HD49 - The Feasibility of Establishing a Virginia Emergency and Disaster Relief Fund
House Joint Resolution 72 of the 1996 Session of the General Assembly directs the Department of Planning and Budget to study the feasibility of establishing a Virginia Emergency and Disaster Relief Fund to provide state assistance to localities included in the Governor's declaration of a state of emergency but not approved for federal financial assistance. The study focuses on state aid to localities (public assistance). It centers on the issue of whether or not there is a need to revise current practices and to establish a new fund to provide assistance to local jurisdictions.
In assessing current practices, the study found that Virginia governors have used their authority to access sum sufficient funding for public assistance to local governments infrequently. There are no written policies and procedures governing this sum sufficient funding, other than the language in the Code and the appropriation act.
The most frequent recommendation from local officials interviewed for this study was to establish policy guidelines specifying eligibility criteria to receive assistance. They said that more guidance is needed specifying what is expected of local jurisdictions in order to be eligible, what costs can and cannot be covered, and what documentation is needed. The criteria should be reasonable, equitable, standardized, and clearly communicated.
Officials in 23 of the 25 localities interviewed for this study said that an emergency and disaster relief fund is needed. However, not everyone interviewed thought that a fund is needed. Of the 15 people from state agencies and other organizations interviewed, eight believe that the fund is needed, but several said that they think that the current practice generally works well.
Among the advantages of establishing a fund are that it would be an identifiable, reliable, and readily accessible source of revenue that would provide immediate financial relief in an emergency; and that it would provide for a more objective, structured, consistent, and equitable process. The disadvantages of establishing a fund include the possibility that it could serve as a disincentive for localities to obtain sufficient insurance and to meet their financial responsibilities; that it could mean that the federal government might be less likely to provide assistance if Virginia has moneys set aside for disaster relief; and that it could be seen as an entitlement program, rather than as a safety net.
According to data obtained by the study team, 20 states currently have legislation or an appropriation or both for contingency funds for disasters. Generally these are line items in their budgets, special funds, or trust funds of several hundred thousand dollars or less. Except for Florida, which has established a special fund by assessing a surcharge on property insurance, the source of revenue is the state's general fund.
Those interviewed by the study team identified a variety of potential sources of revenue for an emergency and disaster relief fund, including Virginia's general fund; proceeds from the lottery; an assessment or surcharge on property insurance; and other taxes, assessments and fees. Several people interviewed suggested establishing a pool of funds, similar to a self-insurance pool, with every jurisdiction asked to contribute.
The study team looked for revenue sources that would meet the following criteria: no new tax, assessment, or fee would be required; no current tax, assessment, or fee would be increased; counties and cities would contribute to the fund, but not to the extent that it would create a hardship, even to those that are fiscally stressed; no unfunded mandate would be created; and no program's budget would be reduced. The team found that year-end balances on ABC profits, wine tax proceeds, and taxes on the rental of passenger vehicles would meet the criteria.
VDES convened a work group which developed program guidelines and procedures, based on data collected by the study, as well as their experience and expertise.
The study team then developed three options for consideration:
• Option 1 - Maintain the status quo. This option would make no changes in current practices and propose no new legislation or budget amendments.
• Option 2 - Modify current practices. This option would propose that the Virginia Department of Emergency Services develop guidelines and procedures, based on those outlined in this study, to provide guidance to the Governor in using the sum sufficient authority when federal moneys are not forthcoming. A special fund would not be established.
• Option 3 - Establish The Virginia Emergency and Disaster Relief Fund. This option would propose legislation to establish The Virginia Emergency and Disaster Relief Fund. This special fund would provide grants to cities and counties that have been subject to a declared state of emergency by the Governor, but not a major disaster declared by the President. The fund would be established in accordance with the guidelines and procedures to be developed by the Virginia Department of Emergency Services, based on those outlined in this study.
Based on public comment, Option 2 is the recommended option. This option would provide for a more objective, structured, consistent, and equitable process to provide immediate financial relief in an emergency. It would not, however, result in a new tax or a reduction in funding for ongoing programs, nor would it limit the Governor's flexibility to address the unique needs of a local jurisdiction. In addition, at VDES's recommendation, the Governor would be able to provide financial assistance to a local jurisdiction the sum sufficient authority if it met the established guidelines, but the Governor had not declared a state of emergency.
Recommendation: Legislation and a companion language amendment to the appropriation act is recommended to provide financial assistance to counties, cities, towns, and public service authorities located in an area declared a state of emergency but not a major disaster for which federal assistance might be forthcoming.
The Virginia Department of Emergency Services would develop guidelines and procedures for the Governor's consideration in determining whether and to what extent financial assistance to local governments might be provided; however, the allotments would be considered grants made at the discretion of the Governor. The funding would come from the Governor's sum sufficient authority pursuant to § 44-146.28 of the Code of Virginia.
If a jurisdiction meets the criteria set forth in the guidelines and procedures, but is in an area that has neither been declared a state of emergency nor been declared a major disaster for which federal assistance might be forthcoming, the Governor would be authorized to have the discretion to make an allotment to that jurisdiction without a declaration of emergency.