………$120,000,000.
(My colleague, Eldon James, refers to it as “local aide to the Commonwealth.” The conferees restored $75,664,938 to the various Constitutional Officers that the introduced budget had deleted, however, these are not “local” government agencies.)
Higher Education reductions, net…………$40,500,000.
(Three major items: $10.0 million from State Council of Higher Education; $14.4 million from a $5 per credit hour charge to out-of-state students to offset debt service on academic buildings; and a $10.0 cut in The Tuition Assistance Grant programs.)
Capital Outlay-savings from project planning, Maintenance reserve and debt service…………$46,600,000.
State Corporation Commission transfers from NGF…………$20,000,000.
The Legislative Branch-transfers and savings…………$14,557,796.
The Judicial Branch - actions by the Judicial Dept., deferring the filling of vacant judgeships, reverting judicial balances, reducing expenditures for court appointed counsel for misdemeanor cases, and general savings within the system…………$45,560,480
Total net from these areas…………$2,094,935,215.
There were other smaller “savings-cuts” in other agencies but those listed above are the “biggies.” Some other agencies, such as those in the Public Safety area had funds “restored” from the cuts which were made in the introduced budget. For instance, sheriffs and regional jails had $98.6 million restored from the $108.9 million reduction recommended by Governor Kaine. Among other benefits these funds will allow sheriffs throughout the state to maintain a ratio of 1 deputy to every 1500 population in that particular county. The sheriff’s association had argued this ratio is necessary to give citizens the proper protection, particularly in the counties with a larger land area and a small relative population.
All of the restoration of funds for the constitutional officers “to meet their urgent needs” shows how the legislators perceive those needs and perhaps, just perhaps, show the political clout these locally elected officials have in the political arenas around the state.
One could go on and on about the budget and the changes made by the conferees.
The actual amendments are now up on the General Assembly web page and any individual budget item in which you might be interested can be accessed through use of your computer and the internet. That, of course, assumes you are more of a computer whiz than yours truly. After all, I’m a true member of the “paper generation!”
According to “reliable source,” one of the last sticky issues to be resolved by the conferees was the “attack” on the contributions to the Virginia Retirement System. Finally, the House conferees gave in to their Senate counterparts who threatened to extend the session for “weeks” if there wasn’t a “payback plan” included in the budget. The plan which finally evolved is that the “contribution shortfall” in this budget will be repaid starting in FY 2013 (the second year of the next biennium) and will be completed in ten years.
The repayments will be added to the “normal pay back scheduled for each FY in the ten year period. The paybacks will include a 7.5% interest rate which is the average return which VRS has realized on its investments over the last twenty years.
Several observations about this “direction” to the current Governor for his preparation of the 2012-1014 budget and to the 2012 session of the General Assembly for its enactment of an Appropriations Act for that biennium.
First, this amendment is strictly “advisory for future budgets.” Every General Assembly is legally an entity unto itself. One GA cannot absolutely bind a future Assembly with its legislation. There may even be a constitutional question about this type of provision in the Budget Bill. The Senators on the Conference Committee with their years of experience are (I hope) fully aware of this point of constitutional law. They are also aware, however, now that such a payback principle is firmly stated in the adopted Appropriations Act future governors and assemblies will have a difficult time changing the basic concept. The public and the bond rating agencies will also “keep the pressure on” to see that these conditions are met.
Future legislatures might tweak the particulars, changing the amount to be “paid back” each year or the rate of interest to be included. Even these will certainly be resisted by the Senate. If any of the current Senators are still active on future Conference Committees, they will probably fight “like tigers” to meet these commitments.
Second, let’s look at what this does to future “commitments” from the General Fund. In FY 2013, the amount that must be set aside for this “extra payback contribution to VRS” over and above the normal rate will be about $157.5 million. $90.0 million of this sum is for the payback and $67.5 million for interest. This calculation assumes the total “short changing of VRS” is included in the commitment for repayment and not just the actual retirement contributions. (VRS has to cover all of its programs, you know.) With the same type of calculation, the payback would be 10% of the remaining principle or $81.0 million and interest of $60.755 million or a total for the biennium of $299,255,000.
