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Delegate Scott’s Richmond Report




Monday, the General Assembly “money” committees met in Richmond to hear the Kaine Administration’s revenue projections for this fiscal year (’09), that ended on June 30, and the next (‘FY10). The news was not good.

The money committee membership includes more than 40% of the House and Senate membership – the Senate Finance Committee and the House Appropriations and House Finance Committees. The 22-member House Finance Committee has responsibility for reviewing and approving revenue measures. The 24-member Appropriations Committee Appropriations Committee handles appropriations, the Commonwealth’s biennial budget and budget oversight.

The Senate Finance Committee, composed of 16 of the 40 members of the Senate has responsibility for both revenues and appropriations.

Members of the money committees meet regularly in August and December. In August, the Governor summarizes the revenues of the recently finished fiscal year and offers a general and preliminary forecast for the current fiscal year.

Senate Finance and House Appropriations Committees meet several times a year to consider revenue updates and to review programs and responsibilities of the various agencies.

I serve on the House Appropriations Committee; Senator Whipple serves on the Senate Finance Committee.

Last December, when he presented his first full two-year budget, Governor Kaine projected serious revenue challenges in the subsequent two calendar years, beginning with January ’08.

His projections on Monday reflected the national economic downturn and a larger-than-expected shortfall for Virginia. As a result of those estimates, the Governor said he would call a meeting of the Governor’s Advisory Council on Revenue Estimates (GACRE). GACRE is composed of business, leaders, economists and members of the House and Senate leadership.

After GACRE’s input, the Administration will update the official revenue forecast. The Governor has already advised agency heads, they should start planning for reductions, but he cannot direct appropriations cuts until the forecast is official.

Nevertheless, it is clear that state revenues will require substantial reductions, including aid to localities. Cuts in all areas are likely, particularly in public education, transportation and social services.

Earlier this year the House Republicans, with only Delegate Tom Rust dissenting, and all House Democrats opposing, proposed to change dramatically the formula for state aid to public education. Fortunately that change did not occur because the Senate did not agree.

That effort involved redefining the “actual cost” of public education. The major component of the reduction would come from limiting the state reimbursement to school employees to the amount approved by the General Assembly in the previous session, rather than the amount approved by localities. Needless to say, it would have major negative ramifications for high cost areas like Falls Church, Arlington and Fairfax County.

We can expect the GACRE meeting to occur in early October, and gubernatorial action limiting ’09 expenditures to be taken shortly thereafter. The Governor has stated he will not consider tax increase to fund any shortfalls. Therefore, FY ’10 promises to be a very difficult year for the Commonwealth and all localities.