'Bigger than any one locality': Fiscal-distressed locality bill clears Senate committee

RICHMOND – Saying the issue is “bigger than any one locality,” the sponsor of legislation fine-tuning a process for state intervention into a locality’s financial duress successfully pushed her committee colleagues to support the measure.

The measure, which stemmed from last year’s contentious battle between Hopewell and the Youngkin administration, has undergone several facelifts since it was originally introduced. However, those changes have done little to quell the bill’s opponents who question its overreach into a local government’s business, and that opposition was in full display at Monday’s Senate Local Government Committee meeting.

Senate Bill 645, which sets up a process for Virginia to help prop up so-called “fiscal-distressed localities,” passed out of the Senate Local Government Committee Monday morning on a party-line vote of 8-6 with one abstention.

The bill’s original version gave the governor authority to appoint an emergency fiscal manager to step in and oversee the reworking of the locality’s ledgers. Last week, it was amended to shift that power from the governor to the nonpartisan Virginia Commission on Local Government.

Monday’s version keeps that power with the commission but broadens the authority of the emergency fiscal manager to temporarily assume dollar-decision duties from constitutional officers, such as the treasurer. Constitutional officers, while technically a locality’s employees, are elected directly by the voters and do not report to local administration.

It also would require that the emergency manager seek the support of the council or board of supervisors before acting on any personnel decisions.

Five of the seven members of Hopewell’s city council are vehemently opposed to the legislation, which is sponsored by its legislative representation – Sen. Lashrecse Aird and Del. Carrie Coyner. The remaining two are staunch supporters.

Distress list 'is very long'

“The legislation before you is bigger than any one locality,” Aird, D-Petersburg, told her colleagues on the committee Monday morning. “If you could take a look at all the localities that are currently listed in fiscal distress in the commonwealth, the list is very long.”

Aird said the bill “is about helping localities in the commonwealth when they are at their worst state.” Those localities have either been unable to develop their own strategies or unwilling to accept help from the state to do it, she added.

The Virginia Municipal League and the Virginia First Cities Coalition are on the fence about the bill, admitting the need for it but questioning the extent to which the state would step in. Both groups stated their concerns Monday.

Monday also introduced opposition from the Virginia Treasurers Association over the temporary transfer of power. Lobbyist Alan Albert said the measure would allow the emergency fiscal manager to “displace” the treasurer or any other constitutional officer.

“The treasurers’ association and the sheriffs’ association just can't live with that language,” Albert said. The bill gives that appointee the power “to push that constitutional officer out of office,” he claimed.

Aird stressed the temporary nature of that language.

“No, we’re not putting constitutional officers out of business,” she said. “No, the governor is not coming in to take over localities.”

Committee chair Sen. Jeremy McPike addressed the genesis of the legislation – Hopewell's failure to submit a required annual audit to the state since 2015 – in a question to Albert.

“Would you agree than non-report for 4-5 years is a sign that it’s not healthy to the locality or its residents?” McPike asked.

Albert responded, “Absolutely. But typically, it’s not the treasurer or constitutional officers who prepare those reports ... but it is true that the treasurer could be a problem.”

Republicans made one last effort to remove the language about constitutional officers, but that motion died.

Hopewell got on the state’s radar after not submitting the audits to Virginia’s auditor of public accounts for review since 2015. Gov. Glenn Youngkin’s administration last year brought in an outside accounting firm to provide Hopewell with 27 recommendations for revamping its financial infrastructure. That drew the ire of a majority on City Council accusing the state of sticking its nose into city business.

Bill amends existing process

Opponents also claim there is state budget language in place since 2017 to help the localities without crossing any sensitive boundaries. Aird responded that she was aware of that process because while in the House, she had a locality – Petersburg – whose position on the possibility of fiscal ruin in 2016 prompted her to push for the budget language.

Aird has been careful not to specifically mention Hopewell or Petersburg as any catalyst for the legislation. She said that the budget language from seven years ago helped save “a locality that was on the brink of bankruptcy.

“That language has proven to not go far enough,” Aird said. “Right now, we have another locality that, thankfully they are getting help but is also on the brink of bankruptcy. As a commonwealth, we have to have tools in place to help our localities.”

Barb Rudolph, founder of the group Clean Sweep Petersburg, called Aird’s bill “long overdue.”

“The tools that are in place are not adequate,” Rudolph said via online testimony.

On the other side of the state Capitol, a panel of the House Counties, Cities & Towns Committee recommended tabling similar legislation from Coyner, R-Chesterfield County. The full committee has not yet acted on that recommendation.

Bill Atkinson (he/him/his) is an award-winning journalist who covers breaking news, government and politics. Reach him at batkinson@progress-index.com or on X (formerly known as Twitter) at @BAtkinson_PI.

This article originally appeared on The Progress-Index: Fiscal-distressed locality bill clears Virginia Senate committee