House and Senate pass varying versions of a state budget, will ultimately compromise and present a single version to the Governor. Also, read (and watch) the latest on safety inspections.
Session 2020, Issue 7
February 24, 2020
Monday, February 24 marks Day 47 of the General Assembly’s 2020 Regular Session. Just 60-days in duration, this “long” session has less than two weeks remaining in which Senators and Delegates can further consider bills. Perhaps the most pressing issue left to discuss is that of the state budget. But not all is done on safety inspections.
The Budget Process
For some background on the budget, Virginia operates on a two-year budget cycle. The Governor proposes a budget based on estimates, outlining major projects for two years and the money needed to see them through. After Year 1, with knowledge of actual revenues to date, the Governor presents a revised budget, reflecting modified plans.
Governor Ralph Northam delivered his proposal for the 2020-2022 cycle last December, when he announced his desire to eliminate Virginia’s safety inspection program among other initiatives.
After the Governor makes such a proposal, it goes before the General Assembly for consideration during session. The House Appropriations Committee and Senate Finance and Appropriations Committee independently look at the Governor’s blueprint, plus amendments offered by their chamber colleagues, and craft spending plans of their own.
Like all other legislation, the House budget will then go to the Senate for consideration, and the Senate budget will go to the House. Unlike other legislation, this budget transfer occurs after crossover and once the chambers have a good sense of the money needed to fulfill their own legislative ideas.
From there, each chamber will “conform” the other budget to theirs—in other words, they will simply amend the other chamber’s budget bill to look like the one they already passed and send it back to the other side. Then, the House will reject the amendments the Senate put onto the House budget, and vice versa. This process puts the House budget and the Senate budget bills “in conference,” where a small group of legislators work out a compromise. The House and Senate will then independently vote on such compromise, known as the “conference report." The legislature will send the prevailing General Assembly budget to the Governor for signature, veto(es), or amendment(s).
As an additional note, in Virginia, state government must balance the budget. In other words, no deficit spending is permitted. As a result, our legislators and administration must make tough decisions about where, how, and how much money will be spent.
What’s in the budget?
A lot. Last week, the House and Senate passed their respective versions of the budget. Now, the House and Senate will work out a compromise via conference committee, and we’ll know what emerges from that this week. What the Governor will sign, veto, and/or amend is to be determined over the next couple of months. The General Assembly will reconvene in late April to consider his action(s).
In any event, it appears state K-12 teachers will get a significant increase in salary. That initiative is shared by the Governor and both chambers in the General Assembly, with the legislators pushing for an even larger increase than what the Governor suggested. Other state employees are likely to also see some boost in pay.
Staying with education, the House budget alone offers another year of tuition freezes at Virginia’s public institutions—they’ve marked $111.8M for that purpose.
Massive amounts of money will be needed to fund whatever transportation package carries the day. Other budget items include, but are not limited to, sports betting, Medicaid, minimum wage, and social services, for which the Governor, House and Senate frequently offer varying approaches. Every year, a significant portion of state’s revenue goes to the Commonwealth’s reserve fund. That figure is $300M in all versions of the 2020-2022 budget to date.
Video plus the latest on safety inspections
Of course, quite relevant to our industry is the topic of safety inspections. Please view the following videos from last week’s House Transportation Committee meeting, where Delegates considered SB 907.
The first video shows VADA’s testimony on the topic. We have previously spoken at length on this issue but reminded the committee of our current position.
The second clip shows Del. Jay Jones explaining why he and the administration want inspections every other year. It also shows Del. Terry Austin offering an amendment to maintain annual inspections.
The third video provides the House Transportation Committee’s full consideration of SB 907.
For context, SB 907 left the Senate with no mention of safety inspections, reflective of the Senate’s stance on keeping annual inspections in place.
Last Thursday, the House Transportation Committee modified SB 907 to make it look like the House version, which would mean inspections every other year. The Senate can still reject such amendment.
What happened yesterday to SB 907 is happening in both chambers to all safety inspection legislation still alive. Votes for or against do not necessarily mean votes for or against safety inspections alone, since the bills include a significant number of initiatives with varying levels of support.
This sort of back and forth will put the inspection bills in a conference committee, in which a small number of Senators and Delegates will work out a compromise. We aren’t there yet. That said, the videos above provide good insight into some of the arguments being made on the safety inspections front.
Weekly Legislative Update
See where we are on the issues and bills that affect Virginia dealerships the most.
Originally, there were five bills—two in the House, three in the Senate—addressing Virginia’s annual safety inspection program. As part of his budget proposal, Governor Ralph Northam announced his desire to repeal the program. He asked Delegate Jay Jones (D-Norfolk) and Senator Louise Lucas (D-Southside & Hampton Roads) to carry legislation including such repeal in addition to other transportation safety initiatives.
