On behalf of my fellow conferees, I am pleased to deliver the much anticipated conference committee report to House Bill 1300 and 1301.

To say it took a bit longer than we anticipated would be an understatement. However, the conference report before you is the product of consensus between the two Chambers on amendments to the current fiscal year budget and a new two year budget starting July 1st.

With regards to the specifics of the Conference Committee Report, as we started this Conference Committee the number of items in dispute were not great, however, there were several significant policy differences that we needed to resolve.

From the House perspective, we were guided by the goals outlined by the Appropriations Committee at the start of the Session, which was to:

• Provide additional funding for both our public schools and our local governments so that they can keep local taxes low,
• Use one-time savings to fund non-recurring costs such as research, capital projects, and other infrastructure needs,
• Minimize the amount of new debt,
• Provide full funding of the VRS contribution rates,
• Reduce the burden on Virginia’s businesses with fewer and lower fees,
• Provide additional support to attract new industry and promote tourism, and
• Make the largest investment in over a decade to our colleges and universities, and finally,
• To protect the health safety net for those less fortunate, and to continue reducing the waiting list for families with a loved one in need of either an ID or DD waivers

Mr. Speaker, I believe that the House conferees succeeded in their mission. The conference report upholds many of the goals and priorities we outlined.

 For example, the conference report provides an additional $215 million in funding for K-12, which is on top of the nearly $440.0 million proposed in the Introduced budget. The largest piece of these new funds is a $110 million in a flexible block grant that may be utilized for inflation, to help offset the local cost of the VRS, or for pre-K programs. What is unique, it that it is flexible and will allow the schools to direct its use.

In addition to the flexible block grant, the conference budget also provides: $47.1 million to update the funding for the K-3 class size initiative, $40.0 million to restore funds for the Cost of Competing, and full funding for the state’s share of the cost of the teacher VRS rate increase.

Mr. Speaker, in the area of Health and Human Resources, the conference recommendations focuses additional resources to meet the needs of Virginia’s most vulnerable citizens. Specifically, the conference report will restore funding to the health safety network; ensure adequate Medicaid payments for our hospitals and nursing homes; and, provide additional Medicaid waiver slots to address the waiting lists for intellectual disability and developmental disability services.

Mr. Speaker, I can’t tell you how proud I am of the conferees, especially Mr. Jones and Landes, in ensuring that the House position prevailed with regard to the ID and DD waivers.

In the original House budget, we were able to provide 250 waivers over and above those required by the DOJ agreement. Well, your conferees not only succeeded in upholding the House position, but added another 55 waiver slots, for a total of 305 ID and DD waivers. Again, this is over and above the slots provided as part of the Settlement.

Regarding the issuance of new debt, the House has been somewhat reluctant to engage in more debt at this time. While the House budget contained nearly $100.0 million less debt than the Introduced budget, the Senate budget contained about $230.0 million over and above the Introduced budget.

Again, the House prevailed, limiting the amount of new debt authorized. In total, the conference report will have $27.0 million less debt than the Introduced budget. However, the conference report provides nearly $87.0 million in cash to meet the state’s current commitment to 57 wastewater projects. This cash will be deposited into the Water Quality Improvement Fund.

The conference report also provides about $93.0 million in cash and bonds for 38 high priority construction and major renovation projects at our colleges and universities and state buildings.

In the area of higher education, the conferees again were not separated by dollars as much as they were by how to allocate the dollars to our schools. I want to thank Delegate Cox for his leadership in this area, and I am pleased that the conference budget provides over $212.0 million for enrollment growth, base operating support, financial aid, and incentive funding. This represents the largest investment in over a decade, and I want to also applaud Governor McDonnell for making higher education a priority.

Mr. Speaker over the last several years this House has made a priority commitment to the long-term structural balance of our finances. This budget will be no different.

With the Governor’s leadership, this budget will include nearly $300.0 million in Rainy Day Fund deposits, replenishing the fund, which was used as intended to weather the recession. The Fund balance at the end of FY 2014 will be in excess of $600.0 million, or about half of the level it was prior to the withdraw.

Last Session, the General Assembly began to phase-out the accelerated collection of sales tax revenues that required nearly 9,000 retailers to pay July’s sales tax in June.

Our recommendations immediately began the phase-out, resulting in 80% of the impacted retailers not having to accelerate their sales tax remittance last June.

