As expected this was a busy week in Richmond with a lot of dormant bills getting quick action in both the House and Senate. Crossover is just a little more than a week away, so now is the time Delegates and Senators are pressing hard to have their bills heard in their respective chambers and moved quickly to the floor for approval.

The Gas and Grocery Tax cuts

House Finance Committee approved bills freezing the gas tax increase for one year and repealing the grocery tax

While it is unlikely the Senate will approve the gas tax cut (outgoing Gov. Northam included the grocery tax repeal in his final budget), the House did move two bills forward this week that roll back the gas tax increase approved in 2020 and repeal the grocery tax. The gas tax increase was part of the omnibus transportation package the Chamber supported in 2020. It remains to be seen what if any compromise may be possible with the Administration, which promised these cuts during the campaign. The budget as introduced by then-Gov. Northam replaced the lost funding for education generated by the grocery tax, but did not do so for transportation. While the patron, Del. Michael Webert, told the House Finance Committee he believed the state would use federal dollars to replace the lost revenue, he acknowledged that his bill does not do that. The fiscal impact statement for his bill shows the substantial loss in revenue (not just for the “frozen” year), as does the FIS for the grocery tax repeal.

Conformity/PPP

House Appropriations and Senate Finance committees approved bill that does not raise PPP deductibility from 2021-approved level

Unfortunately, the House and Senate committees this week approved bills that do not increase the level of deductibility for business expenses paid for with Paycheck Protection Programs loans. Bills introduced in both chambers would have raised the amount of deductible expenses from $100,000, agreed to in the 2021 session, to $1,000,000. There is still opportunity for Gov. Youngkin to see the value in providing this uniform tax treatment to other Virginia businesses that received PPP loans during the worst of the COVID-19 pandemic.

Meals Tax limitation

Laid on Table in House Subcommittee 

A bill introduced by Del. Lee Ware, working closely with representatives of the restaurant industry, would have lowered the amount of food and beverage tax that counties can impose from six percent to a total of four percent. Under the bill, a county would be able to impose a food and beverage tax at up to two percent without restriction, but that would require approval via a referendum in order to impose the tax at four percent. The Chamber supported the limitation.

Localities that have already levied the tax at 6 percent would have had to lower the rate to 4 percent, which is what generated the opposition to the bill. Northern Virginia localities had not yet levied the higher tax.

Greenway bill

House committee carried over to 2023 and Senate committee passed by indefinitely

The House version carried by Del. David Reid was carried over to 2023 by the subcommittee in order to iron out some details between the stakeholders. The Senate Transportation committee discussed doing the same, although technically its action was a bit different.

The bills would move the Greenway, a privately owned toll road connecting Loudoun to the Dulles Toll Road – from the Highway Corporation Act to the Public-Private Transportation Act. The bills do not prescribe a specific arrangement but rather set up what would likely be a multi-year negotiation to establish a new relationship between the road and the state under the PPTA. Ultimately, the goal is to lower the tolls through adoption of distance-based tolling.

Energy Innovation Act – allowing the use of biogas by utilities

Senate: Approved by Agriculture Committee and referred to Commerce and Labor

House: action next week

These bills would expand the types of gas commercial providers in Virginia can offer to its customers, including biogas and hydrogen. The purpose of expanding the portfolio in this way is to offer Virginia consumers more low-emission options and to make use of biogas like methane. Methane is often either flared off at the site where it is produced, such as a landfill, or captured for limited uses such as heating a nearby government facility like Fairfax County does or to power vehicles on site or near the point of production. The Chamber supports an expanded energy portfolio that increases the supply of low-emission options while taking into account reliability and affordability for businesses. 

Data centers taxing structure

House: Approved unanimously by the full House

Senate: Finance subcommittee approved

This bill would establish a uniform taxing structure for data centers in Virginia, helping to ensure Virginia remains the top destination for this important industry.

Cyber/IT volunteer registry

House Appropriations tabled bill

This bill by Del. Suhas Subramanyam, which the Chamber has supported back to 2020, would create a registry for IT and cybersecurity professionals who want to volunteer to assist workforce development stakeholders – localities, higher education institutions, Virginia’s Registered Apprenticeship program, etc. – on developing pathways to careers for students, creating mentorship opportunities, and best practices.

