Support Priority Budget Amendments

VACo has worked with legislators and partner organizations to introduce a series of budget amendments to address county priorities this session.  There are also a large number of other amendments under consideration that are helpful to local governments.  The “money committees” will be reviewing member proposals in advance of reporting their respective budgets on February 18, so the time is now to advocate in support of these requests.

Restoration of K-12 hold-harmless for sales tax on food:  The introduced budget does not include funding to maintain the state’s commitment to replace lost revenue for K-12 associated with elimination of the state’s portion of the sales and use tax on food, which took effect January 1, 2023.  Language in the budget proposes to override the statutory requirement to provide an amount equal to the revenue that would have been distributed for this purpose had the state portion of the “grocery tax” not been eliminated.  Item 125 #11h (McNamara) and Item 125 #7s (Boysko) reflect the net additional funding required to be provided to hold school divisions harmless ($121.3 million in FY 2025 and $121.8 million in FY 2026).

KEY POINTS

• At the time the state portion of the grocery tax was eliminated, there was a widespread understanding that the revenue replacement would be ongoing – an understanding incorporated into statute.
• Although the Administration has indicated that it understands that the expansion of the sales tax base that is also included in the budget would make up for the lost revenue, there is no guarantee that the General Assembly will agree to this policy action. The General Assembly needs to honor the state’s commitment and ensure that school divisions do not lose revenue, regardless of the outcome of separate tax policy discussions.

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Elimination of cap on recognition of support positions in the Standards of Quality:  Item 125 #14h (Reid), Item 125 #43h (Simonds), Item 125 #12s (Carroll Foy), and Item 125 #30s (Favola) provide $200.3 million in FY 2025 and $202 million in FY 2026 to eliminate the cap on recognition of support positions in the Standards of Quality.  Item 125 #22s (Carroll Foy) provides $172.3 million in FY 2025 and $173.8 million in FY 2026 to recognize two additional support positions per 1,000 students in the funding formula.  Item 125 #32s (Deeds) provides $312 million per year to fund several recommendations from JLARC to reverse funding reductions from the Great Recession, including the elimination of the support cap.

KEY POINTS

• Support positions are currently arbitrarily capped at a ratio that does not reflect the need for these positions or the local prevailing practice.
• Support staff (such as school psychologists, school social workers, and licensed health and behavioral positions, cafeteria workers, IT professionals, administrative personnel, custodial staff, etc.) provide vital support for the operations of school divisions.
• Substantial progress has been made over the last several years to recognize more positions in the funding formula, thereby allowing the state to share in the costs of funding these positions.

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School capital funding:  Item 125 #17h (Carr) and Item 125 #9s (Deeds) would provide $120 million per year for the School Construction Grant Fund and Assistance Program.

KEY POINTS

• According to the Commission on School Construction and Modernization, more than half of K-12 school buildings in Virginia are more than 50 years old. The amount of funding needed to replace these buildings is estimated at $25 billion.
• VACo strongly supports local self-help measures, but the state will need to continue to be a partner in meeting this substantial need.

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Instructional assistants:  Item 125 #10h (McQuinn) and Item 125 #33s (Locke) provide $143.8 million in FY 2025 and $146.2 million in FY 2026 for instructional assistants in schools accredited with conditions (in the House version) or not meeting performance benchmarks for three or more school quality indicators (in the Senate version).

KEY POINTS

• These amendments are meant to provide additional state support for school divisions for positions that are currently funded with local dollars.
• This additional support is a recommendation of the 2022 JLARC study of the effect of the pandemic on public education. JLARC notes that the state provides funding for fewer than 3,000 instructional assistants, while school divisions employ approximately 21,000.

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ARPA funding for early voting:  Two helpful budget amendments would ensure that $2.9 million in federal funding from the American Rescue Plan Act that was appropriated in 2021 to support early voting will be spent for that purpose.  Item 486 #1h (Carr), an amendment to the “caboose” bill, would reverse the proposed action in the introduced budget to revert these dollars, and Item 77 #1s (Deeds), an amendment to the biennium budget, would direct the Department of Elections to expend the funds by December 31, 2024.

KEY POINTS

• The recent expansion of early voting opportunities has been largely funded by local dollars. This federal funding will provide important assistance in supporting early voting, which will be particularly helpful with a Presidential election later this year.
• The 2021 budget language directed that this funding be used to “support local efforts to expand early voting to include the adoption of Sunday voting.” This language has been interpreted to award funds based on expansions to early voting beyond what was offered in November 2020.  More flexible language may be needed to allow these dollars to support early voting in general, rather than using an election conducted during the pandemic as the baseline.

