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A lot happened in Richmond this week – and almost all of it had to do with Virginia’s budget. Delegates approved their version of the budget and Senators voted on theirs. Now, both sides meet to reach an agreement. The House’s negotiating team is led by Lacey Putney, Chairman of the Appropriations Committee and my neighboring colleague. Clearly, his presence benefits our region.
There are contrasts between the House and Senate versions of the budget that will have to be reconciled. Both budgets rejected Governor Kaine’s plan to increase the income tax, and both versions rejected his plan to end the state’s responsibility to provide car tax relief. One major difference, however, is fees.
The Virginia Supreme Court, in a decision striking down major parts of the transportation plan passed in 2007, said there really isn’t a difference between taxes and fees. The House plan eliminates $145 million in new and higher fees proposed by the former Governor. The Senate plan actually includes quite a few fees, some significantly larger than the budget Governor Kaine proposed.
As budget negotiations begin, these fees are likely to be a major point of contention between the House and Senate. However, the differences between the two budgets aren’t nearly as great as those we experienced in 2004 and 2006, when the Senate plans featured major tax increases and the House did not. The differences this year should not be so great as to cause a budget stalemate.
There have been some media descriptions indicating that the House budget “borrows” from the Virginia Retirement System (VRS). These are just plain wrong. The root of these erroneous reports seems to come from a misunderstanding of House Bill 1189 (HB 1189), sponsored by Delegate Putney.
Over the next 10 years, the bill will result in over $3 billion in savings to the VRS – without changing the benefits provided to current state or local employees. But, these savings in contributions by state and local governments do not in any way involve borrowing. And, they do not undermine the integrity of the VRS.
These changes have broad bipartisan support. HB 1189 passed the House by a vote of 80 to 19. The Senate’s version of the legislation passed 40 to 0.
One of the spending cuts included in both versions of the budget was the merging of Campbell County’s Cooperative Extension office. I’ve been working with Delegate Putney to try to get some reprieve for this office through the budget negotiations. Many of our children and farmers depend on the Campbell office, one of the busier ones in the state, so I am working hard to convince budget writers to find a way to keep it operating.
Budget discussions aren’t all about taxes, fees, and spending cuts. From the beginning of the year, job creation has been a top priority. The House budget dedicated $54 million to job creation measures, including tax credits. Job creation was a major discussion point of the 2009 campaign, and that can be seen in these measures, several of which were promoted by Governor McDonnell. It will be through job creation, putting people back to work throughout the state that will recover our economy and shortfalls.
Speaking of the Governor, he signed his first bill this week. Significantly, this bill will have an immediate effect, and customers of AEP will see those effects on their next bill. The legislation will immediately reduce the cost of electricity to AEP’s customers. That’s because the legislation bans interim rate increases, like the one AEP has been assessing on its customers over the last few months.
Now, rate increases must be approved by the State Corporation Commission – which regulates utilities and controls rates –