Can you consider how this “committed drain” on the GF will impact other agencies? The potential extra funding to replace the rather drastic cuts that certain agencies have taken in the last three years will be heavily compromised. Services will have to continue to be curtailed. An additional strain will be placed on the possibility of strong contributions to the Rainy Day Fund since any possible surplus over the forecasted revenue will be “committed to payback this year’s short changing of the state’s contribution to the VRS!”
The other question which must be considered - What are the prospects of sufficient growth in the next biennium to make it possible to meet the projected revenue increases in this budget - approximately a growth of 3.5% in FY 2011 and 4% in FY 2012? If these growth rates are actually achieved in the state’s revenue collections, can they be sustained into the 2012-2014 biennial budget period? There are some optimistic signs but the federal government keeps going deeper and deeper in debt and putting more and more regulations on the private sector which is going to be a drag on our national economy in the near future. How this will spill over into Virginia remains to be seen but it is bound to have an impact.
The years ahead are going to be very tough ones for those constructing a budget for our Commonwealth and those who have to implement it. The payback to the VRS will just make it tougher on the future budget architects!
There are strong “rumors” that Governor McDonnell is considering three different issues on which to recall the legislators to Richmond for special session of your GA.  The Governor has indicated he will seek to fulfill campaign promises by appointed commissions relating to job creations, government reform and higher education. From these commissions he hopes to get recommendations that he can take to the General Assembly in special sessions later this year.
On his primary objective of creating more jobs in Virginia, the budget conferees gave him $46 million of the $50 million he requested. Lt. Gov. Bill Bolling will be the Chief Jobs Person in this endeavor. It is very probable the structure to promote Virginia in a number of areas to attract new businesses to the state and to help local firms grow is already in place. A commission would develop “new ideas and new strategies” but it is my guess that most of them will not need new legislation. If they do, this is one area where the Governor will be able to gain consensus and any needed special session would be short.
A government reform commission to “go through the state government sort of top to bottom” will not be a new endeavor. It has been done a number of times since Governor Harry Byrd did it in 1927. Linwood Holton’s commission came up with the cabinet system which the General Assembly then passed (the margin of victory in the House was 51-49 as I recall it) and Doug Wilder’s recommended the privatization of the ABC system (does that sound familiar?). Any suggestions from a commission for state government reform will obviously be more contentious than “job creation.” Regardless of the difficulty of accomplishing this, the stated objective is to have the commissions report in time for a September special session. This may be easier said than done. We shall see.
The Governor’s goal for his Higher Education Commission is for it to devise ways that the state educational institutions can issue an additional 100,000 degrees over the next 15 years. The deliberation of this commission may take a little move time than most think. This is an ambitious goal. It will take some deep discussions to come up with such a plan that can be enacted by your General Assembly which is going to be strapped for funds for the next several biennia.
This is on the “back burner” although the Secretary of Transportation, Sean Connaughton, is “gathering information.” The Governor has clearly stated he will not call a special session on this topic until he is reasonably assured of a consensus for any plan he might put forward.
Since the beginning of the 2010 session of your General Assembly, the House has been operating with 99 members. (Remember that song you use to sing on the school bus “Ninety-nine bottles of beer on the wall?” OK, maybe we just did that in the mountains of Virginia!) With all that has taken place, you may not remember that Democrat David W. Marsden from the 41st House District (part of Fairfax County around Burke and Springfield) ran and won the January 12 special election to fill the seat in the 37th State Senate District. Attorney General-elect Ken Cuccinelli had finally resigned from his seat in the Senate in early December. Because of the timing of the resignation and the special election, Marsden didn’t resign his seat in the House until after the State Senate Special Election, thus pushing the special election to fill the seat for the 41st House District to this past Tuesday, March 2nd.