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Staffing for sheriffs’ deputies:  Item 60 #7h (Delaney)/Item 65 #2h (Delaney) and Item 60 #4s (Boysko) and Item 60 #14s (Diggs) would provide $13.9 million in FY 2025 and $16.7 million in FY 2026 to fund the statutorily-required staffing ratio of one law-enforcement deputy for each 1,500 people in a jurisdiction in which the sheriff bears primary law enforcement responsibilities.

KEY POINTS

• This staffing ratio has not been fully funded since FY 2008, leaving localities to fund positions necessary to support the operations of sheriffs’ offices. The Compensation Board calculates that 327 deputy positions are required over the biennium to meet the 1:1,500 statutory ratio.
• Localities make significant local contributions toward public safety, including providing salary supplements and positions in Sheriffs’ offices in addition to staffing funded by the Compensation Board, but the continued partnership of the state in support of this critical function of government is essential.

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Local administrative costs for Percentage of Income Payment Program:  Item 340 #1h (Sullivan, HB 29) and Item 324 #8h (Sullivan, HB 30) and Item 340 #1s (Deeds, SB 29) and Item 324 #3s (Deeds, SB 30) clarify that nongeneral funds from the Percentage of Income Payment Program (PIPP) Fund will be used to reimburse local Departments of Social Services for the administration of the PIPP program, rather than requiring a local match for administrative costs for the program.

KEY POINTS

• PIPP is intended to reduce the energy burden of eligible participants by limiting electric bill payments to no more than 6 percent of annual household income if the household’s heating source is anything other than electricity, and no more than 10 percent of annual household income on electricity costs if the household’s primary heating source is electricity, and to reduce the amount of energy used by the household. Local departments of social services determine eligibility for the program.
• PIPP is funded by the collection of Universal Service Fees from all residential customers of Dominion Energy and Appalachian Power Company. State General Funds do not support the program.
• The statute creating PIPP specifies that the utilities may recoup their administrative costs. The Code does not address local administrative costs specifically, but contains general language providing that the PIPP Fund must be used for purposes of implementation and administration of the PIPP.
• The Department of Planning and Budget has determined that a local match is required for the administrative funding. This amendment will allow the local match to be covered by the PIPP Fund, similar to the way that costs for the utilities are covered.

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Medicaid coverage for services within local and regional jails:  Item 288 #55h (Coyner) and Item 288 #5s (Favola) direct the state Medicaid agency to pursue a waiver to cover behavioral health and substance use treatment for qualifying incarcerated individuals for the first 30 days of incarceration and the last 90 days prior to release.  In 2023, the Centers for Medicare and Medicaid Services (CMS) issued guidance on a new Medicaid Reentry Section 1115 Demonstration Opportunity that would allow federal funding to cover certain medical and behavioral health services for state prisoners and local and regional jail inmates while they are in a correctional facility.  Currently, Virginia Medicaid coverage for incarcerated individuals is limited to costs incurred during a hospital admission.

KEY POINTS

• Jails continue to serve large numbers of individuals with mental illness and substance use disorders, despite commendable efforts to develop a comprehensive continuum of community-based services, including crisis services.
• The most recent report on mental illness in jails from the State Compensation Board indicated that approximately 22 percent of the jail population were known or suspected to have mental illness. Of the individuals with mental illness in jails, approximately 55 percent also had a co-occurring substance use disorder.  In addition, approximately 12 percent of individuals in jails without mental illness were reported to have substance use disorders.
• Additional flexibility to cover services provided to Medicaid-eligible individuals within the local correctional facilities would support continuity in care, particularly as individuals transition to jail and from jail back to the community.
• Individuals with substance use disorder are particularly vulnerable in the reentry process, as they are significantly more likely to die from an overdose in their first few weeks after release than the general population; consistent coverage would help to mitigate this risk.
• Avoiding gaps in health care coverage for individuals reentering the community has been demonstrated to assist in supporting a successful transition from incarceration by preventing recidivism.

