GOVERNOR'S RECOMMENDATION

 March 26, 2007

TO THE VIRGINIA HOUSE OF DELEGATES:

HOUSE BILL NO. 1650

I approve the general purpose of this bill, but I am returning it without my signature with the request that 17 amendments be adopted.  Only one of my amendments requires further state spending to address legislation passed in the just-completed legislative session.  All of the remaining amendments address only technical changes or necessary language revisions.  I am grateful to all members of the House of Delegates and the Senate for the quality of the budget amendments contained in House Bill 1650 and, I believe that they achieve several notable objectives.

I am particularly pleased at the work we have done together in this budget to move Virginia forward.  In the area of public education, for example, the approved budget amendments will strengthen our efforts to enhance early childhood education.  These amendments contain additional support for early reading intervention programs, as well as new funding to explore approaches to expand the Virginia Preschool Initiative.  We also raised the state contribution for teacher salary increases from two percent to three percent for FY 2008 and the retiree health care credit for retired teachers from $2.50 per month to $4.00 per month.  These actions will help ensure that we attract and retain the best teachers.

Our work together on this budget will help ensure greater access to our higher education institutions for all Virginians through additional general fund support for financial aid and academic operations, as well as incentives to minimize tuition increases.  We will invest $100 million to address capital project cost overruns in higher education, giving our students the most technologically advanced facilities for learning and conducting research.

The approved budget amendments also address significant health care issues.  They provide for competitive pay increases to retain nurse educators and strengthen our ability to educate more nurses by increasing the availability of scholarships.  We are expanding access to new cancer prevention vaccines and providing additional funding to stockpile the treatment necessary to counter a potential influenza pandemic.  Other amendments increase access to prenatal care and raise reimbursements for medical providers to maintain access to health care for fragile individuals and to increase community based health care services.

Specific actions to enhance economic development include additional funding for the enterprise zone program, indoor plumbing assistance and broadband access.  The amendments also include funding for SRI, an independent, nonprofit research institute that will partner with James Madison University and other Virginia institutions.

Legislative actions in natural resources include an additional $276 million in funding and bonding authority for water quality improvements.  We also increased funding to promote land conservation and preserve farmland.

In public safety, additional funding will help ensure that we attract and retain the best people for our State Police force.  We will provide our Commonwealth’s Attorneys with more staff and additional funding to ensure adequate indigent defense.  This budget also includes sufficient bond funding to build a new medium-security prison, as well as funding to plan for an additional prison.

The approved budget provides a four percent salary increase for state employees, faculty at Virginia’s public institutions of higher education, and state supported local employees.  The budget also continues to improve state employee benefits by providing for enhanced wellness coverage as part of the state employee health insurance program.

Finally, the budget includes $500 million from the general fund to meet some of our pressing transportation needs.  Although this payment is one-time in nature, it constitutes a significant contribution from the general fund to address transportation, using unpredicted and temporary surplus revenue for one-time spending needs.

All but one of the amendments I am proposing to House Bill 1650 are technical or clarifying in nature.  Four amendments clarify the various positions that are eligible for the FY 2008 pay increases authorized by the General Assembly.  Other amendments provide flexibility in reporting dates, regulatory restrictions or administrative matters to aid in the implementation of actions previously authorized by the General Assembly, such as flexibility for institutions of higher education participating in the “Tuition Incentive Fund” to collect extra revenue if they use it to increase student financial aid for in-state undergraduates.

My only amendment dealing with funding is a spending amendment of $472,069 to cover the fiscal impact of HB 2749 and SB 1071, which were passed by the 2007 General Assembly but not adequately funded in the budget bill.  These two identical bills expand the reporting requirements of persons required to register with the Sex Offender Registry, as well as expand sentences for child pornography offenses.  The proposed funding will cover the costs of additional positions at the Department of State Police needed to comply with the requirements of this legislation, as well as provide the balance of funding required to address the provisions of § 30-19.1:4 of the Code based on the Virginia Criminal Sentencing Commission’s projected need for additional offenders to be housed in state correctional facilities.

Attached to this letter is a document that succinctly explains each of my amendments.  It is followed by a complete set of my proposed amendments.  In reading these proposals, I think you will find that they are necessary and will make the good budget enacted by the General Assembly even better.

Accordingly, I respectfully request your adoption of these amendments so that they may be incorporated into the Appropriation Act for the 2006-2008 biennium.

Amendment # 1:  Workers' Compensation Commissioners compensation adjustment

Item 30.10

Language:

Page 25, line 49, after “Commission " insert “ and Commissioners of the Virginia Workers' Compensation Commission”.

