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COMMONWEALTH OF VIRGINIA
Office of the Governor

Mark R. Warner FOR IMMEDIATE RELEASE
     Governor March 30, 2005

Contact: Ellen Qualls
Phone: (804) 786-2211, x2379
Cell Phone: (804) 393-9429
Internet: www.governor.virginia.gov

GOVERNOR WARNER ANNOUNCES AMENDMENTS TO BUDGET BILL

RICHMOND - Governor Mark R. Warner today announced his amendments to House Bill 1500, Additional appropriations for 2004-2006 biennium.

"In general, our joint efforts reflected our shared purpose that
appropriations made in this session should sustain the long-term financial
stability of the Commonwealth," said Governor Warner in his message to
legislators.  "This is crucial if we are to avoid creating again the kind of
serious budget shortfall that we spent more than two years addressing.  As a
result of our collective actions, Virginia stands recognized as the best
financially managed state in the nation.
Our challenge now is to maintain that standing.  The amendments I am
proposing are concentrated on economic investment and missed opportunities."

Governor's Message to the General Assembly

I approve the general purpose of this bill, but I am returning it without my
approval with the request that the attached 30 amendments be adopted.

I begin this message by expressing my appreciation to the members of the
House of Delegates and the Senate for all that was accomplished in the past
session in a bipartisan spirit of cooperative action.  Our collaborative
efforts resulted in an appropriation bill that goes far in addressing unmet
requirements of state government.  We were fortunate that additional funds
were available for this purpose.

The budget that was adopted fully funds the state share of the cost of
meeting the Standards of Quality, and provides additional resources for
higher education.  It takes an important first step in addressing our
pressing needs in transportation, with the largest cash infusion of funds in
Virginia's history.  It makes significant progress on our commitments to
clean up the Chesapeake Bay.  And, it funds capital projects on a
pay-as-you-go basis without the issuance of tax-supported bonds.  On these
and many other fronts, the bill that you passed moves Virginia forward.

In general, our joint efforts reflected our shared purpose that
appropriations made in this session should sustain the long-term financial
stability of the Commonwealth.  This is crucial if we are to avoid creating
again the kind of serious budget shortfall that we spent more than two years
addressing.  As a result of our collective actions, Virginia stands
recognized as the best financially managed state in the nation. Our
challenge now is to maintain that standing.

The amendments I am proposing are concentrated on economic investment and
missed opportunities.  Several amendments address what I believe are
unintended consequences, include issues which should not wait until the next
session, or make technical corrections to the budget which was enacted. 

Economic Development and Investment Opportunities (Item 506)

I have proposed that funding be added to Item 506 in the Central
Appropriations section of the enrolled budget, which now contains $48.1
million in general fund appropriations for several distinct activities and
purposes.  Item 506 currently includes funds for the Governor's Development
Opportunity Fund, post-secondary educational opportunities in Southside
Virginia, the microelectronic endowment at Virginia Commonwealth University,
the Virginia Horse Center, rent and telecommunication increases for state
agencies, review of the enterprise-wide technology PPEIA proposals, legal
defense, and dredging of the Appomattox River.  I am recommending that
funding in this item be increased by $15.8 million to provide state support
for the following
purposes:

*Compression Pay for State Police, Capitol Police, Sheriffs, and Deputy
Sheriffs
; *Life insurance premiums for deployed members of the Virginia
National Guard; *Virginia Modeling, Analysis and Simulation Center; *Land
acquisition and related costs at the Virginia Biotechnology Research Park;
*Career and technical training, testing, and certification; *Federal revenue
maximization for the school nutrition program; *Rural and cultural economic
development and tourism; *Appomattox River dredging; *Virginia Horse Center;
*Grace E. Harris Leadership Institute; *Salem Civic Center sales tax
language; and *Improvements to Route 30 for the State Fair

Part of the funds required to support these amounts is provided through
language provisions that identify general fund savings in Medicaid, to
account for projected Health Care Fund increases, and in the Treasury Board,
to account for anticipated debt service savings.

The most significant of these actions are:

Compression Pay for State Police, Capitol Police, Sheriffs, and Deputy
Sheriffs.
The General Assembly attempted to help address pay inequity issues for state
and state-supported local employees in proposed additions to the budget, but
did not include this additional funding for law enforcement officers under
the State Police, Capitol Police, and Sheriffs.  I believe this omission
exacerbates the problem law enforcement agencies are having in retaining
seasoned law enforcement officers.  Thus, I am including additional funding
to increase the salaries of those officers in the funding provided in this
item.  This will help law enforcement agencies maintain staffing levels and
improve operational effectiveness.


