The 2001 General Assembly
Several new members took their seats when the 2001 Session got underway on January 10. December special elections filled vacancies in the seats of three members of the House of Delegates who waged successful campaigns for Congress and that of a deceased member of the Senate.
Republicans maintain the majority of both legislative chambers. The House of Delegates stands at 52 Republicans, 47 Democrats, and one Independent and the Virginia Senate at 22 Republicans and 18 Democrats.
Redistricting and the November Elections
2001 is a major election year in Virginia and partisan politics can be expected to play a larger role than usual. The entire House of Delegates is up for reelection in November as are the top three statewide offices—Governor, Lieutenant Governor and Attorney General. Seven current members of the General Assembly have announced their candidacies for one of those three positions.
Not only are all of the House members up for election, this is the year for redistricting. A special legislative session will likely convene in April to draw new House and Senate districts and then later in the year to adjust congressional district boundaries.
Both Republicans and Democrats have availed themselves of the latest computer technology to begin crafting new district scenarios and litigation related to redistricting was initiated in 2000.
Republican Attorney General Mark Earley filed a lawsuit seeking federal approval of a plan to use the traditional head count, rather than numbers adjusted by a statistical system called sampling, for mapping the new legislative boundaries.
A three-judge federal panel ruled in October that Virginia’s lawsuit was premature because the federal government had not yet decided whether to release the adjusted numbers in addition to the numerical count. Earley then asked the Supreme Court to take up an appeal of the lower court ruling and to do so in an expedited fashion saying that without it, Virginia might not be able to hold legislative elections on time in November. The high court denied that motion and on January 8, 2001 affirmed the lower court ruling. So while the suit has been dismissed, the Commonwealth is not precluded from bringing it again later.
Democrats generally favor sampling to avoid undercounts of minorities and urban and rural poor. Republicans generally oppose it. Among those who joined in the battle against Virginia’s law requiring the numerical count were the cities of Richmond, Los Angeles, San Francisco, Denver and Houston; 10 Democratic legislators from Virginia; the state NAACP; and the American Civil Liberties Union of Virginia.
Regardless of the numbers used in the redistricting process, Virginia’s plan may well wind up in court as Virginia election plans and laws must meet the tests of the federal Voting Rights Act.
The Budget—Car Tax, Food Tax and Other Competing Concerns
Governor Gilmore’s signature program—the elimination of the car tax—is at the crux of this year’s budget debates. Credited as being a primary factor in his election as Governor, Jim Gilmore is determined to "keep his promises"—and may feel additional pressure given his recent appointment by President-elect Bush as chairman of the Republican National Committee
Legislation passed in 1998 approved repealing the state’s car tax over a five-year period. Triggers to delay repeal should the economy slow and revenues sag accompanied the timetable. Now, in the face of declining revenues, the Governor proposed last month to use national tobacco settlement money to boost revenue forecasts and keep the repeal program on schedule. In addition to the tobacco money, the Governor proposes some $206 million in state agency cuts to finance the car tax cut and other new proposals.
There was pre-session bipartisan criticism of the Governor’s plan. Some fear the actions will leave a hole in the budget for years to come as its projected costs continue to increase. In June 1998, the program’s cost for the biennium was an expected $1.2 billion. Eighteen months later, the cost for the two-year period was revised upward to $1.4 billion.
There also are concerns about other programs dependent upon the state budget for funding:
- Legislators fear priorities such as easing traffic in Northern Virginia and Hampton Roads, building and renovating schools, and improving the state’s mental health system all will be shortchanged.
- Teachers want a raise at least close to the 3.5 percent average increases the Governor has recommended for state workers and college professors. He did not recommend an increase for teachers, but said that localities should increase salaries by using some $100 million they have saved from smaller contributions to the state retirement fund.
- Mental health advocates claim the Governor has betrayed his promises to reform the system. They want more funding and have allied themselves with opponents of the Governor’s long-range plan to close major mental health facilities.
Additional criticism comes from food tax cut proponents because the Governor’s budget lacks an estimated $56 million to pay for the next phase of cuts in the food tax—action that critics contend would benefit many more Virginians than would the car tax cuts.
The only sure thing is that the car tax will be center stage during the Session.
Health Care and Elimination of the Certificate of Public Need
Virginia’s certificate of public need (COPN) program began in 1973 and was intended to promote the highest quality health care at the lowest possible cost by preventing the establishment of expensive, unneeded, duplicative services. Hospitals, nursing homes and outpatient centers were required to obtain a certificate from the state before building new facilities or expanding existing ones.