Explanation:

(This amendment is a technical correction to provide an eight percent salary increase for the Commissioners of the Virginia Workers' Compensation Commission on November 25, 2007.  They were mistakenly omitted from the eight percent salary increase for judges and Commissioners of the State Corporation Commission.  A companion amendment in Item 478 increases the salaries.)

Amendment # 2:  Implementation of the salary supplement for sheriffs

Item 59

Language:

Page 51, line 16, strike "A." and insert "A.1.".

Page 51, after line 25, insert:

"2. Whenever a sheriff is such for a county and city together, or for two or more cities, the aggregate population of such political subdivisions shall be the population for the purpose of arriving at the salary of such sheriff under the provisions of this Item and such sheriff shall receive as additional compensation the sum of one thousand dollars."

Explanation:

(This amendment provides language authorizing the Compensation Board to provide the additional $1,000 salary supplement to sheriffs serving more than one locality, pursuant to funding provided by the 2007 General Assembly.)

Amendment # 3:  Adjust enhanced retirement language for deputies and jail officers

Item 59

Language:

Page 54, line 53, strike "shall" and insert "may".

Explanation:

(This amendment modifies language added by the General Assembly that mandated the Governor to include funding in future budget recommendations for localities that elected to provide enhanced retirement benefits to deputy sheriffs and jail officers prior to July 1, 2008.)

Amendment # 4:  Health insurance renewal cost reporting date

Item 77

Language:

Page 82, line 25, strike "1" and insert "15".

Explanation:

(This amendment makes a technical correction to change the date that the Department of Human Resource Management must report on the cost of state employee health insurance plan renewal costs from October 1 to October 15.  This change will allow the health plan provider and the actuary utilized by the department to develop a more accurate estimate of potential costs.)

Amendment # 5:  Distribution of pediatric rate increase

Item 302

Language:

Page 337, line 11, after "2007." insert:

"For fees effective on or after July 1, 2007, the annual RBRVS update to evaluation and management services provided to children shall be applied separately to preventive services and to the remaining evaluation and management services."

Explanation:

(This amendment changes the methodology of how the July 1, 2007, pediatric rate increase of 10 percent is applied between procedure codes.  This change is necessary to ensure that pediatricians providing preventive services actually receive a 10 percent rate increase on July 1, 2007, for those services.  As a result of the annual update of Medicare changes to the system used to set rates by procedure code, many of the pediatric preventive codes would experience a reduction in their rates even with a 10 percent increase in the overall rates.  This action would prevent that reduction from occurring.)

Amendment # 6:  Emergency regulatory authority for "Money Follows the Person" grant

Item 302

Language:

Page 342, line 8, after "community." insert:

"The Department of Medical Assistance Services shall promulgate any necessary emergency regulations within 280 days or less from the enactment date of this act."

Explanation:

(This amendment provides emergency regulatory authority for the Department of Medical Assistance Services to initiate the necessary changes to home and community-based waivers to implement the federal "Money Follows the Person" demonstration grant expected in the next round to be awarded to the Commonwealth.)

Amendment # 7:  Extend timeframe for child care programs to meet training requirements

Item 341

Language:

Page 388, strike lines 33 through 40 and  insert:

"G. The provisions of Chapter 686 of the 2006 Acts of Assembly that amended § 54.1-3408 by adding subsection N shall not prevent the administration of drugs to a child in a child day program as defined in § 63.2-100 and regulated by the State Board of Social Services or the Child Day Care Council, with permission and direction of the child's parent or guardian, until January 1, 2008.  The Commissioner of Social Services shall ensure that sufficient opportunities are provided to enable currently regulated child day programs to satisfy the medication administration training required by the standards for such child day programs by that date.  In the event that any regulated child day program has not, for good cause, completed training by January 1, 2008, the regulated child day program may apply to the Commissioner for a good cause extension, not to exceed 90 days, to comply with training requirements and, if granted, shall be exempt from the training requirements specified in § 54.1-3408 N during the period of such extension."

Explanation:

(This amendment extends the deadline for regulated child day programs to meet medication administration training requirements pursuant to the standards for licensed day care centers.  Changing the date from June 1, 2007, to January 1, 2008, will allow sufficient time for most providers to become compliant, before having to request extensions for good cause.  In addition, this amendment will correct the terminology "regulated child day program" used to refer to the affected providers.)

