Press Release

William J. Howell and Vincent F. Callahan

Speaker Howell, Chairman Callahan Object to $1.0 Billion Cumulative Reduction in Dedicated Funds for Commonwealth's Six-Year Transportation Plan

Objections also raised over $100 million Reduction for Chesapeake Bay Clean Up

Administration urged to restore funding in 2006-08 Base Budget consistent with state law

RICHMOND--House of Delegates Speaker William J. Howell (R-Stafford) and House Appropriations Committee Chairman Vincent F. Callahan, Jr. (R-McLean) today issued the following statement following yesterday's Warner Administration presentation to the House Appropriations Committee on developing the Commonwealth's base budget for the 2006-2008 biennium:

"In the 2005 Session, House Republicans initiated, introduced and successfully enacted not only the largest dedication of funding - nearly $850 million - to Virginia's roadways and transportation infrastructure in nearly 20 years, but also a 'bold and unprecedented commitment' according to the Chesapeake Bay Foundation of $50 million annually - or $500 million over 10 years - for cleaning up the Chesapeake Bay and Virginia waterways. What impressed so many were that both of these innovative initiatives included new, ongoing and sustained revenues to improve transportation mobility, increase highway safety, and reduce the amount of pollution that is released into streams and rivers that feed the Chesapeake Bay," said Speaker Howell.

Speaker Howell continued: "The Governor proudly signed these House Republican legislative initiatives into law just months ago. That's why I am dismayed that the Administration now is eliminating $290 million in dedicated transportation funding and eliminating another $100 million for water quality improvements in the 2006-08 state budget that the Governor is preparing. Not only are the Administration's actions misguided, but they also fail to recognize previous funding commitments by the General Assembly clearly expressed in the Code of Virginia. Chairman Callahan and I respectfully urge Governor Warner to join House Republicans now to restore this base level of funding. If the Governor chooses not to do so, House Republicans will insist upon and vote for a budget that restores this critical funding during the 2006 Session."

"I am truly troubled by the cavalier attitude toward the law on the books that the Administration appears to be taking as it develops the base budget for the 2006-08 biennium," said House Appropriations Committee Chairman Vincent F. Callahan, Jr. (R-McLean). "I do not know what the Governor's final budget will yield for transportation. However, I am confident that the budget crafted by the Appropriations Committee next year will fully recognize the previous funding commitments we have made to retiring the FRAN debt and to depositing the one-third of the insurance premium tax to transportation. Frankly, the Speaker and I believe that to continue with this uncertainty only serves to heighten the distrust taxpayers have in our ability to keep our word and fulfill our commitment not to divert transportation funding from its intended purpose."

Yesterday, the Governor's Department of Planning and Budget made a presentation to the House Appropriations Committee that outlined the Administration's 2006-08 base budget adjustments. There are two actions that, if left uncorrected, will result in a cumulative reduction of over $1.0 billion in the six-year transportation plan, a third of which will directly impact road construction in Northern Virginia.

According to the Warner Administration, the annual deposit of the insurance premium revenue to the Priority Transportation Fund will not continue in FY 2007 and FY 2008. The Virginia Transportation Act of 2000 requires that one-third of the insurance premium revenue be deposited to the Priority Transportation Fund. Earlier this year, the Governor proposed language eliminating this statutory requirement in budget amendments submitted to the 2005 General Assembly. House budget and the adopted budget rejected this proposal. As required by statute, the House budget and ultimately the final conference report appropriated $107.6 million from this source for transportation during the 2005 Session.

The other transportation-related action removes the general fund appropriation that has been pledged for the retirement of the Federal Revenue Anticipation Notes (FRANS). That action is inconsistent with language included in the adopted in the 2005 Amendments to the 2004-2006 State Budget. That language states: "It is the intent of the General Assembly that general fund appropriations to the Priority Transportation Fund shall include the amounts required to offset the debt service payment requirements on the Transportation Trust Fund attributable to the $317,000,000 of the Federal Highway Reimbursement Notes until such debt has been retired." (Chapter 951, 2005 Acts of Assembly). These FRANS cannot be retired prior to their maturity and general funds will be required until 2013 for debt service. Either general funds will be provided for future debt service or transportation revenue that could be used for road projects will be required to pay this FRAN debt service.

In addition to removing funding for transportation, the Warner Administration's Department of Planning and Budget also stated yesterday that the 2006-08 base budget removes $50 million in general fund support to reduce the nutrients discharged by wastewater treatment plants located in the Chesapeake Bay watershed.

As originally proposed by House Republicans in House Bill 2777 (Louderback) during the 2005 Session, $500 million over a period of 10 years would have been deposited to the Water Quality Improvement Fund (WQIF) to address the nutrients discharged by the 120 wastewater treatment plants listed as "significant dischargers." The legislation approved by the 2005 General Assembly established a policy requiring the Commonwealth to provide the financial support necessary to support these grants. While some in the Administration may believe and state that the $50 million was a one-time payment to the WQIF, House Republicans believe that given Virginia's commitment to cleaning up the Chesapeake Bay by 2010 and the requirements of a federal consent decree, it is absolutely clear that the General Assembly considered this an ongoing commitment.