Life insurance premiums for deployed members of the Virginia National Guard.
This action would provide funding for the state to pay the military life
insurance premium for all Virginia National Guard soldiers deployed as part
of Operation Enduring Freedom, Operation Noble Eagle, or Operation Iraqi
Freedom.  Currently, members of the guard must pay out-of-pocket the
premiums on life insurance policies up to $250,000.  Given that some
National Guard soldiers may forego insurance coverage due to its cost, this
action would ensure that the coverage is provided, and that every soldier's
family is protected financially.  Finally, this action would help in the
recruitment and retention of National Guard soldiers.

Support for the Virginia Modeling, Analysis and Simulation Center.
The use of mathematical modeling and computer simulation to explore complex
problems, particularly in defense and homeland security, has grown
enormously in recent years.  States which are well positioned to take
advantage of that growth benefit substantially.  The economic contribution
of this sector to Virginia for FY 2004 is estimated at $413 million.  The
Virginia Modeling, Analysis and Simulation Center at Old Dominion University
is the focal point of Virginia's activity.  We recently became aware of an
opportunity to make Virginia preeminent in this field and further enhance
the economic benefits to the state.  I am therefore recommending that we
strengthen Virginia's capacity in modeling and simulation by adding funding
to support focused research efforts and collaborative projects with the U.S.
Joint Forces Command
headquartered in Norfolk.   

Support for rural and cultural economic development and tourism.
While the General Assembly adopted some actions to strengthen cultural and
economic development in rural Virginia, I am proposing certain additional
strategies for that purpose.  My amendments are targeted to those strategies
and will produce measurable results in Southside and Southwest Virginia.
The funding I am recommending is focused on boosting tourism, providing
regional grants to support identified workforce training requirements of
existing businesses in distressed regions, and providing funds to assist
localities in acquiring and developing closed industrial sites.  Language
requires that I submit a spending plan to you before committing this
additional funding.

Support to maximize federal revenue for the school nutrition program.
The introduced budget included additional state funding to support school
nutrition, in the form of a 5-cent per meal state subsidy for
school breakfasts.   The enacted budget did not include that
appropriation.  I remain convinced, however, that the need is pressing and
the case for additional state support is compelling.  Numerous studies have
documented the clear connection between nutrition and student learning, and
between nutrition and future health.

I believe we have a unique opportunity to improve student nutrition and at
the same time increase federal funds that support school nutrition programs.
In this item, I am recommending a 20-cent reimbursement incentive available
only to schools which increase the number of breakfasts served.  Local
divisions may not use this additional state support to supplant funds they
are already spending on nutrition programs.  This additional state support
will provide a return of up to
6 to 1 in additional federal funding for every state dollar spent.  We can
and should maximize federal revenue for this important purpose.
 
Career and technical training, testing, and certification.
The economic vitality of the Commonwealth relies, in large measure, on the
education and skill level of our citizens.  In order to encourage high
school students who are not college-bound to continue working toward high
school graduation and pursue technical training for an industry
certification, we need funding to support the costs of technical training,
testing, and certification.  My amendments provide funding to public schools
and community colleges to pay the cost of training and testing which leads
to industry certification in specific trades.

Other Spending Amendments

I am also submitting amendments to cover the cost of training and travel for
veterans service representatives, in accordance with the new guidelines
stipulated in House Bill 2851 (2005). My amendments also restore funding and
positions for the Department of Minority Business Enterprise to enable the
agency to fulfill its mission, address the findings of the recent disparity
study, and to effectively implement the Small, Women, and Minority-owned
(SWAM) business procurement initiative.
I also added a total of $3.5 million in state support for cultural and
historic attractions, to recognize the role they play in stimulating tourism
and improving the quality of life for Virginians across the Commonwealth.

