RD362 - Report of the Task Force for Local Fiscal Impact Statement Process Review


Executive Summary:
The Commission on Local Government (CLG), a five-member body appointed by the Governor, promotes and preserves the viability of Virginia’s local governments by fostering positive intergovernmental relations. The Commission assists counties, cities, and towns in the Commonwealth by conducting reviews on boundary change and governmental transition issues for the courts and localities; publishing an annual catalog of state and Federal mandates on local governments; and developing an annual report analyzing the comparative revenue capacity, revenue effort, and fiscal stress of Virginia’s cities and counties.

Section 30-19.03 of the Code of Virginia states that CLG shall prepare and publish a statement of fiscal impact for “any bill requiring a net additional expenditure by any county, city, or town, or…any bill requiring a net reduction of revenues by any county, city, or town,” and also states that the Division of Legislative Services shall forward bills to the CLG that qualify for this process.

Item #113 of the 2013 Appropriations Act included language requiring CLG to convene a task force to investigate the local fiscal impact statement process for bills as well as budget items. The budget language stated that the identification and referral of bills and budget items to CLG should be studied, along with the feasibility of using consultants. It also outlined the composition of the task force, and required CLG to issue a report to the Chairmen of the House Appropriations and Senate Finance Committees by December 1, 2013.

The task force’s goal is to create a process that allows legislators to have the best information available in order to make policy decisions. The task force concluded that the two largest challenges to this goal as it relates to the local fiscal review process are time and resources. As the task force spent considerable time studying the issues presented by the budget language, each recommendation of the task force seeks to alleviate the difficulties that come from those two challenges.

Of primary concern to the task force is the impact of budget items, as the biennial budget and amendments to it can have a significant fiscal impact on local governments. However, CLG does not currently have the resources necessary to determine these impacts. Accordingly, the task force recommends that a larger effort be undertaken to enhance the budget process in order to provide sufficient time to determine the fiscal impact of budget proposals on local governments.

With the key challenges of time and resources in mind, the task force also recommends the following actions:

• Section 30-19.03 should be amended to authorize the Department of Planning and Budget and the Department of Taxation to forward legislation to CLG for local analysis;

• CLG should solicit impact analysis from professional organizations within Virginia in addition to the counties, cities, and towns of the Commonwealth, from which assistance is already requested;
• CLG, with the assistance of the Department of Housing and Community Development, should develop a web-based application to gather and manage information provided by professional organizations and localities for the development of fiscal impact statements;

• CLG should be permitted to contract for personnel assistance while the General Assembly is in session, and;

• Bills with a local fiscal impact should be introduced no later than the first day of the General Assembly session.