For the second time since the November elections, the Democrat candidate eked out a win in a “swing district” in NOVA, Northern Virginia, that is. Marsden won the 37th State Senate race with 11,943 votes (50.6%). The newest Delegate, Eileen R. Filler-Corn, garnered 5,758 votes in Tuesday’s election. That number gave her a 37 vote margin over the Republican candidate, Kerry Bolognese. Fifty and one tenth of one percent of the vote is close but still a WIN! Eileen was shown in as a full fledged Delegate on Wednesday, March 3rd.
It would appear the Republican Party of Virginia was not flush enough to back their candidate as sufficiently as did the Democrats. Kerry spent $72,957 in his bid for election with $52,302 of this amount coming from the Republican Party of VA. On the other side of the aisle, Eileen received $126,018 from the Democrat Party of VA and another $26,437 from Democrat House Caucus. Her total expenditures amounted to $297,555  So on a per-vote received basis, the winner spent about $52 and the loser $13! I bet the Republican Party wishes maybe it had dug a little deeper. This shows how important every vote is, and, especially in special election, how important a good “get out the vote” effort is.
When the House of Delegates passed a series of “pro-gun bills,” the Richmond Free Press had an interesting headline. This headline went something like “WILD WEST RETURNS.” It went on to describe some of the bills which had easily cleared the full House after being heartily endorsed by the House Committee on Militia, Police and Public Safety. The bills did such things as repeal the “one-hand-gun a month” statute which has been in Virginia’s code since the 1990s; make it an “affirmative defense” to the charge of illegally carrying a firearm, and showing the charging officer a concealed weapon permit and a photo ID; prohibit any “person, property owner, tenant, employer, or business entity” from having rules which would prohibit a person who may lawfully possess a firearm from storing that firearm in a locked glove compartment or a locked gun rack in a motor vehicle parked in a parking lot set aside for motor vehicles; and, have a study to develop legislation to allow the State Police to issue lifetime concealed weapon permits.
The Senate Courts of Justice Committee’s Chairman, Henry Marsh, D-Richmond, appointed a Special Subcommittee to review and act upon all of the “gun bills.” This Special Subcommittee was loaded with urban members of the committee. Senator Toddy Puller, D-Fairfax County; Louise Lucas, D-Portsmouth; Janet Howell, D-Fairfax County; himself; and the “token” Republican, Fred Quayle, R-Suffolk. The fine guiding hand of the Majority Floor Leader, “Dick” Saslaw, D-Fairfax County, could be readily seen in this method of handling these pieces of legislation (which the Senate Democrat leadership didn’t want to come before the full committee or the full Senate for fear they might just pass).
The Governor and the Republican leaders in the House immediately called “foul” since few bills are sent to Special Subcommittees with the authority to act decisively on the bills assigned to them.  Generally, subcommittees only “recommended” specific action on a bill to the full committee. Saslaw countered pointing out the use of subcommittees in the House to kill a multitude of legislation over the years.
Of course, the House members maintain that this isn’t true. Subcommittees in the House simply make “recommendations” to the full committee for their actions! The problem is most capitol lobbyists can’t remember when a House full committee overturned a subcommittee’s recommendation on an important piece of legislation.
It is also true that a few decades ago the Speaker of the House A. L. Philpott sent pro-gun bills to the old Militia and Police Committee, which was considered “a minor committee.” “Minor committees” only had fifteen members. As I remember, all of us except maybe one or two were from “rural” districts where owning guns was (and still is) sort-of a way of life. Strangely enough almost all of the pro-gun bills passed that committee and the anti-gun bills were “shot down.” (The pun is intended!) When a “special subcommittee” was needed for a particular piece of legislation, one-third to half of the members made up the “subcommittee.”
One such subcommittee did pass some creative legislation under the leadership of the subcommittee’s chairman, Delegate C. Richard Cranwell, D-Vinton. A number of bills were introduced in 1986 to restrict the sale of guns in Virginia. At a boisterous evening public hearing on the bills it became evident to most of us on the subcommittee that something really needed to be done. The opposing sides were sent off to meet together with the State Police and instructed to work out some kind of criminal check when a gun was being purchased.