Language Amendments

Finally, I am including 23 language amendments to clarify existing
provisions or language in the enrolled House Bill No.1500, as enrolled.
Many of these provide technical clarification to provisions adopted during
the 2005 session.  Some provide additional administrative flexibility in
addressing issues on which we agree, such as the 2005 transportation
initiative.  These language amendments are listed below:

*Site flexibility for a Virginia School for the Deaf and the Blind
replacement facility; *Flexibility for Virginia State University in the use
of equipment and capital funds; *Clarification of Non-participating Tobacco
Manufacturers escrow incentive payment language to reflect Senate Bill 1332;
*Maintenance of FY 2005 formula for distribution of Older Americans Act
funding; *Submission of tuberculosis samples by Virginia Department of
Health to Division of Consolidated Laboratories; *Clarification of
Department of Medical Assistance Services language on provider overpayment;
*Transfer of Council on Indians funding to the Office of Natural Resources;
*Department of Historic Resources support for Base Realignment and Closure
activities; *Authority for Department of Fire Programs to set minimum
payment levels to localities; *Elimination of VITA deficit loan repayment;
*Authorization of VDOT land exchange with Lehigh Cement Company;
*Elimination of State Police exemption from VITA; *Use of transportation
residue property; *Extension of Local Partnership Program in VDOT; *Use of
rest stop funding on I-81; *Clarification of the scope of a Virginia Port
Authority capital project; *Grandfathering current energy performance
contracts; *Correction of delegated authority for nongeneral fund capital
projects; *Restoration of existing policy for graduate student financial
assistance; *Revisions to Transportation Initiative of 2005 language to
provide greater flexibility in designation of funding (four separate
amendments)

The most significant language amendments are detailed below:

Consolidated Virginia School for the Deaf, Blind and Multi-Disabled.
Language in the enrolled bill requires the consolidation of the Hampton and
Staunton Schools for the Deaf, Blind and Multi-Disabled to be at a new
facility location to be determined by the required study.  My amendment
allows existing facilities to also be considered for the location of the
consolidated school.  The study may find renovations and additions at an
existing campus to be more cost effective than relocating to a new site.

FY 2005 funding formula for Older Americans Act.
My amendment requires the Department for the Aging to continue using the
existing distribution formula for Area Agencies on Aging (AAAs) until a
special task force can evaluate the impact of the 2000 census and report to
the Governor and General Assembly.  FY 2006 budgets are in place for many
local agencies, and changing the distribution formula at this time would
disrupt services.
 
Base Realignment and Closure (BRAC) support at the Department of Historic
Resources.
The language requires that DHR work collaboratively with state military
facilities to expedite the inventory of historic properties and to assist
installation commanders in meeting Department of Defense requirements for
environmental assessments.  State agency cooperation is one factor used in
the BRAC process for assessing the continued use of military bases.

Minimum amount of aid that Department of Fire Programs may pay to
localities.
Currently, state statute authorizes the Fire Services Programs Board to
provide a minimum of $4,000 for towns and $10,000 for cities and counties.
In 2001, the Office of the Attorney General advised the Board that it had
the power to increase these minimums to $6,000 and $12,000, given increases
in revenues, and payments have been made at that level since that time.  A
recent re-interpretation from the Office of the Attorney General concludes
that the Board cannot pay these higher amounts without additional
legislative authority.  I am offering an amendment that would give the Board
the authority to continue providing aid payments at the higher minimums
until amendments can be made to the Code of Virginia.

Virginia Information Technologies Agency (VITA) deficit loan repayment
requirement.
The enrolled budget includes language requiring VITA to increase its rates
in order to recover $6.1 million in start up costs which VITA has incurred,
which were funded in the introduced bill through a general fund
appropriation.  The rate increase necessary to recover these costs
represents a budget cut to all affected agencies, whose budgets were not
funded to absorb the increase.  Moreover, some of these costs cannot be
charged to the federal government.

I have submitted a language amendment striking the repayment language,
thereby eliminating the implicit budget cut for state agencies.  Funds to
cover the start-up costs will come from unobligated year-end balances, or
will be addressed in next year's budget bill.

Extend Local Partnership Program.
This amendment extends by one year the eligibility period for transportation
projects for the Local Partnership Program.  The extension will ensure full
utilization of the funds provided by the General Assembly to encourage local
governments to assume the responsibility for the management and
administration of the design, acquisition, and construction of all
non-interstate transportation facilities within their boundaries. 

Rest stop funding on I-81.
Language in the enrolled budget bill gives priority to the I-95 and I-64
corridors in using $20 million in funding provided for rest stop
improvements.  Given the heavy volume of traffic on Route I-81, I am
providing an amendment to allow the Commonwealth Transportation Board to
consider the needs of Route I-81 rest stops when determining the use of the
$20 million.

Energy performance contracts.
The enrolled budget includes language I proposed to treat energy performance
projects as capital projects, if the cost of the project is greater than $3
million.  I am proposing a clarifying amendment to this language that
provides a grandfather clause allowing energy performance projects underway
before July 1, 2005, to continue to be treated as operating expenses so as
not to negatively impact present project negotiations.