Over the years there have been numerous attempts to modify or eliminate the COPN process, but not until 2000 was legislation passed to initiate a process to do so. The General Assembly voted to eliminate the COPN according to a plan and a schedule yet to be determined.
The Joint Commission on Health Care was instructed to formulate the plan to dismantle COPN and established a subcommittee to do so. The most critical action by the subcommittee involved the establishment of a "facilitation process" in which key stakeholder groups and other interested parties were charged to address and reach consensus on the provisions of the deregulation plan. Key stakeholders included the Medical Society of VA, VA Hospital and Healthcare Association, and the VA Health Care Association. Other participants included: VA Commonwealth University, University of VA, VA Chapter of the American College of Radiology, U.S. Oncology (VA Oncology Associates), VA Association of Health Plans, VA Poverty Law Center, VA Association of Regional Health Planning Agencies, VA Academy of Family Physicians and VA Association of Nurse Anesthetists. The VA Department of Health provided some staff support. The process was directed by a facilitator who helped the groups identify all possible recommendations and then reach a consensus.
The consensus recommendation, which was endorsed by the Joint Commission, calls for the phasing-out of most COPN regulation in three stages. Generally speaking, the services and projects subject to COPN with the least cost impact and complexity/risk are proposed to deregulate first; services and projects subject to COPN with the most cost impact and complexity/risk are proposed to deregulate last. Significantly, however, the phase-out plan is proposed to be contingent on the General Assembly fully funding expansions to Medicaid and state-support for indigent care and additional support for medical education. The requested appropriation for funding Phase I alone is $40 million.
The major stumbling block that remains is the hefty price tag of $135 million that accompanies deregulation of the program, particularly in this legislative session in which money—the lack thereof—plays such a large role.
The Transportation Debate
Road building and maintenance is another high price item. In Northern Virginia alone, political leaders have identified $500 million a year needed for transportation projects. They have suggested additional fiscal authority to raise funds, but the Governor is expected to vigorously oppose a proposed regional referendum to increase the state sales tax in Northern Virginia to raise money for roads or for a roads and education split.
In addition to requests from around the state for new road money, the legislature must address concerns raised by the Joint Legislative Audit and Review Commission in a December 2000 report that warned of a potential overrun of $3.5 billion in the state’s highway construction program. It said the overall costs could reach as much as $12.5 billion because of design and construction revisions sought by localities, estimates that do not include contingency funding for unforeseen engineering and construction problems, and spiraling property values.
Just prior to the release of, and in anticipation of, the JLARC report, Governor Gilmore announced a top-to-bottom reorganization of the Department of Transportation and proposed a reform package designed to produce savings of some $147 million a year.
The Governor’s plan divides the VDOT bureaucracy into two distinct sections—one responsible solely for road building and the other for oversight of administrative and finance matters. Deputy commissioners would head each.
The overall goal of the reform plan is to speed VDOT’s approval of highways. It also is intended to increase accountability and cost savings and protect the environment.
The Gilmore administration subsequently attacked the JLARC report as flawed and further debate about the Governor’s plan and the report is expected during the Session.
Localities Join Forces to Increase Legislative Clout
Northern Virginia localities have joined forces to lobby once again for increased funding for education and transportation. Arlington, Fairfax, Loudoun and Prince William Counties and the City of Alexandria bring a regional list of issues to Richmond. These include:
- A request for full funding for the Standards of Quality for education, more money for school construction and renovation and revamped subsidies to assist with high personnel costs in the region.
- Significant increases in state transportation funding through some sort of new, additional, dedicated and permanent revenue source along with decentralization of transportation decision-making and increased funding for mass transit.
A coalition of nine Virginia localities known as First Cities will lobby for solutions to problems affecting older cities. They cite higher levels of fiscal stress than newer cities caused by higher levels of poverty, higher crime rates, older infrastructure along with stagnant real estate and sales tax growth. Richmond, Petersburg, Lynchburg, Danville, Roanoke, Newport News, Norfolk, Hampton and Portsmouth formed the First Cities coalition.
First Cities seeks revised formulas for the distribution of education funds, an increase in the rehabilitation tax credit, and additional funding for infrastructure improvement.