The next day at the reconvened meeting of the subcommittee, the “instant criminal check” for the purchase of a gun in Virginia was formulated. Funding was provided the State Police to set up the system. Two of us on the subcommittee just happened to also be on the Appropriations Committee. Thus, Virginia became one of the first, if not the first, states to have “instant criminal checks” for the purchase of a gun, reducing the sale of guns to persons with criminal records in the state. Of course, to get the bill past the full House, gun shows had to be exempt from the process.
These types of “you all get together and work out a solution” directives aren’t quite as prevalent as they use to be.
You may have read about the happening I’m about to relate in a previous GP. Nevertheless, at this stage of the 2010 Session of your General Assembly (GA) it is worth repeating.
It was in the wee hours of Sunday morning (the clock in the House Chambers had been stopped at 11:59 pm, so technically it was still Saturday and the last day of the 1964 GA was still in session) and all of the House Members (89 Democrats and 11 Republicans) were anxiously awaiting word from the Senate on their reactions to the latest version of the one amendment to the Appropriations Act that was still in “disagreement.” This was the report of the fourth “conference committee” on this particular item in the budget bill. The House had already approved the report unanimously.
The Senate Majority Leader finally appeared at the entrance to the House Chambers. The Doorkeeper solemnly announced, “Mr. Speek’a, a message from the Senate.” The Senator was recognized and reported to the House, “The Senate has rejected the report of the Conference Committee (a loud chorus of groans) and requests another Conference Committee be appointed to resolve the disagreement on the amendment to HB 30!”
Another Conference Committee was appointed and reported a few minutes later. The Senate, apparently with little debate, quickly reported its “unanimous acceptance of the Conference Committee’s report!” Practically all forty expectant senators lined the back wall of the House Chambers as the chief House conferee, the Majority Whip for the House Democrats, reported on the Committee’s report and recommended the House reject the report (even though one very tired House member had agreed to the report!)
A recorded vote was taken.
As the Senators watched, 100 red lights appeared on the voting board.
As the Senators filed out of the Chamber, the Minority Floor Leader, M. Caldwell Butler, R-Roanoke, rose and requested the floor.
The Speaker, E. Blackburn “Blackie” Moore, D-Winchester, asked, “For what reason does the gentleman rise?” “A point of personal privilege,” came the response. “The Gentleman has the floor.” The Speaker hesitantly stated.
“Mr. Speaker and fellow delegates,” intoned the Roanoke delegate, as the nervous majority listened intently, the Republican Floor Leader, raised his voice noticeably for emphases and stressed, “We are now witnessing the true two-party system of Virginia, The House vs. The Senate.” All hundred delegates laughed and applauded in agreement.
It did appear the final legislative day might be extended into the following week, but the Democrat Governor got concerned, summoned the next conference committee (all Democrats, of course) and the Democrat Leadership from both houses to his “third floor office” and “brokered” a workable compromise before the sun came up on Sunday.
Fast forward to the last scheduled week of the 2010 General Assembly, and we find this version of the two-party system still healthy and working extremely well. The political party membership of the “Budget Conferees” is different and the Governor is of a different party, but the results are the same — The House vs. The Senate. Five Republicans and one Democrat from the House and four Democrats and two Republicans from the Senate (with a third Republican Senator in the wings) are “negotiating on the disagreements between the two versions of the Appropriations Act.” Both sides remain adamant about how the spending of the Commonwealth for the next two years should be handled.
In the 45 years since Caldwell Butler labeled this the “real two-party system of Virginia” (I am not sure this categorization originated with Caldwell but that was the first time yours truly had heard it), the “power and influence” of Virginia’s Governor’s office has been curtailed considerably by the GA. This “reduction in influence” is showing itself in a rather practical way in the present budget deliberations.
The current Governor, Republican McDonnell, is trying to “broker” a solution to the different versions of the 2010-2012 budgets. He had the Conferees over for breakfast at the Mansion on Monday, March 1, in hopes of getting “a more comfortable working relationship between the members of the Conference Committee.” Little progress appeared to be made in the early part of last week.
