Update on the General Assembly
Details on important bills related to the business community, as well as the “skinny budget” can be found below. The bills that passed the House and Senate and are headed to the Governor’s desk for signature include:
HB1842 (Knight) creates the Virginia Business Ready Sites Acquisition Program. The Program was created to better acquire sites in order to create and maintain a portfolio of project-ready sites, develop such sites to increase marketability, and enter into development agreements with private employers for large-scale economic development projects. The sites acquired through this program would be owned by the state.
HB2332 (E. Campbell) and SB1308 (Deeds) reduce from 100 acres to 50 acres the minimum number of contiguous acres required for a site to be considered eligible to receive a site development grant from the Virginia Business Ready Sites Program Fund administered by VEDP.
SB1134 (Ruff) and HB2238 (Cherry) establish the Precision Plastic Manufacturing Grant Fund, which will provide up to $56 million in grants to a qualified company that engages in the manufacture and distribution of precision plastic products. There is an expected capital investment of at least $1 billion and it will create at least 1,761 new full-time jobs related to or supportive of its business.
HB1924 (Hope) requires authorized employers to pay individuals with disabilities at a rate at least equivalent to all other employees covered by the Virginia Minimum Wage Act.
SB1086 (Ebbin) requires qualifying businesses to provide unpaid living organ donation leave. The bill requires the employer to provide up to 60 business days of unpaid leave in any 12-month period for those serving as an organ donor and up to 30 days of unpaid leave in any 12-month period for those who serve as a bone marrow donor. It also requires employers to continue to provide health care coverage during the employee’s leave.
HB1895 (Filler-Corn) prohibits any employment agreement from including a nondisclosure or nondisparagement provision with the purpose of concealing a claim of sexual assault or sexual harassment as a condition of employment. The bill reflects federal law.
HB2180 (Morefield) and SB1213 (McDougle) requires the Department of Professional and Occupational Regulation (DPOR) to recognize licenses and certificates issued by another state. To qualify, the individual must have a valid license or certificate, which has been held for three consecutive previous years, and pass a board examination by another state’s board. The individual must be in good standing, cannot have any pending investigations, unresolved complaints, or discipline imposed related to their license or certificate, and cannot have a disqualifying criminal record. The bill also requires DPOR to recognize work experience in another state as fulfillment for licensure or certification in the Commonwealth if certain conditions are met. Once signed by the Governor, this legislation will go into effect on July 1, 2023.
HB2195 (Byron) and SB1470 (Ruff/Barker) are workforce transformation bills creating the new Virginia Department of Workforce Development and Advancement. In addition to the new agency, the legislation consolidates statewide workforce program evaluation and data sharing, and transfers the following programs to the new agency:
Title I (workforce development activities) and Title III (employment services and labor exchange services) of the Workforce Innovation and Opportunity Act (WIOA);
The Trade Adjustment Assistance program;
The Jobs for Veterans State Grant program;
The Reemployment Services and Eligibility Assessment program;
Registered Apprenticeship programs;
The Virginia Career Works Referral Portal and Workforce Data Trust;
The Virginia Workforce Connection;
Labor market information services;
The Hampton Road Skilled Trades Rapid On-Ramp Network for Growth.
The new agency will have the powers and duties to promulgate regulations, develop a strategy to inform and engage with the business and organized labor communities to coordinate the workforce development programs offered by the Department, identify labor market needs, regularly track metrics related to the workforce development programs, and ensure alignment of the Department's offerings to the needs of employers and the needs of the Commonwealth. Additionally, the new agency and the State Council on Higher Education of Virginia (SCHEV) will jointly develop and implement strategies to collaborate with employers and higher education institutions to grow and expand the Virginia Talent and Opportunity Partnership (V-TOP).
Education & Child Care
The Virginia Literacy Act bills, HB1526 (Coyner) and SB1175 (Lucas) expand several provisions of the Virginia Literacy Act enacted during the 2022 General Assembly session. Most notably, this legislation provides critical reading intervention services to students in grades four through eight who demonstrate substantial deficiencies on Standards of Learning (SOL) reading assessments or other literacy screeners. The 2022 National Assessment of Educational Progress (NAEP) results, coupled with learning loss during the pandemic, highlight the critical need to focus on literacy fundamentals, ensuring students are reading on grade-level, and ultimately strengthening Virginia’s talent pipeline. Both the House and Senate budgets provided funding to support the expansion to grades four through grades.
