Capitol Briefs 2023 | Issue 7

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As Commonwealth waits for budget, successful session for Virginia dealers comes to close

Franchise protections. Untaxed diagnostic labor. Home solicitation amendments. Loud exhausts getting study. EV mandates remain in place.

2023 Session, Issue 7
February 27, 2023

A two-year biennial budget was adopted during the 2022 session and signed into law in June. That budget could remain if House Republicans (who hold the majority in that chamber) and Senate Democrats (who hold that chamber’s majority) cannot agree to changes.

Negotiations are ongoing but they did not complete their work in time for the General Assembly’s adjournment on Saturday, though they were able to agree on a handful of stopgap measures to adjust the budget until they can reach an agreement on the full version.

The House and Senate proposals have a $1 billion chasm in available budget revenues. Democrats oppose the Republicans and Governor Glenn Youngkin’s package of tax cuts. Senate Finance Co-Chair Janet Howell (D-Fairfax) and House Appropriations Chair Barry Knight (R-Virginia), along with budget conferees, will continue conversation over the coming days. Youngkin will have his chance to propose budget amendments for lawmakers to consider at its veto session on April 12.

The General Assembly did finish its work on all other legislation. The bills passed by the General Assembly will now be considered be the Governor, who can sign, amend, or veto the bills. Here is a rundown on the issues we have been tracking.

Franchise bill the first to clear both chambers

The House version of VADA’s franchise bill, HB1469, was the first bill of the session — out of hundreds of pieces of legislation — to cross the finish line after receiving unanimous support from both the House and Senate. The completed House and Senate bills are with the Governor for signing. (Click the one-pager or here to get the 101 on the bills)

Bill to remove tax on diagnostic work

Delegate Kim Taylor (R-Petersburg) has House Bill 1677 to clarify that diagnostic work for automotive repair should be characterized as labor, and therefore untaxed. Dealers agree. There is minimal fiscal impact on the state budget. There were some clarifying questions for the Virginia Department of Taxation and Senate finance staff as to whether other industries could attempt to modify their own labor standards for diagnostic services, and potential revenue impacts of such decisions. After advocacy and talking to Senate Finance Committee members, HB1677 passed in the Senate 40-0 and the House 99-0.

Clarifying “Home solicitation”

House Bill 2422 and Senate Bill 1509, which passed both chambers unanimously, clarify the definition of a “home solicitation sale” and amend the Virginia Home Solicitation Sales Act. The Act provides consumer protections from sellers that solicit sales at the door or over the phone. A key provision of the law provides buyers the right to cancel a home solicitation sale until midnight of the third business day after the day when the agreement or offer is signed, often referred to as the “cooling off period.” The bills are backed by an insurance company looking to exclude insurance agents from the act.

Given that dealers sometimes do test drives or conduct business at a person’s home, VADA attorneys wanted to ensure the new definition would not lump dealers into “solicitors.” VADA asked for and received a carveout in the bill to ensure licensed motor vehicle dealers who may, from time to time, deliver a vehicle or sign paperwork at customer’s home do not come under the act.

The House bill is sponsored by Amanda Batten (R-James City), with the Senate version by Monty Mason (D-Williamsburg).

Loud exhausts gets workgroup study

A bill from Senator Adam Ebbin (D-Alexandria) would limit the decibel level to 85 (50 feet away) from a vehicle’s exhaust system. Northern Virginia, in particular, has had a rash of complaints from citizens about loud exhaust (due mostly to highway racing). There are a dozen or so automobiles sold by dealers with systems over 85 decibels, so while we hear the pain, we also don’t want dealers harmed by Senate Bill 1085.

The bill has been amended to a study to address this issue, which VADA supports. House Transportation committee Chairman Terry Austin (R-Buchanan) would also like a study at how exhaust systems affect noise ordinances, law enforcement, and prosecution. Ebbin’s legislation passed the House 31-8 and the Senate 77-21.

Clean Cars repeal dies in Senate, remains in place

There were a number of bills in the House and Senate to repeal the 2021 law to adopt California Air Resource Board standards and CARB’s zero-emissions vehicle (ZEV) requirements in Virginia. HB1378 passed out of the House on partisan lines and headed to a Senate committee, where the legislation died on a party-line 8-7 vote. Therefore, Virginia will remain under the EV mandates adopted by California starting with the 2025 model year.

As always, it has been a pleasure serving Virginia's franchised new car and truck dealers.
Don Hall
President & CEO
Anne Gambardella, Esq.
General Counsel & EVP

Ralston King
VP, Legislative Affairs

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