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2013 Session Report

March 7, 2013

Dear Friend,

The 2013 General Assembly session ended on schedule on 23 February with the passing of the 2013-2014 state budget and other final bills. We will reconvene on 3 April to address the Governor’s proposed amendments to the budget and legislation, as well as to elect judges for vacant positions.

I serve on the House Appropriations Committee, where I work with other legislators and the Governor’s office to craft the budget. I also serve on the Agriculture, Chesapeake, and Natural Resources Committee, where we address issues concerning agriculture, forestry, natural resources, environment, and historical resources. In addition, I serve on the Counties, Cities, and Towns Committee, which has cognizance over the relationships between the state and local governments. My primary focus this session was the budget, Route 58, and reforming electric utility regulations to hold down our electricity costs.

Overall, I strongly supported the budget I helped craft in the House Appropriations Committee, and it passed the House 83-17. While the final budget bill contains some provisions I disagree with, it is a conservative and balanced budget, reflecting targeted expenditures and priorities for jobs, economic development and core services. I was pleased we were able to a) restore local direct aid to counties and towns; b) fund a 2% raise for teachers and support staff; c) provide salary increases for state employees, including a ‘compression’ factor; d) provide state supported local employees a raise; e) fund an additional 200 ID and 50 DD Medicaid slots for the health care safety net for less fortunate citizens; and, f) provide $31M for school safety and security. We also set aside funding to address likely DOD cuts, whether from sequestration or yearly federal budget cuts to Defense. In the biennium budget that we prepare next January, we are required by Virginia’s Constitution to replace about $285M in the Rainy Day Fund. We set aside $95M this year as a down payment for that.

The budget discussions and media coverage included some lively and emotional debates on Medicaid expansion, often ignoring the fundamental fact that governors, not legislators are the decision makers. Governor McDonnell, rightly so, has decided not to implement Medicaid expansion, certainly not until the current federal program’s shortcomings are fixed by fundamental reforms for health outcomes, cost containment, elimination of waste, fraud and error, and until Virginia can be confident the federal funding is there. This is a wise and prudent step as Medicaid is now 22% of the state budget, up from an historic level of around 13%, and is expanding each year under the current rules and regulations. Even President Obama, as a candidate for President, remarked, “As we move forward on health care reform, it is not sufficient for us simply to add more people to Medicare or Medicaid to increase coverage in the absence of cost controls and reform…another way of putting it is we can’t simply put more people into a broken system that doesn’t work.” This is one of his few statements on which the President and I agree.

Since the Senate had Medicaid expansion in their budget — and, frankly, we don’t yet know the next governor’s position on this issue — we came to agreement on a budget amendment that would REQUIRE reforms first and then and only then could expansion occur if the House members of a special commission concur that the necessary waivers (changes) from the federal government have been granted, they are in place in Virginia, the cost containment is as promised, and the federal funding available. I am doubtful the federal government will even grant us state management and control of Medicaid, that whatever they offer will address the cost containment necessary for Virginia, or that the federal government has the money. So, I supported this push-back against Obamacare.

We passed a significant bill on electric utility regulation. Recall that the Attorney General is the ‘lawyer’ representing all of us in rate increase requests to the SCC by the Publically Owned Utilities (POU’s), such as APCO. As our rates have risen steeply over the last few years — chiefly due to EPA regulations on coal mining and coal-fired generation plants — he and his staff have worked diligently to determine if there were steps Virginia could take on its own in today’s changing energy environment to improve our regulatory framework. Working with all stakeholders, he proposed and we passed HB2261 (Kilgore). This legislation a) places base rate increase requests by APCO and Dominion into alternate years, which means APCO cannot file another base rate request until 2014; b) provides policy guidance to the SCC for accounting for certain major costs beyond the control of the utility; c) increases the customer refund percentage for earnings above their authorized Return On Investment (ROE); d) expands the definition of when earnings are insufficient or excessive; and, e) eliminates incentives for certain generation projects.

With regard to the latter incentives, the bill eliminates the Renewable Portfolio Standard (RPS) incentives and reduces the incentive dollar returns for nuclear and offshore wind to half of that currently allowed. Eliminating the RPS incentive was what I had in mind last year with my HB1017. While HB1017 did not pass last year, I refilled it (HB1987) this year and it was incorporated into broader bill, HB2261, which we passed and the Governor signed.

These incentives were intended to encourage the use of renewable energy sources. Unfortunately, as we have seen in state after state across the nation, they have failed to produce power that is competitive in price, cannot operate without huge taxpayer and user subsidies, and are not as efficient as natural gas, coal, and nuclear power generation. While the cost and reasonable profit on a renewable project made sense, a bonus incentive of .5% on the equity of the entire company is not appropriate for customers to bear.

After spirited debate, and I suppose the use of much of my political capital, my House Bill 1953 for completing Route 58 to I-77, passed the General Assembly and went to the Governor for his signature. The bill increases the current bond authorization by $553M and prioritizes the Lover’s Leap segment for completion when construction resumes. I am especially grateful for those who traveled to Richmond, sent letters, and called other legislators in support of this bill.

