Virginia Budget Picture Worsens…Again
The 2009 session of the Virginia General Assembly was dominated by issues and legislation affecting the Commonwealth’s fiscal health. Virginia was not to be spared from the ills suffered by every other state in the face of a nationwide economic recession. Declining tax revenues had blown a nearly $4 billion hole (at session time) in the state’s biennial budget, necessitating action on the part of the Governor and General Assembly to re-balance the state’s finances. If one could put a silver lining on the present state of the economy, it would be that legislators (also faced with an election in November) came to an unspoken consensus agreement that this was no time to saddle Virginia businesses with additional tax burdens in order to bail out the state budget. Instead, the Governor and General Assembly worked hard to identify cuts in existing spending plans and to create efficiencies to eliminate the budget deficit.
However, it’s now apparent that the state is not yet out of the woods. Governor Tim Kaine announced in May that tax revenues for the month of April declined by 21.3%, driving down year-to-date collections by 8.8%. The Commonwealth’s budget was predicated on already gloomy forecasts of revenue declines in the range of 7%.
In response to the latest numbers, Governor Kaine has called on state agency directors to prepare for further cuts in operating expenditures. What remains to be seen is how long legislators will hold steadfast in their resistance to tax increases as a means for addressing revenue shortfalls. A new Governor will be elected in 2009 and will present a budget plan to the General Assembly for the biennium beginning in 2010.
AOBA-Initiated Legislation Signed Into Law
In the immediate wake of the State Supreme Court decision which overturned key components of the 2007 Northern Virginia transportation funding package and left commercial real estate unacceptably exposed, AOBA initiated conversations with several key legislators and leaders to explore possible remedies. After a year and a half of persistent, methodical effort, AOBA can claim a hard-fought victory for its members. The business community still waits for the General Assembly to pass a new transportation infrastructure package which will provide a long-range, dedicated source of funding; until it does so, however, AOBA members can at least rest assured that the exposure of their Northern Virginia office properties has been significantly limited as a result of our legislation.
Members will recall that the 2007 transportation legislation embraced shared responsibility for funding new transportation infrastructure. It created several new funding sources, reaching a broad variety of citizens and businesses in the Northern Virginia and Hampton Roads regions, to support new projects to alleviate severe traffic congestion. Then, early in 2008, the State Supreme Court overturned all but one of the adopted revenue sources – leaving the local-option, commercial real property tax surcharge of up to 25 cents per $100 of assessed value as the only money still on the table. Overnight, what had been seen as one of the less appealing revenue sources in the package was now the only place left for local governments to turn to generate transportation funding.
Fairfax Delegate Tim Hugo (R), ably moved two AOBA bills reducing the existing cap on the commercial real estate tax levy, from 25 cents to 12.5 cents per $100 assessed value, and clarifying for what purposes the funds could be used. AOBA faced opposition from local governments which, while they insisted they had no intent to go up to the current 25-cent restriction, nonetheless fought fiercely to preserve their authority to do just that. Local governments (Fairfax and Arlington Counties in particular) also objected to the Hugo-AOBA bill clarifying the legislature’s intent that the commercial real estate surtax funds be used only for capital expenditures for new transportation projects that increase capacity and efficiency of the region’s failing transportation network. The Counties, instead, sought flexibility to divert commercial real estate tax revenues to a range of activities, including administrative overhead and “safety improvements.”
Over the vocal objections of local government interests, the General Assembly overwhelmingly approved both bills. But this was not nearly the end of the battle. Governor Tim Kaine’s administration indicated that he would be signing both AOBA bills, without amendment. However, what AOBA was not told was that, responding to the pleas of Arlington and Fairfax Counties, he had amended a separate and unrelated bill by adding language allowing Northern Virginia local governments to use commercial real estate tax revenues for the overly broad purpose of “transportation safety improvements.”
AOBA again sprang into action—the task, this time, to persuade the General Assembly that, in the one-day veto session in April, it should reject the administration’s amendments. Despite our strong vote margin on the bill in the regular session, the highly politicized environment of the veto session created a much tougher challenge for AOBA. In the end, it came down to a tie vote in the Senate— meaning the Governor’s amendment would stand-- but Lieutenant Governor Bill Bolling, for only the second time in his term, cast a tie-breaking vote to reject the Governor’s amendment, by a margin of 20-19.