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Jail per diems:  Item 61 #2h (Krizek) and Item 61 #1s (Peake) request $8.7 million in FY 2025 and $17.7 million in FY 2026 to restore the per diem rate for local-responsible inmates to the rates paid prior to the Great Recession.  The first-year amount reflects a partial year due to the schedule of Compensation Board reimbursements.

KEY POINTS

• In the 2010 Session, per diem payments were reduced for local-responsible inmates (from $8 to $4) and restructured for state-responsible inmates (from $8-14, depending on timing, to $12). These rates were unchanged until FY 2023, when the General Assembly increased the per diem rate for state-responsible inmates to $15.  Subsequently, the General Assembly increased the local-responsible rate to $5, as of December 1, 2023.
• These actions represent important progress in providing more resources to assist localities with the costs of operating jails, but there is more work to be done in strengthening the state’s partnership with localities.
• In FY 2022, localities spent $623.8 million in operating and capital costs for jails and jail farms (including debt service) and an additional $15.9 million to house inmates in other jurisdictions; the state contributed $364.6 million through the Compensation Board. Other state funding (primarily grants) totaled $3.2 million in FY 2022.  Federal funding (direct grants and per diems) totaled $55.6 million.  In FY 2022, the Commonwealth’s share of total expenditures was 34.2 percent; a decrease from FY 2021 (35.0 percent), while the average locality share of costs was 57.8 percent.  In the past, these costs were more evenly shared; for example, in FY 2005, the state contributed approximately 45.6 percent and localities provided approximately 43 percent.

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Substance use disorder treatment in jails:  Item 60 #12h (Coyner)/Item 394 #20h (Coyner) and Item 60 #13s (Favola)/Item 394 #8s (Favola) move $500,000 in FY 2025 opioid settlement funding for substance use disorder treatment in jails that was proposed in the introduced budget to be administered by the Compensation Board into the Virginia Opioid Use Reduction and Jail-Based Substance Use Disorder Treatment and Transition Fund (which is administered by the Department of Criminal Justice Services).  The amendments also increase the funding amount to $2 million per year.

KEY POINTS

• VACo supported the creation of the Virginia Opioid Use Reduction and Jail-Based Substance Use Disorder Treatment and Transition Fund, which was established (but not funded) in 2023.
• This fund is to be used for the planning or operation of substance use disorder treatment services and transition services, such as medically assisted treatment therapies, addiction recovery, and other services for persons with substance use disorder who are incarcerated in local and regional jails.

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Aid to localities with police departments (“HB 599”):  Item 396 #2h (McQuinn) and Item 396 #1s (Locke) provide additional resources ($6.3 million in FY 2025 and $13.5 million in FY 2026, for the House amendment, and $6.3 million in FY 2025 and $19.8 million in FY 2026 for the Senate amendment) for localities with police departments.  By statute, the “HB 599” program is required to grow along with state general fund revenues.

KEY POINTS

• To be eligible for “599” funds, a locality must have a police department, and all of the department’s law enforcement personnel must meet the state’s minimum training requirements. Each locality must also certify that it will use the “599” funds to supplement, not supplant, local funds provided for public safety services.
• Localities that receive HB 599 funding contribute significant local funds to their local police departments. In FY 2023, localities that received HB 599 funds were allocated $210.8 million from this funding source and reported budgeting $2.4 billion in local funds for this purpose.

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Virginia Firefighting Personnel and Equipment Grant Program:  Item 406 #3h (Sickles) and Item 406 #3s (Marsden) provide funding for a new grant program being considered in legislation this session.  The program would make grants to localities for programs to hire new, additional full-time firefighters; convert part-time or volunteer firefighters to full-time firefighters; recruit and retain volunteer firefighters, or acquire firefighting and emergency medical services vehicles and equipment and modify facilities.  The House amendment would provide $50 million per year and the Senate amendment would provide $25 million per year.

KEY POINTS

• Establishment of such a grant program was recommended by a working group directed by 2023 legislation and these resources would help localities meet critical public safety needs.

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Broadband:  Item 103 #3h (Bulova)/Item 103 #8s (Marsden) provide $60 million per year to the Virginia Broadband Resiliency Initiative to supplement costs for make-ready work related to projects funded under the FY 2022 VATI program. It also dedicates 50 percent of non-deployment resources received from the Broadband Equity, Access, and Deployment (BEAD) Program to this initiative.  Item 103 #10h (Krizek)/Item 103 #13s (Boysko) restores $29.7 million in FY 2025 and $49.7 million in FY 2026 to the Virginia Telecommunication Initiative (VATI) and allows use of these funds for make ready costs, including pole replacements, in areas served by not-for-profit public utilities.  These funds shall only be awarded to a unit of government that previously received VATI funding with a private sector internet service provider as a co-awardee and may be used to supplement the make ready costs in its previously awarded VATI projects.

