State won’t study ‘fiscal stress’ of local governments

Sen. Rosalyn Dance and Sen. Emmett Hanger, Jr. (Courtesy CNS)

RICHMOND, Va. (CNS) — A bill ordering a study of the “fiscal stress” of local governments was halted in the House Rules Committee this week.

More than 53 percent of counties and cities in Virginia have reported above-average or high fiscal stress, according to a report by the Commission on Local Government. Petersburg, a city grappling with a severe financial crisis, placed third on the state fiscal stress index behind the cities of Emporia and Buena Vista.

“Petersburg does have some financial challenges, but they’re actually not unique. There are a lot of counties and localities within the commonwealth right now that are facing similar fiscal distressers,” said Del. Lashrecse Aird, D-Petersburg.

The top priority for this session, according to Aird, is identifying “what we as a commonwealth need to do to put protections into place and allow localities to have tools and resources to prevent this type of challenge from occurring into the future.”

Under SJ 278, a 15-member joint subcommittee would have reviewed local government and state tax systems, local responsibilities for delivery of state programs and causes of fiscal stress among local governments. In addition, the study would craft financial incentives and reforms to promote increased cooperation among Virginia’s regions.

“I believe that this legislation will help address fiscal issues that localities are experiencing,” said Sen. Rosalyn Dance, D-Petersburg, who co-sponsored the legislation. “Currently, there is no statutory authority for the Commission on Local Government to intervene in a fiscally stressed locality, and the state does not currently have any authority to assist a locality financially.”

In the case of Petersburg, the city received technical assistance from state officials, including cataloging liabilities and obligations, researching problems and reviewing city funds. However, state intervention could have occurred only if Petersburg invited it, because current law forbids the commonwealth from imposing reactive measures in a struggling locality.

SJ 278 was sponsored by Sen. Emmett Hanger, R-Augusta County, who co-chairs the Senate Finance Committee. Earlier in the session, the committee killed seven bills relating to state and local tax policy reform. Hanger agreed to reconsider the rejected tax reforms as part of the proposed study mandated by SJ 278.

Hanger’s resolution passed in the Senate but was left in the House Rules Committee. Del. Lee Ware, R-Powhatan, cited the upcoming elections this year of House members and governor as a roadblock for the bill. Moreover, the 2018 legislative session will last 60 days, compared with just 45 days during the current session.

“Regarding tax reform proposals, they are interesting to consider in a short session but unlikely,” said Ware, who chairs the House Finance Committee.

Capital News Service is a student-operated news reporting program sponsored by the Richard T. Robertson School of Media and Culture at Virginia Commonwealth University.

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