Amendment # 8:  Provide discretion for abusive driver program administrative cost

Item 435

Language:

Page 478, line 9, after "program." insert:

"If, following receipt of vendor bids for program administration, it is anticipated that administrative costs will exceed thirteen percent of the revenues collected, the Governor may authorize the expenditure of additional revenues to implement the program."

Explanation:

(This amendment will permit the Governor to authorize the necessary administrative costs to cover the abusive driver program, if vendor bids to operate the program exceed thirteen percent of the revenues collected.)

Amendment # 9:  Clarify language distributing road maintenance funds to port localities

Item 454

Language:

Page 501, strike lines 31 through 49 and insert:

"Of the amounts in this Item, $1,000,000 the second year from the general fund is appropriated for service charges to be paid to localities in which the Virginia Port Authority owns tax-exempt real estate.  The funds shall be transferred to Item 444 of this act for distribution by the Commonwealth Transportation Board for roadway maintenance activities in the jurisdictions hosting Virginia Port Authority facilities and shall be treated as other Commonwealth Transportation Board payments to localities for highway maintenance.  These funds shall not be used for other activities nor shall they supplant other local government expenditures for roadway maintenance.  These funds shall be distributed to the localities on a pro rata basis in accordance with the formula set out in § 58.1-3403 D, Code of Virginia; however, the proportion of the funds distributed based on cargo traveling through each port facility shall be distributed on a pro rata basis according to twenty-foot equivalent units."

Explanation:

(This amendment clarifies the formula to be used to distribute road maintenance funding to localities hosting Virginia Port Authority facilities.)

Amendment # 10:  Clarify faculty salary compensation

Item 461

Language:

Page 517, after line 40, insert:

"S. Out of the amounts for Compensation Supplements, funding is provided to increase faculty salaries at institutions of higher education by one percent.  A three percent salary increase for faculty is included in each institution of higher education.  Institutions may award the salary increase on the basis of merit so as not to exceed an average of four percent at each institution.  For those institutions of higher education with nursing faculty, this average four percent increase shall be in addition to the ten percent salary increase provided for all nursing faculty within each affected institution of higher education."

Explanation:

(This amendment clarifies that institutions of higher education shall receive a four percent salary increase for faculty.  In addition, the language provides clarification that the four percent salary increase is, on average, in addition to the ten percent salary increase provided for all nursing faculty at each affected institution of higher education.)

Amendment # 11:  Provide funding for fiscal impact of SB 1071/HB 2749

Item 462

Language:

Page 517, line 42, strike "$53,973,815" and insert "$54,445,884".

Page 523, after line 24, insert:

"T.  It is acknowledged that HB 2749 and SB 1071, passed during the 2007 Session of the General Assembly, have a fiscal impact of $1,672,069.  Included in the appropriation for this Item is $472,069 in the second year from the general fund.  This amount includes $433,600 in the second year from the general fund for the Department of State Police to address the impact on that agency from the implementation of the legislation and $38,469 in the second year from the general fund to address a portion of the impact attributable to an increase in the cost of operating state prisons.  This latter amount, along with the $1,200,000 identified in paragraph N of Item 387, shall constitute the appropriation required by § 30-19.4:1, Code of Virginia,  and the total shall be transferred to the Corrections Special Reserve Fund, to be used for planning and site acquisition of a new prison in Charlotte County."

Explanation:

(This amendment provides additional funding to cover the fiscal impact of HB 2749 and SB 1071.  The bills mandate new requirements for the registration of sex offenders and increase the penalties for possession and distribution of child pornography.)

Amendment # 12:  Clarify Tuition Incentive Fund

Item 463.10

Language:

Page 525, after line 7, insert:

"C.  Institutions that contribute nongeneral funds to ensure access and affordability to higher education for Virginia students, shall be permitted to exceed the limit for increases in tuition and mandatory E&G fees for in-state undergraduate students stated in paragraph B., provided that the percentage increase in such tuition and fee revenue not exceed the in-state undergraduate increase for 2008 reflected in the institution’s six-year plan and provided that any revenue generated by an increase in tuition and E&G fees beyond the limit stated in paragraph B. be used only to increase above the FY 2007 level of financial aid for in-state students."

Page 525, line 8, strike "C" and insert "D".

Page 525, line 9, after "(SCHEV)"  insert ", in conjunction with the Department of Planning and Budget (DPB),".

Page 525, line 16, strike "D" and insert "E".

Page 525, line 16, after "SCHEV"  insert "and DPB".

Page 525, line 21, strike "E" and insert "F".

Page 525, line 22, strike "C." and insert "D.".