Other legislation I co-patroned or supported include further reforms for K-12 education; preventing the disclosure of identifications of concealed carry permit holders; requiring secret ballots in union elections; not permitting unions access to personal data in organizing drives; toughening Virginia’s texting-while- driving laws; improvements in scrap metal selling/purchasing procedures; expanding foods permitted to be sold off the farm; significant tort reforms for businesses and plaintiffs; placing a moratorium on drones until 2015 for further study; limiting products that can be purchased with welfare funds; moving most Water Quality Programs from DCR to DEQ for better administrative effectiveness; and, doctors are now required to tell patients that Lyme Disease tests are not always correct. The Tebow bill, allowing school districts to permit homeschooled students to participate in sports failed in the Senate again by one vote. I expect it to return, as so many citizens support the measure. The bills to open schools before Labor Day failed again, so the current waiver system remains in place. With Smith Mountain Lake and tourism in Patrick County providing so much of the revenue local governments receive and, in turn, spend on K-12 education, I continue to oppose efforts to move the start date for K-12 to before Labor Day. A bill to require drug tests as part of the eligibility process for welfare recipients failed again this year due to cost.

Possibly the most important bill we addressed this session was transportation. Virginia is in danger of losing our cherished AAA bond rating and our “friendly to business” ranking has dropped due to our failure to address an adequate transportation infrastructure. Perhaps more importantly, there simply is no money for secondary roads, primary roads such as Route 58 or Route 122, or start-up money for I-73. Most of the new construction dollars are currently going to maintenance. By 2017, there will be zero construction money and maintenance will go negative. Thus, we will not be able to maintain the roads we have. This has been a long-simmering problem, and the resultant bill was a ‘give and take and compromise’ by legislators from all regions of the state and legislators of both political parties.

Since the current gas tax is a declining source of dollars (greater MPG, new 55MPG standard, etc.), the bill ELIMINATES the current 17.5-cents per gallon tax and replaces it with a 3.5% sales tax on gas and 6% on commercial-use diesel (heavy trucks cause more wear and tear), both levied at the wholesale or ‘rack’ level. The general retail sales tax is increased from 5% to 5.3%, which also goes to transportation as everyone — even non-drivers — benefit from good roads and transportation. Together, these two changes mean rural Virginians will be paying LESS state taxes on gasoline, around 10-cents a gallon versus 17.5-cents today.

The second major component of the bill applies only to Northern Virginia and Hampton Roads. In those areas, money is raised there and spent there on transportation projects they decide on. For example, in NOVA their sales tax goes from the new statewide 5.3% to 6%, an added 3% transient occupancy tax, and 25-cents/$100 is added to the Grantor’s Tax. Unless we travel to these regions and spend money there, this component does not affect us, but it does allow them to address huge congestion problems with their money however they decide.

Another significant component is using some General Fund monies to fund transportation. Transportation is funded and spent separately from the General Fund, which is the regular budget funding source for education, health and human resources, public safety, etc. Historically, using some General Fund dollars for transportation has been a contentious issue between political parties and regions, so this is a significant policy change resulting from the bill. I’ve always believed transportation is a core function of government and some of the General

Fund money should be used for transportation so, to me, this is a positive change for the future. Other components include reducing the current 2% discount for vehicle sales by 1%, so vehicle purchases will cost more, and alternative fueled vehicles will pay a $100 yearly fee, as these vehicles use the roads, as well.

For years, the House of Delegates has wanted a ‘lockbox’ bill to ensure monies raised for transportation would have to be spent for transportation. We passed legislation again this year to do that. Unfortunately, the Senate killed our bill, just as they have done every year since I’ve been in the House.

This was not an easy vote for me but, as I said, rural Virginians will be paying some less for gas, which is so vital to us, and the bill will provide additional funding for all the state, including us per the statewide funding allocation formula that allocates road funding across the state. Some critics of this bill will say we should reduce General Fund spending instead of passing a comprehensive transportation bill. We’ve done that. I helped reduce General Fund spending by $7B in the last few years while keeping taxes level and reducing spending by nearly every state agency. Education (K-12 and higher education) makes up 50% of the state discretionary budget; Medicaid 22%, public safety 15%, and everything else about 13%. So, it is the duty of critics to say what they would cut or reduce. I have yet to locate any contractor who would put down asphalt for free.

This bill is not perfect, nor will any similar bill ever be perfect due to regional, political, and personal preferences. But this is a bill that could pass regional and bipartisan hurdles and fix the problem for a long time. I was elected to fix problems, to govern, to make tough decisions. So, I did what I determined was the right thing to do for the citizens of the 9th District, other rural areas and Virginians in our urban areas. A major driver in my decision to vote for this bill was that the NOVA and Hampton Roads legislators dropped their insistence on ‘stacking’ the Commonwealth Transportation Board with urban representatives and making changes to the roads funding allocation formula that rural Virginians are so dependent upon for roads. Either or both would have devastated rural Virginia transportation infrastructure and, especially, our roads needs for decades to come.

I am always humbled to walk the historic halls of the Virginia Capitol fully aware you have placed in me your confidence, faith and support. I would be pleased to discuss with you or your group any issues from this session or provide assistance with any state government matters you may have. You can contact me at 540-576-2600 or or P.O. Box 117, Glade Hill, VA 24092.


Delegate Charles D. Poindexter
9th District, Virginia House of Delegates
Virginia General Assembly


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Courtesy Ronald Reagan Library
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Ronald Reagan
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