The conference budget continues this phase-out by allocating $50 million, which will remove another 1,407 retailers from accelerating the tax collections. With this budget, and last year’s actions, 95.6% of all retailers will be removed from this requirement.

Finally Mr. Speaker, as I said back in February, I believe it is imperative to ensure that we have adequate cash reserves on hand as we continue to emerge from the worst recession in memory. To that end, the conference budget aside a couple of reserve funds. The first is designed to meet any negative impact of either federal budget reductions, or base realignment actions over the next several years.

The second reserve fund will serve two purposes; first, as a revenue reserve in the event that our economy does not perform at the levels that we anticipate. If our economy does perform, then these appropriated dollars will be earmarked for a pay raise in the second year of the budget -- fiscal year 2014 -- for state employees, college faculty, and our state supported Constitutional Officers and their employees, such as deputy sheriffs, Commonwealth Attorneys, and such.

Mr. Speaker, I want to thank all of the House conferees for their hard work and commitment over the last 6 weeks. It is not always an easy job, they don’t earn extra pay for their duty, but each and every one of the conferees was here; on demand, to meet the Senate on any day, at any hour. Thank you for your good work.

Mr. Speaker, it is time to vote on these two conference reports. It is time to move forward so that our local governments, public schools, colleges and state agencies can turn their attention to carrying out their responsibilities of providing services to the people of Virginia.

I hope it will be the pleasure of the House to adopt the conference reports.

Thank you.

RICHMOND, VA - Ahead of tomorrow's crucial vote on the Commonwealth's Fiscal Year 2012-14 budget, House Republicans emphasized the importance of quickly passing Virginia's biennial budget. House and Senate Budget conferees agreed to the conference report on the $85 billion budget before the Easter Holiday and localities, agencies and schools across the Commonwealth are waiting for final passage before creating their respective budgets for the upcoming fiscal year. This afternoon, Speaker of the Virginia House of Delegates William J. Howell (R - Stafford) issued the following statement urging passage of Virginia's financial blueprint for the coming biennium:

"Under the leadership of Chairman Putney and Chairman Stosch, the House and Senate budget conferees produced a structurally balanced budget that strategically targets economic development priorities, funds the core functions of government and does not raise taxes," said Speaker Howell. "While the budgetary process advanced in an unconventional manner this year, tomorrow we have the opportunity to bring the budget process to an end with the passage of the conference reports for HB 1300 and HB 1301."

The conference report includes additional funding to support higher education, to preserve the health care safety net, and to help spur job creation- all without raising taxes. Key investments include $110 million block grant for K-12 education, $122 million to moderate tuition costs in Virginia's public colleges and universities, $44.7 million for health and safety services, funding for 305 new Medicaid waiver slots and various economic incentives targeted to create jobs around the Commonwealth.

"The budget conferees worked tirelessly to craft a fiscally prudent conference report in a timely manner," said Delegate Kirk Cox. "With many critical deadlines looming for state agencies and local governments, a vote against the budget at this time is a vote to put funding for our teachers, local governments, and roads at risk."

Virginia's localities must enact a budget for local school divisions by mid-May for the upcoming school year. Localities also tailor their spending proposals on the funding levels set in the biennial budget. Schools and localities run the risk of inaccurately estimating and budgeting for the upcoming year if a budget is not in place as soon as possible. Critical transportation initiatives will also suffer absent budget passage this week - last week Virginia's Department of Transportation announced that 473 construction and maintenance projects from Fairfax to Abingdon would be shut down should a budget fail to pass.

"Rejecting the conference report at this late juncture would require the House and Senate go back to the drawing board and start the budget process over from scratch. Given the time and effort required to craft and negotiate a budget, if the budget fails tomorrow we couldn't hope to have a budget ready again for weeks," said Howell. "This is a good budget and a good compromise. We hope that Senate Democrats recognize that schools, localities and agencies across the Commonwealth cannot afford to wait on us to pass a budget any longer and that they will join with us tomorrow in voting for the budget."

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“Yesterday, federal employment data indicated that the unemployment rate in the Commonwealth dropped to 5.8 percent, the lowest rate since 2009.  This is a positive sign that Virginia is on a positive economic trajectory and yet another indication the job creation efforts of Governor McDonnell and Republicans in the General Assembly,” said Howell.