HB1423 (Coyner) and SB1404 (Barker) repurposes the School Readiness Committee as the Commission on Early Childhood Care and Education. This Commission will make annual recommendations to the Governor and General Assembly on how to expand access and quality of child care programs, finance comprehensive birth-to-five childcare and early education system, and strengthen, retain, and grow the quality of the Commonwealth’s childcare and early education workforce. The Chamber will be making recommendations to the Secretary of Education for appointments to serve on this commission.
HB1630 (Coyner) and SB1479 (Lucas) reduces from 12 to six the number of months required for a break in service for a teacher, bus driver, specialized student support positions or school administrator to return to work full-time and continue to receive their pension under the Virginia Retirement System (VRS). Attracting recently retired teachers and school personnel back to school is one strategy to help combat the significant shortages in all regions of the Commonwealth.
HB1885 (Byron) and SB1396 (Stuart) make it a Class 3 felony to conspire with another to commit simple larceny of retail property of a retail mercantile of a value exceeding $5,000 aggregated over a 90-day period, with the intent to then sell such retail property. It is also a Class 3 felony to receive such property while knowing or having reasonable grounds to believe the property was obtained illegally.
HB1405 (McNamara) and SB796 (Surovell) remove the requirement that, in order for a group of affiliated corporations to be granted permission from the Tax Commissioner to change their filing status for corporate income tax purposes, for the previous tax year there would have been no decrease in tax liability computed under the proposed election as compared to the affiliated group's former filing method. The bill retains the current requirement that the affiliated group agree to file returns under both the new filing method and the former method and pay the greater of the two amounts for the taxable year in which the new election is effective and for the immediately succeeding taxable year.
HB1456 (McNamara) makes changes to the elective entity level tax on pass-through entities. The bill would impose the tax only on the share of income, gain, loss, or deduction attributable to eligible owners, as opposed to imposing the tax on the entire entity. "Eligible owner" is defined in the bill as an owner of a pass-through entity that is a natural person or a person eligible to be a shareholder in an S corporation. The bill also strikes the requirement that to qualify for the tax a pass-through entity must be 100 percent owned by natural persons or persons eligible to be shareholders in an S corporation.
HB1770 (Kilgore) and SB1265 (Saslaw) amend the Virginia Electric Utility Regulation Act, primarily as it relates to Dominion Energy, while HB1777 (O’Quinn) and SB1075 (Ruff) amend the Virginia Electric Utility Regulation Act as it relates to Appalachian Power. In both cases, the legislation creates a process for fuel securitization in Virginia which would allow certain large costs to be recovered over a period of many years, rather than within a single year. The legislation further establishes electric utilities will be subject to biennial, rather than triennial, reviews of their rates and earnings by the State Corporation Commission (SCC), with reviews commencing this year for Dominion and in 2024 for Appalachian. The legislation further gives the SCC greater discretion in determining the fair rate of return for utilities in future rate reviews. Each bill incorporates language from HB1604 (Ware) and SB1321 (McClellan), which give the SCC explicit authority to lower or raise existing base rates if the Commission finds the current rates on a going-forward basis will produce over- or under-earnings for the utility.
HB2275 (Kilgore) and SB1166 (Surovell) adjust the composition and duties of the Commission on Electric Utility Regulation. The legislation adds three citizen members, requires the Commission to meet twice annually, and requires the Commission to receive an annual report from the State Corporation Commission regarding the implementation of the Virginia Electric Utility Regulation Act.
HB2444 (Bloxom) and SB1441 (Locke) direct the SCC to consider the economic benefits arising from the manufacture of wind turbine generator components when considering cost recovery associated with the Coastal Virginia Offshore Wind (CVOW) project. The legislation also moves up the timeline for completion of the CVOW project to 2032 from 2034. This legislation was highlighted as a necessary first step to creating a hub for the manufacture of offshore wind turbine components in Virginia.
HB2482 (Fariss) and SB1541 (Lewis) direct the SCC to issue a final order for electrical transmission projects associated with ‘Data Center Alley’ within 270 days after the filing date. For projects filed prior to January 1, 2023, the SCC is directed to issue its final order within 90 days of the legislation going into effect.