Graduate student financial aid.
High quality graduate students are the lifeblood of our research
institutions.  A 1999 SCHEV study estimated that two-thirds of all graduate
students remain in Virginia.  For years, it has been state policy to allow
institutions to use up to 50 percent of the funds designated for graduate
grants for out-of-state students.  The enrolled budget bill reverses this
policy by prohibiting institutions from using general fund appropriations
for any new grant awards for non-Virginia graduate students.  The Council of
Presidents has advised me that Virginia's research institutions will not be
able to attract top graduate students and compete nationally with such an
extreme limitation on graduate financial aid.  The enrolled bill directs a
study of this issue, which I believe is warranted.  Therefore, I am offering
an amendment to restore the past policy of 50 percent, pending completion of
the study.

Flexibility for implementing transportation initiative.
I am offering four related amendments that provide flexibility to the
Department of Transportation regarding the fund source and distribution of
funding between fiscal years in implementing the program objectives approved
by the General Assembly.  Without this language, about $ 84 million in
federal funds freed up by eliminating project deficits will be severely
restricted in their use. 

Details of Spending and Revenue Sources

Spending FY 2005 FY 2006
Biennial
Rural and cultural economic development $0
$5,100,000 $5,100,000
and tourism activities

Federal Revenue Maximization for $0
$1,172,020 $1,172,020
School Nutrition

Grace E. Harris Leadership Institute $0 $100,000
$100,000

Career and technical training, testing, $0 $1,453,288
$1,453,288
and certification

State Police, Capitol Police, and sheriff $0
$2,975,722 $2,975,722
compression pay

Virginia Biotechnology Research Park $3,200,000 $0
$3,200,000

Life insurance premiums for deployed $0 $350,220
$350,220
National Guard soldiers

Virginia Modeling, Analysis and $0
$1,450,000 $1,450,000
Simulation Center

Virginia Horse Center $0 $10,000
$10,000

St. Mary's Health Wagon $0 $25,000
$25,000

Harrison Museum for African- $0 $50,000
$50,000
American Culture

Schooner Virginia $0
$150,000 $150,000

Celebrating Special Children, Inc. $0 $75,000
$75,000

Air Force Museum Foundation $0 $100,000
$100,000

Virginia Economic Bridge, Inc. $25,000 $75,000
$100,000

Art Museum of Western Virginia $0 $180,000
$180,000

The Barter Foundation $0 $90,000
$90,000

Chrysler Museum $0 $40,000
$40,000

Fredericksburg Area Museum & $0 $20,000
$20,000
Cultural Center

Greater Reston Arts Center $0 $10,000
$10,000

Lynchburg Academy for the Arts $0 $30,000
$30,000

Marine Corps Heritage Foundation $0 $40,000
$40,000

Museum of the Shenandoah Valley $0 $30,000
$30,000

Paramount Theatre $0
$20,000 $20,000

Shenandoah Valley Discovery Museum $0 $30,000
$30,000
 
Staunton Performing Arts Center $0 $30,000
$30,000

USS Monitor Center at the $0 $90,000
$90,000
Mariner's Museum

Virginia Aquarium & Marine $0 $40,000
$40,000
Science Center

Virginia Arts Festival $0 $20,000
$20,000

Virginia Beach Performing Arts Center $0 $40,000
$40,000

Virginia Living Museum $0 $90,000
$90,000

Virginia Performing Arts $0
$2,000,000 $2,000,000
Foundation Facilities

Woodrow Wilson Presidential Library $0 $130,000
$130,000

Wolf Trap Foundation for the $0 $70,000
$70,000
Performing Arts

Veterans Service staff training $0 $124,258
$124,258
and travel

DMBE positions $0 $164,713
$164,713

Fund Switch for VPBA Excess Proceeds ($507,000) $0
($507,000)

Total Spending $2,718,000
$16,375,221 $19,093,221


Resources FY 2005 FY 2006
Biennial
Title IV NGF revenue from Juvenile $500,000 $0
$500,000
Justice Services (revenue)

Health Care Fund (additions to balance) $0 $6,500,000
$6,500,000

Debt service savings $4,000,000 $750,000
$4,750,000
(additions to balance)

Natural Disaster Reserve, Danville $365,000 $0
$365,000
Tornado (additions to balance)

Out-of-state inmate revenue (transfers) $2,000,000 $0
$2,000,000

Total Resources $6,865,000
$7,250,000 $14,115,000