The February 2012 unemployment rate in Virginia stood at 5.8 percent, down from 6.2 percent in December 2011 and a peak of 7.2 percent in January 2010.  The drop in unemployment translates to over 50,000 fewer unemployment claims since the January 2010 peak according to the U.S. Bureau of Labor Statistics.  With a national unemployment rate of 8.3 percent, Virginia continues to outperform the nation as a whole in terms of job creation and retention.

“Job creation and economic development efforts have long been a priority of the House Republican Caucus.  We have had a great ally in Governor McDonnell pursuing various measures that attract business, encourage capital investment and reduce regulatory burdens that dampen economic vitality,” continued Howell.  “We could not be more pleased to see that our efforts have made a demonstrable difference to the economic well being of our business community and the prosperity of families across the Commonwealth.”

Included below are selected job creation and economic development bills sponsored by the House Republican Caucus during the 2012 General Assembly Session.

 2012 Legislative Accomplishments

• FY 2012-14 House Budget – HB 30 (Putney)
  • Includes $11.8 million in funding for the Governor’s Opportunity Fund, in turn creating jobs and stimulating economic innovation
  • Includes $4 million in manufacturing-based development programs to ensure that Virginia is a leader in the American Manufacturing renaissance
  • Includes $15 million for research and development efforts critical to the high-tech economy of Northern Virginia
• Fair Competition in Government Contracting – HB 33 (Comstock) & SB 242 (Obenshain)
  • Encourage competitive bidding on transportation and infrastructure projects to make the most of taxpayer dollars
  • Guarantees that free enterprise and full and open competition will determine how public construction contracts are awarded
  • Ensures neutrality and provides that the 96 percent of the Virginia private construction workforce who are non-unionized have a fair opportunity to compete for projects funded with our tax dollars

• Major Business Facility Jobs Tax Credit – HB 714 (Kilgore) & SB 368 (Reeves)
  • Extends the acceleration of the Major Business Facility Jobs Tax Credit, which incentivizes large businesses in all sectors to bring jobs into the Commonwealth
  • Encourages hiring of Virginians in a variety of sectors through business-friendly tax credits for each new, full-time, in-state hire
  • Stimulates business, particularly in economically distressed areas of Virginia, so that we can put Virginians back to work, help our businesses grow and continue the economic recovery here in Virginia.

• Renewable Energy Portfolio Incentives – HB 1102 (Miller)
  • Promotes research and development activity in Virginia by exploring and incentivizing job-creating domestic energy alternatives
  • Feeding the innovative engines in Northern Virginia will solidify our position as a national high-tech leader.

• Extension of Capital Gains Tax Exemption – HB 1013 (Comstock) & SB 226 (Herring)
  • Extends the current capital gains tax exemption for start ups
  • Allows our job creators to expand investment in science and technology by exempting investment in business start ups from capital gains taxes
  • This exemption encourages investors to risk their capital on Virginia’s entrepreneurs and create more good paying high tech jobs

• Extension of Telework Expenses Tax Credit – HB 551 (Comstock) & SB 238 (Herring)
  • Extends the telework tax credit for employers through the end of calendar year 2015
  • Promotes non-traditional work arrangements particularly important in Northern Virginia and Hampton Roads

•  Small Business Investment Tax Credit – HB 585 (Merricks) & SB 344 (McDougle)
  • Creates an incentive program to encourage investment in Virginia’s small businesses
  • Promotes and encourages entrepreneurship for the small, local businesses that make up the backbone of Virginia’s economy

• Agriculture & Forestry Development Fund – HB 766 (Landes) & SB 128 (Stanley)
  • Supports Virginia’s farming and forestry businesses by offering grants and loans to attract processing facilities that utilize Virginia-grown products
  • Virginia’s agricultural and forestry sector remains the single largest driver of our economy
  • Encourages domestic processing of Virginia’s agricultural resources, increasing economic utility and creating jobs – particularly in rural areas of the Commonwealth

• Virginia Energy Plan – HB 1177 (Watson)
  • Encourages domestic, Virginia-based energy production  including natural gas, coal and wind-based alternatives
  • Embraces innovative, forward-looking solutions that will insulate the Commonwealth from potential volatility in the energy market while creating jobs here at home
• Encouraged Development at the Virginia Port Authority – HB 1183 (Cosgrove)
  • Extends various tax credits intended to incentivize traffic at the Port of Virginia, critical to the vitality of the entire Hampton Roads region
  • Targeted investments in Virginia’s maritime and shipping industries will increase international trade and domestic shipping