HB2026 (O’Quinn) and SB1231 (Lewis) remove the requirement that biomass-fired electric facilities that do not co-fire with coal be retired by the end of 2028 and allow for the establishment of new biomass-fired facilities under certain conditions. The legislation further directs the Department of Forestry to create an advisory panel to examine the impact and use of biomass-fired electrical generation facilities and to create best practices by the end of 2023 for the sustainable harvesting of biomass.
HB1643 (Kilgore) and SB1121 (Hackworth) make it the policy of Virginia to encourage the capture and beneficial use of coal mine methane from coal mines which would otherwise escape into the atmosphere. The Virginia Department of Energy is directed to evaluate different options for capture and use and report its evaluation to the General Assembly and Governor by the end of this year. HB2178 (Morefield) makes jobs associated with methane extraction in the coalfields region subject to the green jobs creation tax credit in order to further incentivize capture and use of coal mine methane.
HB1781 (O’Quinn) and SB1116 (Hackworth) expands the ability of the Southwest Virginia Energy Research and Development Authority to support energy development projects and energy innovation on former coal mine sites and adjacent land in Southwest Virginia.
SB1501 (Stuart) requires the Department of Environmental Quality (DEQ) to inform persons in writing of alleged violations of regulations prior to assessing any civil penalty. The legislation also provides that DEQ may allow noncompliant persons 30 days to take action to correct any violations, and that alleged violators may provide any relevant facts to the Department, including demonstration of a good faith attempt to achieve compliance. The legislation is intended to encourage self-reporting of violations and is designed to ensure that DEQ will still be able to punish bad actors.
Political Action Committees
SB1427 (Suetterlein) passed the House with amendments that were agreed to by the Senate. The bill, as passed, creates new filing deadlines and requires more frequent reporting of larger donations by political action committees. Specifically, the bill increases the number of reports required by PAC from four to five. The deadlines for each report are as follows with changes emphasized in italics:
Not later than April 15 complete from the preceding report through March 31
Not later than June 1 complete from the preceding report through May 25
Not later than September 15 complete from the preceding report through August 31;
Not later than October 15 complete from the preceding report through October 7; and
Not later than January 15 complete from the preceding report through December 31, and then continuing in accordance with this subsection until a final report is filed.
Additionally, all in-state political action committees must file a report for a single expenditure of $1,000 or more, when made between May 26 and the third Tuesday in June and between October 8 and the date of the November general election.
The House and Senate were unable to reconcile their respective budgets into one final version; instead, they passed a “skinny budget” to address unfunded liabilities while budget conferees continue to work on a reconciled budget. Four items are included in this “skinny budget”, including:
Funding to cover the $250 million calculation error by the Virginia Department of Education
A contribution to the rainy day fund
Virginia Retirement System contribution
Funding for other previously authorized Capital projects
Bills of interest to the business community that did not pass include:
SB1248 (Lucas) was tabled in House Rules. The legislation, if passed, would have prohibited the MEI Project Approval Commission from recommending the approval of any MEI project where the business does not have or is not committed to maintaining a diverse board of at least 30% women and underrepresented groups. Business would have been required to submit a board diversity disclosure when seeking approval for an MEI project.
SB1101 (Boysko) failed in House Commerce and Energy. The bill would have required the Virginia Employment Commission to establish a paid family and medical leave program capped at 12 weeks beginning in 2026. The amount of the benefit is 80% of the employee’s weekly average wage and was not to exceed 80% of the state weekly average wage. This program would have been funded through premiums assessed to the employers and employees.
HB2341 which directed the Board of Education to create two pathways to the advanced studies high school diploma – one that required advanced coursework in a career and technical education field but does not require coursework in world language, and another pathway that required advanced coursework in world language but does not require coursework in a CTE field – was defeated in the Senate Education and Health Committee. The Chamber will continue to work with the legislature, the Board, and the administration to increase access and opportunities for advanced CTE coursework that will lead to more students earning valuable stackable credentials.
HB2333 (Marshall) would have made it the policy of Virginia to promote the development and operation of small modular nuclear reactors (SMRs) and would have directed the SCC to establish a pilot program for establishing up to three SMRs in the Commonwealth. Different versions of the bill passed both the House and Senate, but differences between the two versions were not rectified prior to the end of session.
