Virginia's Budget Woes Continue
Aside from the failure to address critically needed transportation infrastructure funding for traffic-clogged areas of the state, the 2008 Virginia General Assembly session was best characterized by the contentious budget battle between the Republican House and Democratic Senate. Unfortunately for everyone involved, the 2009 session will likely offer no relief.
Next week, Governor Tim Kaine is scheduled to present legislators with a revenue forecast that is expected to show a deficit of more than $1 billion. The shortfall is being attributed to the nationwide economic slowdown, as well as to the foreclosure crisis, and – this will sound familiar – increased energy costs. Though a clearer picture will be available next week, some analysts have publicly predicted that the slowdown in the economy will produce a deficit of about $1 billion over each of the next two years under the current spending plan.
The predictions of a revenue shortfall are sure to add fire to already heated political posturing between House and Senate leadership. Budget negotiators last year failed to reach agreement by the scheduled close of session, forcing the General Assembly to extend its time in Richmond. Ultimately, both sides came to a compromise that cut approximately $2 billion from the state's biennial spending plan.
The administration has already ordered some layoffs of state employees and has begun scaling back on funding provided to local governments for schools and social programs. In addition, the state's oft-controversial “rainy day fund” has been drawn on to the tune of about $350 million; additional withdrawals would require approval from the General Assembly. Virginia residents should also be prepared for additional spending cuts: several transportation projects have already been removed from the state's plans, and more may be put on the chopping block or funded through bonds issued against future revenues.
Virginia Housing Commission Update
Four Virginia Housing Commission Work Groups are set to reconvene next week in Richmond, as the groups continue their work in the interim prior to the 2009 General Assembly session. AOBA makes certain to secure membership on these work groups in order to continue representing members' interests.
The Environmental Standards Work Group, to which several bills of concern to AOBA members were referred, will meet on August 19. Among the issues it will review are proposals to mandate retrofitting of automatic sprinkler systems in all high-rise residential properties throughout the Commonwealth, as well as installation of carbon monoxide detectors in all residential units; and to allow jurisdiction-wide rental inspection districts. AOBA was successful in defeating these proposals during the 2008 session, but they were referred to the Housing Commission for further study and to develop recommended revisions for future action. The Housing Affordability Work Group will also meet next week, and advocates are expected to make a strong push for legislation to mandate acceptance of Section 8 housing vouchers. AOBA defeated this bill in 2007, and a similar bill failed to receive a hearing in the 2008 Session.
Vice Presidential Nomination Could Alter Political Landscape in Virginia
Press reports continue to place Virginia Governor Tim Kaine on the short list of possible candidates to join presumptive Presidential nominee Barack Obama on the Democratic ticket. In his public responses, to date, the Governor has done little to invalidate those reports.
If Kaine becomes the Vice Presidential nominee and the Democrats go on to win the White House, sitting Lieutenant Governor Bill Bolling – a staunch Republican – would ascend to Governor, since Kaine's term runs through 2009. Bolling and current Attorney General Bob McDonnell had reached an accord earlier this year, wherein McDonnell would run as the Republican nominee for Governor in 2009, while Bolling would seek reelection as Lieutenant Governor. However, should Bolling become Governor sooner through succession, they have now agreed that he will run for reelection as Governor, with McDonnell seeking reelection as Attorney General.
Such changes in the assumed Republican ticket could have a trickle-down effect for the state's Democratic nominees as well. Both Del. Brian Moran (D-Alexandria) and Senator Creigh Deeds, who ran for Attorney General in 2005, are competing for the privilege of being the Democratic gubernatorial nominee, but their perceived respective strengths against Bolling or McDonnell may differ. Another local Delegate, Vienna's Steve Shannon, is running for Attorney General on the Democratic side, and could also be affected by Governor Kaine's national political fate.
And if Bolling does become Governor by succession, rather than election, his agreement with McDonnell doesn't settle the entire ticket for the Republicans. Several local elected officials, including former Senator Jay O'Brien, Delegate Tim Hugo, and Prince William County Board Chairman Corey Stewart, have previously expressed an interest in the Lieutenant Governor's race; while they wouldn't run against an incumbent in their party seeking reelection, the Bolling-McDonnell "musical chairs" scenario would give them an open field.
Loudoun County Continues Money Grab with Look at Rezoning Fees
The same jurisdiction that is presently weighing a new meals tax and increases in the Business, Professional and Occupational Licensing (BPOL) and commercial real estate tax rates is now considering increasing fees for rezoning of developments. Currently, developers who seek a rezoning in Loudoun County are subject to a processing fee of $15,730, plus an additional $80 per acre for properties that exceed 200 acres in size. A staff-generated proposal would increase that fee to $35,605 for residential cases and $27,723 for commercial applications.
According to state law, localities are permitted to recover 100 percent of processing costs for rezoning applications. County staff indicates that the proposal is intended to ensure that property owners are covering the full costs of rezoning applications. The staff proposal comes before the Board of Supervisors at a time when development applications are down sharply and the County is ostensibly seeking to attract more commercial investment.
Prince William County Rejects Impact Fee Authority
At its July 22 meeting, the Prince William Board of County Supervisors declined to proceed with implementation of impact fee authority granted to Northern Virginia localities as part of transportation legislation adopted by the General Assembly in 2007.
The now infamous H.B. 3202 encompassed a comprehensive package of regionally and locally imposed revenue streams to fund the construction of critically needed transportation infrastructure across Northern Virginia. The newly endowed impact fee authority, along with the ability to assess an add-on levy to commercial real estate tax bills, was among the only revenue sources left available following a Constitutional challenge before the Virginia Supreme Court.
However, in spite of being among those jurisdictions clamoring for impact fee authority prior to the 2007 session, the Board expressed disappointment with the parameters of the newly granted authority, after reviewing its impacts and ramifications in further detail. Specifically, County staff cited the requirement that impact fees be premised on planned construction projects serving a defined geographical area. But with other regional funding sources invalidated by the Virginia Supreme Court and the subsequent reduction in planned construction projects, the County would be significantly restricted in what it could charge for impact fees; and any funds collected that are not used within 15 years would revert to the Virginia Department of Transportation.
The staff's analysis showed that the County reaps greater benefits, in terms of overall revenues generated, from applying the current proffer system in rezoning cases. The Board agreed to draft a letter to the Governor and General Assembly to voice dissatisfaction with the authority and request changes to increase its revenue-generating potential.
Let Your Tenants Know About Utility Rate Increases
Several members have requested that AOBA provide simple language for distribution to residents and tenants that will increase their awareness of the impact that Dominion Virginia Power's rate increases will have on them (and hopefully to then help prod state legislators to take action). AOBA has done so, producing language that may be used as an insert in your communications with tenants; members should feel free to adapt it as needed. Please click here to view the suggested language.
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