Virginia Budget Challenges Continue

Last week I attended the quarterly meeting of the House of Delegates Appropriations Committee. It appears that the state’s budget challenges will continue. While payroll withholding grew slightly more than projected, this source is slightly below the historic the trend for this source.

Total general fund income grew in FY 2009 and FY 2010, largely as a result of individual income tax revenues that exceeded projections by eleven million dollars. Sales taxes exceeded projections, however, local governments have pointed out that local revenues are not recovering as quickly as state revenues, partially because of the unavoidable reliance of local governments on limited sources of revenues such as the real estate tax.

Local leaders have asked that reductions in aid to localities be eliminated for the current year, FY2012. Of course that request conflicts with the state’s obligation to deposit $146 million into the so-called Rainy Day Fund, as well as the state commitment to add to the Water Quality Improvement Fund approximately $32.2 million, plus any year-end surplus from agencies. In addition to approximately $23 million that is designated for transportation, the Governor has designated $4.3 million for disaster relief.

The Governor has also suggested that he would propose that any remaining surplus funds be designated for increasing funding for the Virginia Retirement System (VRS).

Most of these ideas seem logical, but they do not adequately reflect the concerns of local governments. Leaders of nine local governments in Northern Virginia have written a letter asking for different priorities. They remind the Governor that local governments have to rely heavily on taxes that are reliant on revenues based on housing values at a time when housing values are declining. They have asked the Governor to eliminate the reductions in aid to localities contained in his proposed amendments, including a $60 million reduction in this fiscal year.

Rarely in my time state government have I seen such unanimity among localities. I hope the Governor will use his substantial skills to bring local government leaders to Richmond to develop some new ideas for building a budget that addresses the state and local concerns, and ensures adequate funding for public and higher education and transportation for the future.

Delegate Scott represents the 53rd District in the Virginia House of Delegates. He may be emailed at deljscott@aol.com