HB2197 (Byron) would have added advanced nuclear technology and hydrogen power to the list of eligible sources of electricity under Virginia’s Renewable Energy Portfolio Standard Program. The bill passed the House but was passed by indefinitely in the Senate Commerce and Labor Committee.
HB1783 (O’Quinn) would have prohibited Virginia localities from adopting policies which would limit or prohibit customers from acquiring natural gas services and would have prohibited denial of permits based on a proposed utility provider. The bill passed the House but was passed by indefinitely in the Senate Commerce and Labor Committee.
SB1001 (Stuart) would have repealed the Clean Energy and Community Flood Preparedness Act, which established Virginia’s participation in the Regional Greenhouse Gas Initiative (RGGI). The legislation was passed by indefinitely in the Senate Agriculture, Conservation, and Natural Resources Committee.
HB2167 (Williams) was passed by indefinitely in the Senate Judiciary. It makes it a Class 3 felony for a person to commit an act of violence at a person’s current or former place of employment, place of worship, courthouse, or hospital, regardless of whether the person is on duty or if it is during or outside normal business hours.
HB1431 (P. Scott) was struck from the docket in House Courts. The bill would have abolished Virginia’s contributory negligence bar. Current law provides that if a plaintiff is at all at fault for their own injuries, the plaintiff cannot recover. In other words, a defendant must be 100% responsible for the injury of the plaintiff for the plaintiff to recover damages The bill sought to change this standard, which would mean the plaintiff’s own negligence would not necessarily preclude them from recovery.
Delegate McNamara and Senator Newman patroned HB2138 and SB1355, respectively, to increase from 30 percent to 50 percent the Virginia individual and corporate income tax deduction for business interest disallowed as a deduction under § 163(j) of the Internal Revenue Code beginning in taxable year 2024. The bill allows an individual income tax deduction in an amount equal to 50 percent of certain federal qualified business income deductions, excluding qualified real estate investment trust dividends. The bill also reduces from six percent to five percent the corporate income tax rate beginning in taxable year 2023. Neither bill passed.
HB2319 (McNamara) and SB1451 (Norment) are bills to lower the top income tax rate from 5.75 percent to 5.5 percent for taxable years beginning on and after January 1, 2024. The bills also raise the standard deduction to $9,000 for single individuals and $18,000 for married persons for taxable years beginning on and after January 1, 2024, but before January 1, 2026. Neither bill passed.
HB1436 (McGuire) was passed by indefinitely in the Senate after reporting out of the House nearly unanimously. The bill would have removed the age 55 or older restriction on individuals who receive a military benefits income tax subtraction. SB1194 (Reeves) was passed by indefinitely in Senate Finance and Appropriations earlier in the session.
Political Action Committees
SB804 (Petersen) was defeated in the Senate Privileges and Elections committee. The bill sought to prohibit candidates, campaign committees, or political action committees from soliciting or accepting contributions from any public utility.
General Assembly Retirements
In December 2021, the Supreme Court of Virginia issued an order setting General Assembly and congressional districts for the next decade. Due in large part to this redistricting, the General Assembly has seen a wave of departures and retirements at the conclusion of the 2023 session – some retirements were anticipated but several were unexpected. With these departures, a significant amount of institutional knowledge will be lost. Below is a list of announced retirements and departures as of March 2, 2023:
Senate Majority Leader Dick Saslaw, D – Fairfax
Senate Minority Leader Tommy Norment, R – Williamsburg
Senator Janet Howell, D – Fairfax
Senator Jill Vogel, R – Fauquier
Senator John Edwards, D – Roanoke
Senator John Bell, D - Loudoun
Delegate Kathy Byron, R – Lynchburg
Delegate Rob Bell, R – Charlottesville
Delegate John Avoli, R – Staunton
Delegate Margaret Ransone, R – Westmoreland
Delegate Jeff Bourne, D – Richmond
Delegate James Edmunds, R – Halifax
Delegate Mike Mullin, D – Newport News
Delegate Kathy Murphy, D – Fairfax
Delegate Ken Plum, D – Fairfax
Delegate Roxann Robinson, R – Chesterfield
Delegate Tim Anderson, R – Virginia Beach
Delegate Wendy Gooditis, D – Frederick