Delegate Peace supports passage of correction to education funding

House Bill 5032 Unanimously Passes the House Mechanicsville, VA – Delegate Christopher K. Peace (R-Mechanicsville) today voted in favor of passage of House Bill 5032, a bill that amends the 2006-08 biennial budget to correct the estimated sales tax distribution for public education. The measure, introduced by Delegate Vincent F. Callahan, Chairman of House Appropriations Committee, does four things.

First, it corrects the sales tax estimate for distribution to school divisions. Second, it provides the state’s 55% average offset for basic aid. Third, it provides approximately $60 million in fiscal year 2007 in order to hold harmless the school divisions for their 45% share of the basic aid offset. Fourth, the bill contains a provision that will allow for the downward adjustment of the hold harmless payment to reflect any upward revisions to the sales tax following the December update. This measure amends the appropriation of funds for the two years ending respectively on the thirtieth day of June 2007 and the thirtieth day of June 2008. In other words, the hold harmless will extend only to the amount that school divisions originally anticipated receiving in fiscal year 2007 in the adopted budget, Chapter 3.

The overstatement of sales tax revenue for public education was an understatement in the amount of sales tax revenue in the general fund. Because sales tax represents the first dollar to fund the cost of education, any reduction would need to be offset by an increase in state basic aid payments, which would be on average 55% of the sales tax reduction. Because this error ultimately accrued to the benefit of the general fund, the cost to backfill the basic aid payment would come from these dollars. In fact, after backfilling the basic aid amounts, there would have been an additional $130 million in general fund resources available for appropriation over the biennium.

Upon adoption of the measure Delegate Peace stated, “The legislature passed a 2006-2008 budget which reflected a significant increase in state spending for K-12 education; an increase of approximately 19%. This good faith act was based upon financial data provided to legislative staff by the executive branch. Many localities made their budgets based on erroneous figures. This legislature did not want to hold this error against local schools systems. The legislature has done everything reasonable to ensure that no city or county loses money this year.”

Delegate Christopher K. Peace was elected to represent the 97th District of the Virginia House of Delegates on January 24, 2006. The 97th District includes parts of Hanover, Caroline, King William, King and Queen, Henrico, Spotsylvania Counties and all of New Kent County. Peace now sits on the prominent House Courts of Justice, Health Welfare and Institutions, and Science and Technology Committees.