So His Excellency made a call to the chairmen of the two conference groups (Del. Lacey Putney, I-Bedford, and Senator “Chuck” Colgan, D-Manassas) and invited them up to his office for a 4pm meeting on Wednesday, March 3. Both chairmen informed the Governor that they would be happy to come to such a meeting IF he invited ALL of the members of the Conference Committee!
At that meeting, it is reliably reported, the Governor “encouraged the conferees” to compromise and come to agreements concerning the budget by the scheduled date for the first report of the conference committee (midnight, Tuesday, March 9). Let me assure you that time is going to come and go and the conferees will probably still be “discussing the revenue estimates for the next two years” without any movement toward resolving the spending disagreements.
Reactions to the Governor trying to get a budget agreement within the scheduled time frame of this GA session have been generally applauded by the Republican “rank-and-file” members. The longer serving members of the GA from both parties, however, are stressing that the budget is “now the responsibility of the legislature, not the executive branch!”
Interesting discussions are occurring in the legislative halls as lobbyist speculate whether the conferees can come to agreement by this Saturday and the scheduled conclusion of the 2010 Session of the GA. The Chairmen of the two conferring groups are keeping an optimistic public front. “It can be done and we are working to make certain it does,” both Putney and Colgan are stressing to the media. However, this prospect of completing on time is not shared with some of the other members of the “two-parties.”
The state Sheriff’s Association organized a “press conference” Tuesday morning (March 9) with Sheriff’s from across the Commonwealth in attendance at the Capitol. Senator Janet Howell, D-Fairfax (Reston area), was one of the principal speakers. She is probably the representative from the Senate Conferees who will “negotiate” the Public Safety portion of the budget with her House counterpart once the “revenue” package is agreed upon. In addition, Senator Tommy Norment, R-Williamsburg, a key player in the negotiations (by invitation of Chairman, “Chuck” Colgan) also spoke to the assembled constitutionally-based Sheriffs. Also present at the presentation were Senators Ralph Northam, D-Norfolk (6th district includes the Eastern Shore), and Jeff McWaters, R-Va. Beach (won the 8th District seat in the special 1/12/10 election to replace Ken Stolle, elected Sheriff of VA Beach), along with now-Sheriff Ken Stolle, a prominent member of the group supporting the comments of Janet Howell and Tommy Norment.
The Sheriffs were holding the press conference to support the revenue enhancers in the Senate version of the budget (SB 30). Some of these new “fees” are designated to help the restoration of funding removed by Kaine’s introduced budget for constitutional officers, particularly for Sheriffs and Regional Jails. The House version of the budget does not have any of these fees included and hence, while HB 30 did restore some funding for the constitutional officers, the Sheriff’s Association would much prefer SB 30.
Senator Norment gave the assembled Sheriff’s the clue on how to promote their objective. He reported that when these particular items were discussed with some of the House conferees the Senators were told the Delegates had received no “push back” from the constitutional officers on their version of the budget. So, the Senate Minority Whip exhorted the law enforcement officers to “advocate, advocate” to the House conferees and to the Delegates who represent your area to support the Senate’s position on your budgets.
There is no question that Senators Howell and Norment are going to be very strong advocates for the Senate’s position on the “Compensation Board” portion of the budget.
In response to this part of the voice of the Senate conferees, some of the House Conferees are saying, “The Senators just want to use unrealistic revenue projections and increases in ‘fees-re taxes’ to fund all of their pet projects. We’re just not going to give into that kind of reckless spending!”
Will the budget deliberations be done by Saturday, March 13th? It is possible, but in the opinion of yours truly, very unlikely. The Session will have to be extended a couple of days and perhaps even a week. Even then it may take a very strong insistence from the public that the legislators “GET THE JOB DONE!”
Additional talk in the halls of the General Assembly Building (and the Patrick Henry Building, where the Governor and his Cabinet have their offices) is that there will be one and perhaps two special sessions later this year. One session would deal with the transportation issues and one would deal with the restructuring of state and local government. There will be more on these possibilities in a later GP.