03302010 SUMMARY OF STATE REDUCTIONS PRESENTATIONSummary Impacts
of General Assembly
FY 20 10- I I & FY 20 I I -12
"599" Monies
• FY 201 0- I I reduction is $ I , 180,344 from
the FY 2009-10 budgeted amount.
This actually represents less of a reduction than
Governor Kaine originally proposed a -
In FY 20 I I - 12: the General Assembly will reduce
this funding by an additional $ I , 184,370.
• The City has experienced a cumulative
reduction of $4,458,002 in 599 funding
since FY 2000 unadjusted for inflation)
this equates to almost one cent on the Real
Estate Tax.
Reduction in Aid to Localities
• The final State Budget increased this
general reduction in State Aid to Localities
from $50 million to $60 million
ForVirginia Beach this reduction increases from
the current $2.2 million to $2.65 million.
• The State allows localities to determine
which revenue streams to reduce, or we
may send the State a check.
We have not made either selection allowing the
State to determine where to apply their cut.
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Constitutional Offices
• Commissioner of the Revenue: -$173,404 (further reduction
needed is $48,404)
• Treasurer: -$ 192,479 (further reduction needed is $79,505)
• Clerk of the Circuit Court: $179,023 (no further reduction)
• Commonwealth Attorney: -$222,294 (further reduction needed
is $ 193,977)
• Sheriff: -$3, 139,566 (further reduction needed is $ I ,089,566)
The State is no longer providing the same level of support for
"locally responsible prisoners" costing us $1.3 million -reducing the
daily rate to $4.
And, they are redefining "state responsible" from sentenced to 12
months to sentenced to longer than 2 years, meaning more
prisoners are now local.
• Per the Non-Supplanting Policy these Offices are expected to
absorb these additional decreases. For many this will mean
additional staff reductions.
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Human Services
• Total reductions to Mental Health/Mental
Retardation, Social Services, and Juvenile
Probation: $506,996.
• If Congress extends ARRA FMAP, the
Department of Human Services would receive
an additional $20 I ,689 in Federal revenue,
which will partially offset the State reduction.
Importantly, if Congress does not extend this
Federal aid, the City would experience a more
significant reduction than the aforementioned
$500,000.
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State Aid to Libraries
• -$41,897 reduction
State Aid to Education
• To balance the State budget ,the General
Assembly reduced, for teachers and other
education positions, the employer payment to
VRS from 10.49% to 3.93% for FY 201 I and to
5. 16% in FY 2012. Eventually rates will have to
rise to fully fundVRS.
• Covers the increased cost of the Composite
Index totally in FY 201 I and 50% in FY 2012
saves $14.9 million in FY 20 I I
• Reduces Basic Aid forVirginia Beach by
$51.8 million.
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Total State Reductions
From FY 09- 10 to FY 10- I I
• $ 5.7 million for the City
• $5 I.8 million for Schools
• This equates to I I . I cents of the City's
real estate tax.
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PPTRA Funding was Restored
• The General Assembly fully funded
reimbursement for Personal Property
• City receives $53.4 million and this will
provide a 70% reduction on taxpayer's
personal property bills.
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VRS Life Insurance Rate
• The Life Insurance rate in FY 2010 budget
was 1.02% of salaries. The recommended
budget reduces this rate to 0.69%.
• The final State Budget further reduced
the rate to 0.33% for an additional savings
of $800,000.
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State BRAG Funding
• The $7.5 million was restored for FY
2010-I I, but is unfunded for the second
year of the State's Biennium (FY 20 I I - 12).
State Fee Increases
• The State will increase the charge for
Deeds as well as the Four-for-Life charge,
• Normally these are shared with local
governments, the State Budget changes
this relationship allowing neither to be
shared.
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Reduction in Dealer Discount for
General Sales
• The Dealer Discount only applies to the first 3% of
sales tax collected and allows retailers/dealers to
retain a portion of sales tax collected. The complete
elimination of this discount would have resulted in an
additional $65m in General Sales tax revenues.
• The adopted comprise was to retain 40% of the
Dealer Discount for retailers that do not e-file (those
that manually tabulate the General Sales tax), which
will generate $49.Om in General Sales tax revenue to
the State.
• This could generate $ I million for Schools which
would be available as additional State Share Sales Tax
in future budgets.
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Elimination of Dealer Discount
forVATelecomTax
• The State will completely eliminate the
Dealer Discount for theVirginia
Telecommunication Tax, which costs the City
approximately $3 12,000 per year.
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Virginia Telecommunication Tax
• The House proposed siphoning over $20.6
million from the local Virginia
Telecommunication Tax to restore funding to
Constitutional Offices.
• The House/Senate Conference Budget
eliminated this shift; however, the final budget
for the first time treats the Virginia
Telecommunication Tax as a State General
Fund revenue rather than a local revenue,
which represents an undesirable precedent for
local governments.
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The Second Year of the Biennium
• FY 201 I-12 Concerns:
599:As previously noted, the State's Biennial
Budget includes a reduction in 599 funding for FY
- 12 (City's reduction will be $ I , 184,370).
Line of Duty Charge:The State has historically
funded. In FY I I ,this cost will be shifted to the
VRS Life Insurance Fund. In FY 12, this cost will be
shifted to localities. The minimum budget impact
will be $325,000, but it could be as high as $
million.
BRAC :As previously noted, the State's Biennial
Budget does not include funding for FY I I-12.
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