KEY POINTS

• These amendments provide funds to the Virginia Telecommunications Initiative (VATI) to be used for make-ready costs, including pole replacements, to accommodate the installation of broadband infrastructure, such as fiber optic cables.
• These funds will help to overcome bottlenecks in the delivery of high speed internet service to unserved and underserved areas in Virginia counties.

Additional amendments to support

Staffing for directors of Finance:  Item 62 #31h (Callsen)/ Item 62 #1s (Marsden) provide $1.4 million in FY 2025 and $1.5 million in FY 2026 to restore funding for unfunded positions in the offices of local finance directors (recent General Assembly actions provided funding for positions in the offices of Treasurers and Commissioners of the Revenue).

Forest Sustainability Fund: Item 96 #4h (Lopez)/Item 96 #1s (Perry) provide $5 million per year to the Forest Sustainability Fund

Aid to local public libraries:  Item 227 #1h (Carr)/Item 227 #2h (Morefield)/Item 227 #1s (Locke) provide $2.5 million each year from the general fund to increase state aid to local public libraries. This funding represents the third installment of a four-year plan to fully fund the state library aid formula by fiscal year 2026.

Local departments of social services training academy:  Item 324 #1h (Coyner)/Item 324 #2s (Favola) provide $844,524 the first year and $2.2 million the second year from the general fund (as well as matching nongeneral funds) for the Department of Social Services to implement a cohort-based “training academy” model.

Child Welfare Stipend Program:  Item 329 #2h (Coyner)/Item 329 #3s (Favola) expand Virginia’s Title IV-E Child Welfare Stipend Program to include individuals preparing to work in Child Protective Services (CPS) slots as well as several additional child welfare position slots.

Replacement of public benefits IT system:  Item 334 #2h (Carr)/Item 334 #1s (Aird) provide funding to replace the Commonwealth’s eligibility and enrollment system (currently known as the Virginia Case Management System or VaCMS) for public benefit programs, including Medicaid, TANF, SNAP, Child Care Subsidy, and energy assistance.

Catawba Hospital:  Item C-48 #2h (Rasoul) provides $2 million in FY 2025 for Catawba Hospital renovations.

Stormwater Local Assistance Fund:  Item 365 #2h (Bulova) and Item 365 #6s (Marsden) provide $35 million each year from the general fund to meet the estimated fiscal year 2024-2026 biennium financial need for state matching grants through the Stormwater Local Assistance Fund (SLAF).  Item 365 #7s (Marsden) would provide $50 million per year for SLAF.

Wastewater improvements:  Item 365 #5s (Marsden) provides $200.0 million GF each year for the Commonwealth’s portion of municipal wastewater facility projects that are now under or entering active construction to meet the Commonwealth’s obligations under the U.S. EPA Chesapeake Bay TMDL and Virginia Phase III Watershed Implementation Plan.  Item C-53.50 #1s (Marsden) and Item C-53.50 #1h (Bulova) authorize $400.0 million in VPBA tax-supported bonds for the Commonwealth’s portion of municipal wastewater facility projects that are now under or entering active construction to meet the Commonwealth’s obligations under the U.S. EPA Chesapeake Bay TMDL and Virginia Phase III Watershed Implementation Plan.

WMATA:  Item 433 #1s (Marsden), Item 433 #1h (Sickles), and Item 433 #2h (Krizek) provide general fund support of $65.0 million the first year and $65.0 million the second year for the Washington Metropolitan Area Transit Authority during the implementation of a corrective action plan to provide for rightsizing of the Authority’s total costs, operating costs, headcount, and automation.  Item 433 #2s (Marsden) is a language amendment that would provide an exemption from the three percent cap on increases to the state share of WMATA’s budget due to recent increases in inflation, provided that planning and reporting requirements are met.

I-81:  Item 438 #12h and Item 438 #6s (Obenshain) provide $295.5 million GF the first year and $365.5 million GF the second year ($660.5 million total) for improvements and safety enhancements identified in the I-81 Corridor Improvement plan.

VACo Contact: Katie Boyle