A third group, the Virginia Coalition of High-Growth Communities, seeks additional tools to help localities manage their growth. The high-growth coalition, which represents about 25 localities across the state, hopes to persuade legislators to give localities the power to charge impact fees and the ability to stop development until schools, roads and other facilities can be upgraded to meet increased service demands.
The latter two groups cite the need to restructure the financing of local government. Localities and groups such as the Virginia Municipal League and Virginia Association of Counties were major participants in a two-year study to address the issue of financing local government. Known as the Commission on Virginia’s State and Local Tax Structure for the 21st Century, this group of private citizens studied Virginia’s tax structure for some 14 months and released their report in December 2000 to the Commission on the Condition and Future of Virginia’s Cities.
The report provides a long-range blueprint to make state and local tax systems fairer, more efficient and more reflective of conditions in Virginia in the 21st century.
Among the Tax Commission’s recommendations were proposals to modernize Virginia’s personal income tax system, equalization of the taxing authority of cities and counties, a revenue sharing proposal with state government to meet localities’ increased costs, increased funding for state mandated local programs, and authorization for localities to work together to address regional transportation and economic development activities.
Legislators praised the Tax Commission’s work, but noted that it would be unlikely for these proposals to surface during the 2001 Session. Localities clearly intend to continue to work for a number of the recommendations in future sessions.
Changes in the Virginia’s Eminent Domain Laws
Condemnation of private property by government or private "public-service" companies in the name of the public good has become a growing issue and was the subject of a two-year study by a legislative subcommittee. According to the State Corporation Commission, the deregulation of telephone, electric and natural gas businesses has dramatically increased the number of private companies that could seek to use condemnation to expand their businesses.
The subcommittee report calls for several measures to protect private property owners:
- Allow Virginians to receive legal expenses for challenging unfair offers from governments or companies trying to condemn their property. Seventeen states provide for the award of legal expenses if an offer is found to be unfair.
- Require mandatory mediation before going to court in eminent domain proceedings if one side requests it.
- Direct natural gas pipeline companies and electric utilities to notify property owners by first-class mail of their intent to build across their property and require a public hearing on a transmission route if requested within 45 days of the property owner’s notification of the company’s plans.
- Allow a locality to condemn property outside its boundaries only if allowed by law or special act of the legislature—but allow condemnation outside a locality’s borders for public utility and transportation purposes.
- Prohibit a power company from taking less than a 400-foot right of way when building a 765,000-volt overhead power line and require companies to offer to buy homes lying within 200 feet of that right of way.
Electric Utility Restructuring in the Commonwealth
Publicity surrounding California and its electric restructuring woes may increase the attention given to measures revising Virginia’s Electric Utility Restructuring Act, first passed in 1999. Virginia has worked diligently over a period of years to involve all stakeholders in the process of crafting these laws and that process continues. Competition for retail generation services is scheduled to commence in 2002. There have been numerous meetings of the legislature’s oversight committee, the "Legislative Transition Task Force," and its Consumer Advisory Board to ensure that issues related to deregulation are properly addressed.
Among the revisions to the restructuring laws to be considered this year are:
- amendments that ensure that rates for "default service" will be based on competitive market prices for generation and not be subject to traditional cost of service regulation; and
- amendments that provide that billing and metering services will be made competitive according to a proposed schedule and under specified conditions.
In a related measure, Virginia’s electric cooperatives, which operate primarily in rural areas, want the 2001 General Assembly to allow them to regulate themselves. The rates of electric cooperatives have historically been approved by the State Corporation Commission, but this year legislation has been introduced that will allow any of Virginia’s 12 electric cooperatives to vote for self-regulation. Cooperatives are owned by their customers and managed by a member-elected board of directors. Under self-regulation, the boards would set rates. Members also could be allowed to vote to go back under SCC oversight if they so chose and cooperatives would still be bound by existing rate caps.
Conclusion
The 2001 Session of Virginia’s General Assembly will be a 46-day drama filled with political intrigue. The executive branch vs. the legislature—Republicans vs. Democrats—and all in an election year. The issues are important and difficult and demand the most from legislators, lobbyists and others that come to persuade their elected representatives of their points of view.
Reed Smith Hazel & Thomas attorneys are registered to represent the interests of a broad spectrum of clients before the 2001 General Assembly. In addition, bills or activities in general subject areas are monitored for a number of other clients.
An update on the progress of the 2001 General Assembly will be provided near the midpoint of the Session during the first full week of February.