The end of the story? Governor Kaine did, subsequently, sign both of the AOBA bills into law, capping a significant legislative victory for our members and all other commercial property owners in Northern Virginia.
Gubernatorial Primary June 9 Still Too Close To Call
Even Virginia’s most prominent political prognosticators are still shying away from making predictions about the June 9 Democratic primary between gubernatorial candidates Terry McAuliffe, Brian Moran, and Creigh Deeds. The fate of the three nominees will lie in their ability to turn out their supporters at the polls next month.
A look at the latest polling reveals little. In two of the latest polls, former Democratic National Committee Chairman Terry McAuliffe has claimed a double digit lead over his rivals, former Delegate Moran and still-State Senator Deeds. The Public Policy Polling Company survey of likely primary voters showed McAuliffe with 30 percent support and Moran and Deeds trailing with 20 percent and 14 percent, respectively. Another poll of likely primary voters, by SurveyUSA, showed an even bigger lead for McAuliffe-- 38%-- with 22 percent apiece for Moran and Deeds. Both surveys, though, have been criticized for giving too much weight to the African-American vote, which some believe will not turn out to the degree it did in last year’s presidential race. The Moran campaign responded quickly, contending that its own poll results, conducted by Greenberg Quinlan Rosner Research, show Moran and McAuliffe deadlocked in a tight contest.
Once a Democratic nominee is named, they will square off against former Attorney General Bob McDonnell (R) in the general election.
Republican Resurgence in Northern Virginia?
The Democratic Party’s exclusive reign over the Alexandria City Council came to a close in May, as Republican Frank Fannon and Independent Alicia Hughes (also supported by the Republican Party) both won seats in the local election. Their surprise victories unseated two Democratic incumbents – Councilmen Justin Wilson and Timothy Lovain – seemingly ushering in a new era of bipartisanship on the Council. Democrats have controlled all six seats on the City Council since 2003.
However, Northern Virginia Republicans have experienced a bit of a resurgence this year, at least in low-turnout elections. Before the Alexandria City Council elections, a special election was held in January to replace Brian Moran, who vacated his House of Delegates seat to run for Governor full-time. Though Democrat Charnielle Herring prevailed, she did so by only a 17-vote margin. In nearby Fairfax County, Sharon Bulova (D) won an extremely narrow victory over Republican Pat Herrity in a special election to succeed Congressman-elect Gerry Connolly as County Board Chairman. However, Republican John Cook won the subsequent special election to replace Bulova as Braddock District Supervisor, in an area that has long been represented by Democrats. It is yet to be seen whether these results are part of a larger trend, or simply an anomaly resulting from election-fatigue created by a series of special elections.
Also claiming a seat on the Alexandria City Council this month was former Mayor Kerry Donley, a Democrat. Mayor William Euille ran unopposed, and incumbent Democrats Rob Krupicka, Redella “Del” Pepper and Paul Smedberg were also reelected.
Arlington Voters To Reconsider Housing Referendum
Voters in Arlington County will again have the opportunity this November to consider whether or not to create an independent housing authority. Members of the Arlington County Green Party have submitted petitions to place the issue on the ballot for consideration again this year. By doing so, advocates beat the July 1 deadline after which the state has adopted a five-year moratorium on the creation of such entities. The referendum was opposed last year by both the Republican and Democratic Parties, and was defeated by a 66%-33% margin.
Join AOBA and Dominion Virginia Power for a Discussion Regarding Energy Programs
AOBA will host a briefing on energy programs for members with Virginia commercial and multifamily properties. Please join your AOBA colleagues on June 10 from 2:00 to 4:00 p.m. for a special briefing by Dominion Virginia Power’s Managing Director of Corporate Public Policy, Bill Murray. Murray will review new and expanded energy programs relevant to AOBA members. The briefing will be held at 1120 Connecticut Avenue, NW, Suite 1200 in Washington, D.C. Please RSVP to: Pascha Francis, pfrancis@aoba-metro.org or call 202.296.3390.
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