Explanation:

(This amendment allows any institution of higher education to collect tuition revenue in excess of the Tuition Incentive Fund limits if they use the additional revenue to increase student financial aid for in-state undergraduate students.)

Amendment # 13:  Delete language relating to SPORS

Item 473

Language:

Page 532, strike lines 1 through 12.

Explanation:

(This amendment deletes the language increasing the multiplier for the State Police Officers Retirement System from 1.70 percent to 1.85 percent.  SB 1166, passed by the 2007 General Assembly, also increases the multiplier in the same manner.  However, there is a conflict between some of the provisions of SB 1166 and the budget bill language.  Because of the passage of SB 1166, the budget bill language is no longer needed and deleting it will have the added benefit of avoiding conflict between the provisions.)

Amendment # 14:  Workers' Compensation Commissioners compensation adjustment

Item 478

Language:

Page 533, line 38, strike “$152,424” and insert “$158,286”.

Page 533, line 44, strike “$149,292” and insert “$155,034”.

Explanation:

(This amendment is a technical correction to provide an eight percent salary increase for the Commissioners of the Virginia Workers' Compensation Commission on November 25, 2007.  They were erroneously omitted from the eight percent salary increase for judges and Commissioners of the State Corporation Commission.  A companion amendment in Item 30.10 authorizes the increase.)

Amendment # 15:  Change fund source for capital project at James Madison University

Item C-61.95

Language:

Page 571, line 40, strike "Higher Education Operating" and insert "Bond Proceeds". 

Page 571, after line 40, insert:

"The Director, Department of Planning and Budget, may approve the use of nongeneral fund balances from auxiliary enterprise services to support this acquisition and reduce the amount to be financed from 9(d) bonds."

Explanation:

(This amendment will identify James Madison University's capital project to acquire East Campus property as a 9(d) bond financed project.  This project was authorized by the General Assembly but was inadvertently added as a Higher Education Operating funded project.)

Amendment # 16:  Capital lease authorization for various agencies

Item C-326.10

Language:

Page 630 after line 13 insert:

"C-326.10   A. The Department of Health is hereby granted approval to enter into a new capital lease or renew an existing capital lease due to  expire during the current biennium for their local offices located in the City of Richmond and the City of Roanoke.

B. The Department of Rehabilitative Services is hereby granted approval to enter into a new capital lease or renew an existing capital lease due to expire during the current biennium for their disability determination offices located in the City of Roanoke, the City of Virginia Beach, and Fairfax County.

C. The Department of Environmental Quality is hereby granted approval to enter into a new capital lease or renew an existing capital lease due to expire during the current biennium for their regional office located in the City of Roanoke.

D. The Department of Housing and Community Development is hereby granted approval to enter into a new capital lease or renew an existing capital lease due to expire during the current biennium for their administrative offices located in the City of Richmond.

E. The Department of Corrections is hereby granted approval to enter into a new capital lease or renew an existing capital lease due to expire during the current biennium for their regional office located in the City of Richmond.

F. The Department of General Services is hereby granted approval to enter into a new capital lease or renew an existing capital lease due to expire during the current biennium on behalf of the Department of Corrections Probation and Parole Office and Department of Social Services Child Support Enforcement Office located in the City of Manassas.

G. The Department of General Services is hereby granted approval to enter into a new capital lease or renew an existing capital lease due to expire during the current biennium on behalf of the Department of Social Services, the Department of Medical Assistance Services, and other agencies to be identified in the Roanoke region."

Explanation:

(This amendment provides language granting authority for the Department of Health, the Department of Rehabilitative Services, the Department of Environmental Quality, the Department of Housing and Community Development, the Department of Corrections, and the Department of General Services to renew existing capital leases that will expire during the current biennium.  The language also allows these agencies to enter into new capital leases in lieu of renewing the expiring leases.)

Amendment # 17:  Corrects 9(d) bond table in Item C-328

Item C-328

Language:

Page 632, after line 44, insert:

"Acquire East Campus Property  C-61.95  17509  $9,000,000  $0  $9,000,000".

Page 632, line 44, strike "C-61.95" and insert "C-61.96".

Page 633, line 60, strike "17405" and insert "17452".

Explanation:

(This amendment adds James Madison University's capital project, Acquire East Campus Property (17509), to the 9(d) bond table in conjunction with a companion amendment to Item C-61.95 which switches funding from higher education operating funds to 9(d) revenue bonds.  In addition, the amendment corrects entries in the 9(d) bond table for Virginia Commonwealth University and James Madison University.)