• Expanded Virginia Investment Partnership Eligibility – HB 243 (Cline) & SB 338 (Newman)
  • Encourages existing Virginia manufacturers and researchers to continue their investment in Virginia by adding production capacity, utilizing cutting-edge technology and modernizing assembly processes
  • Increasing the pool of businesses eligible for incentives will further stimulate economic development and job creation efforts across the Commonwealth

• The Virginia Jobs Investment Program – HB 768 (Landes)
  • Creates a new Virginia Jobs Investment Plan to encourage creation of well-paid jobs,  administered by the Virginia Department of Business Assistance
  • Coordinating the training of Virginia’s workforce with the development of diverse, new employment opportunities throughout the Commonwealth will improve Virginia’s already exceptional business climate

• Extension of Coalfield Employment Enhancement Tax Credit – HB 1192 (O’Quinn)

• Extends this tax credit which incentivizes not only the mining of Virginia’s coal deposits but also creates and retains jobs in Virginia’s coal industry
• Particularly in rural southwestern Virginia, we strive to help forge partnerships to will put Virginians to work while capitalizing on our natural resources
• The coal industry has an incredible economic ripple effect all across Virginia, and ultimately leads to more affordable electricity for all Virginians

"My colleagues and I in the House Republican Caucus were pleased by the passage of Senate Bill 497 and House Bill 1130, which I carried in the House. These landmark reforms will permanently put the Virginia Retirement System on a structurally sound foundation and I can think of no greater ending to a busy and productive legislative session," said Howell.

The reform measures adopted by the General Assembly create a hybrid retirement program - similar to a measures recently adopted in other states - for all new state employees beginning in 2014. The hybrid plan mixes features of a pension-style defined benefit plan with a 401(k) style defined contribution program.

"The passage of these bills reflects the commitment of the members of the House and the Senate, Republican and Democrats alike, to ensure the long term solvency of the Virginia Retirement System," said Delegate S. Chris Jones (R - Suffolk), Chairman of the Appropriations Subcommittee on Compensation and Retirement, which governs VRS. "These bills are the culmination of efforts, over the past three sessions by the General Assembly, to enact common sense reforms to the VRS for the benefit of its members, both current and future employees."

"These reforms are important steps that will not only ensure the long-term solvency of the VRS, but they will also help us maintain structurally balanced budgets in the years to come. These reforms are also critical for us to retain our state's prized AAA bond rating," commented Majority Leader M. Kirkland Cox (R - Colonial Heights).

"I consider the passage of these bills to be one of the most important legislative achievements of my 25-year career in the General Assembly. It is my sincere hope that as Republicans and Democrats in both bodies worked together on this landmark legislation that will improve the financial health of VRS, we will now turn our sincere efforts towards a resolution on the budget," said Howell.

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The meeting will be held in the Appropriations Committee Room on the 9^th Floor of the General Assembly Building.  

For further information, please contact Robert P. Vaughn, Staff Director of the House Appropriations Committee at (804) 698-1590.  More information will be posted on our website (http://hac.virginia.gov) as it becomes available.

Members of the House Budget Conference Committee: 

• The Honorable Lacey E. Putney
• The Honorable M. Kirkland Cox
• The Honorable Beverly J. Sherwood
• The Honorable R. Steven “Steve” Landes
• The Honorable Chris S. Jones
• The Honorable Johnny S. Joannou

"With the defeat of the House budget yesterday by Senate Democrats, the Commonwealth of Virginia entered uncharted financial waters. Never before has the General Assembly failed to put a version of the Budget into conference. As many of us have said over the last several days, the obstructive actions of Senate Democrats put Virginia on uncertain financial footing."

"My colleagues and I in the House Republican Caucus were unwilling to allow such a state of affairs to continue. So today, Appropriations Committee Chairman Lacey Putney asked for the unanimous consent of the House of Delegates to reintroduce the FY 2012-14 House budget."

Due to procedural deadlines in the General Assembly, introduction of new legislation this late in the legislation session requires the unanimous consent of the body.

"We are pleased that our Democrat colleagues in the House of Delegates were willing to cross party lines to work with us on the most important piece of legislation to come before us this session. With their help, we now have a vehicle for continued consideration of the biennial budget."

"Today the entire House of Delegates - Republican and Democrats alike - sent a message to Senate Democrats: we have let this political theater play out for long enough. Now, Senate Democrats must come to the table and earnestly work with us on the financial blueprint that will govern Virginia's services and spending for the next two years."

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