The House has its position to require safety inspections once every two years, while the Senate’s approach is to keep annual inspections.
We have made clear to all that maintenance of the safety inspection program is not about money for VADA members. It is about consumer safety and how VADA members see first-hand the defects that need fixing for cars to properly function. Throughout session, we have highlighted consumer safety reasons for keeping the program, providing data to back up our points. We have also discussed how even the newest vehicles cannot alert drivers to every deficiency in a vehicle an inspection would catch.
Earlier this session, Republican Senators Steve Newman, Mark Obenshain, and David Suetterlein voted to preserve a bill Sen. Suetterlein carried that would have eliminated the inspection program. Fortunately, that bill died. We thank dealers statewide who have called and continue to call their elected representatives to explain the importance of safety inspections.
HB 1414 – Speaker Filler-Corn
- Bill would, among furthering other administration-backed transportation initiatives—alter the safety inspection program to require inspections once every 24 months. The House passed the bill 56-42. Referred to Senate Committee on Finance and Appropriations.
HB 1439 – Del. Jones
- As amended, HB 1439 would alter Virginia’s safety inspection program to require inspections once every 24 months. Bill also includes other transportation safety measures. The House passed the bill 52-48. Senate Transportation conformed the bill to the Senate version of SB 907, thus keeping safety inspections, and referred it to Senate Finance and Appropriations. If it passes the Senate, we anticipate the House will reject the Senate amendments and put this bill in conference.
SB 890 – Sen. Saslaw
- Bill contains the same transportation measures as HB 1414 but maintains the annual inspection system. The Senate passed the bill 23-17. House Finance conformed this bill to HB 1414, which would require safety inspections once every 24 months. House Appropriations reported the bill as amended. If it passes the House, we anticipate the Senate will reject the House amendments and put this bill in conference.
SB 907 – Sen. Lucas
- Bill contains some of the same measures as HB 1439 but maintains the annual inspection system. The Senate passed the bill 26-14. House Transportation conformed this bill to HB 1439, which would require safety inspections once every 24 months. If it passes the House, we anticipate the Senate will reject the House amendments and put this bill in conference.
HB 577 – Del. Keam
- Bill would put in place California emissions standards, potentially both low emissions (LEV) and zero emissions (ZEV) standards. This bill died in House Appropriations.
HB 595 – Del. Bourne
- Bill would authorize the Department of Motor Vehicles to issue, upon request of a licensed dealer, a license plate that is a combination of a special license plate and a dealer tag. VADA asked Del. Bourne to carry this legislation. The House passed the bill 98-0. The Senate passed the bill 38-0. It will go to the Governor for approval.
Peer-to-Peer Vehicle Sharing
Marketed by some as Airbnb for cars, peer-to-peer vehicle sharing is an emerging technology that would allow one to rent—or share, depending on whom you ask—their vehicle to another through an online platform. The sharing platforms asked patrons to carry their preferred legislation. A rental car company asked patrons to carry theirs. Taxation was the main point of contention, with the platforms wanting less than the 10% rental tax applied to their transactions.
Why are we involved? We want everyone—including the car sharing platforms and/or its users—to pay their fair share to the Commonwealth so as to prevent Virginia from needing to increase the sales and use tax as a way of accounting for any deficits.
Additionally, we want to prevent a platform company—owned or funded by a large auto manufacturer—from titling a fleet of vehicles in another state, never paying Virginia’s sales and use tax, and bringing cars into Virginia to operate just as a traditional rental company but with a tax break.
With VADA’s help, the two sides reached agreement. Whenever a single owner has 11 or more vehicles on a shared platform, the tax on transactions shall be 10%, same as the rental tax. A single owner who has 10 or less vehicles on a shared platform will be taxed at 6.5% for the first year of this law and 7% thereafter. This is a win for VADA. It preserves transportation revenue, and it prevents large manufacturer owned fleets from circumventing the rental rules.
SB 735 – Sen. Newman
- SB 735 reflects the consensus language and will be the vehicle for the agreed upon language moving forward. There is no need for HB 891, HB 892, HB 1539, SB 749, or SB 750 and, as such, all died before crossover. The Senate passed the bill 40-0. Both House Finance and House Appropriations approved the legislation. We anticipate the House will pass it this week.
As always, we are monitoring various employer-employee legislation. This year, such bills include those addressing employee purchases of necessary tools and equipment, non-compete agreements, an increase in the minimum wage, and paid sick leave.
Consumer Data Security
Various bills dealing with consumer data will be studied over the coming year in preparation for legislation in 2021.