Outreach by Dept. of Small Business and Supplier Diversity

House General Laws subcommittee approved unanimously 

SB963 by Del. Suhas Subramanyam requires the Department of Small Business and Supplier Diversity to bolster its outreach with stakeholders including business groups and universities to: seek input prior to taking any action including promulgating regulations; and work proactively with these groups to develop better, targeted outreach programs to build capacity among Virginia SWaM businesses and inform these businesses of opportunities with SBSD. 

Paid Sick Leave and Leave Insurance

There are two bills again this session that would establish a universal paid sick leave mandate on Virginia businesses. They likely will not make it through the House this year.

Sen. Surovell has a bill requiring grocery store workers to be provided with paid sick leave. In subcommittee this week, he amended the bill to include any worker who works in a grocery store section of a store with such offerings. The subcommittee asked for assistance in developing an enactment clause to include guidance for impacted retail businesses. The bill amends the section of code added last year to require home health workers be provided paid sick leave. It was approved by the subcommittee 2-1 and will be re-referred to the Finance Committee. 

Sen. Favola has brought back her bill to establish a private insurance market in Virginia for paid leave policies, after a study over the summer. The Chamber supports this bill and sees it as a way to incentivize businesses to adopt paid leave, and a more affordable and fair system for small businesses that may not be able to afford a self-funded program.

Cannabis update

Moving through both houses; up next in Senate Rehabilitation on Friday morning

There is a lot of work being done to reshape the bills that were approved last year. In 2021, the House and Senate agreed that for retail sales and the related regulations to go into effect, the General Assembly needs to re-enact the bill. In the interim, then-Gov. Northam amended the legislation to legalize possession of cannabis, and added language on unionization. This required an to employer “remain neutral” if employees are considering unionizing or be subject to having its license revoked, which the Chamber believes is not in harmony with the National Labor Relations Act. Gov. Youngkin has spoken clearly that he would not support legislation coming to his desk that retains this provision, and the Chamber is making its views known as well.

Among the points of contention discussed this week: allowing pharmaceutical processors (many of whom are already processing cannabis for medical sales in Virginia) to have early access to the retail market; the taxes, fees for vertical integration, and other potential barriers to entry for small cannabis businesses; social equity licensing aimed at addressing impacts of past cannabis regulation; and the health and welfare arguments common to the legalization of adult cannabis use.

“Free Trial” regulations

House approved bill on Jan. 31

The House on Monday approved a bill that would require a company offering a free trial subscription service to make the subscriber aware of how to cancel the free trial and that an online option be available. Originally, the bill would have required advanced notice to, and “affirmative consent” of, the subscriber prior to being charged at the conclusion of the trial.

“Test-to-Stay” guidelines

Senate Education and Health Committee approved Feb. 3

From the two Senators – Sen. Chap Peterson and Sen. Siobhan Dunnavant – who were the impetus behind requiring school districts to offer in-person learning in the 2021-2022 school year. This bill directs the Departments of Education and Health to develop isolation and quarantine guidelines, including “test-to-stay” guidelines, to replace what the patron believes are outdated and patchwork quarantine practices at Virginia K-12 schools.

Local government PLAs, prevailing wage and collective bargaining

Not surprisingly, the Senate Commerce and Labor Committee voted down an attempt to repeal the recently passed requirements an allowances to local governments related to project labor agreements, prevailing wage, and collective bargaining. The House companion is awaiting action.

Charter Schools

Senate Education and Health defeated the bill on Feb. 3

While the Committee defeated the bill, the patron Sen. Obenshain did make some changes that offer a little insight into the shape of the bill should it come back this session or next. The bill as introduced would allow the creation of charter school divisions where schools had failed to receive accreditation in two of the past three years. It was amended to allow their creation where math and English Standards of Learning test scores in grades 3-8 were in the bottom quartile. Sen. Obenshain also agreed to reduce the number of state appointees to the regional boards, giving local appointees a greater say.