Bill addressing fiscal-distress declaration is rewritten; vote on it delayed a week

RICHMOND – Legislation born of last year’s confrontation between Hopewell and the state over fiscal management has been rewritten to create a new timeline for triggering an “early warning system” and shifts the power to send help from the governor to a state commission.

The rewrite was presented Monday morning in a Senate Local Government Committee meeting. It was so extensive that the committee agreed to delay action on it until next Monday so committee members could digest it.

The substitute for Senate Bill 645, from Sen. Lashrecse Aird, D-Petersburg, comes after a majority of Hopewell City Council members sent a letter to the legislature last week criticizing the original bill. That letter, among other items, claimed the bill gave the governor too much leeway to send in the cavalry and take the reins of authority away from council and city administration.

The newly worded legislation now says that if a locality does not meet the state requirement for submitting an annual report of its ledgers, the state auditor of public accounts would deem it on the brink of fiscal distress and began working with that locality to get that report ready. Should that report not be submitted within 18 months after the auditor’s determination – either through the locality’s inability or refusal to do so – then the Virginia Commission on Local Government could appoint an “emergency fiscal-stress manager” to oversee the process of getting the issues reconciled.

In Hopewell’s case, the city had not submitted its annual audit to the state since 2015. The lack of those reports led to Hopewell losing its ability to issue bonds for major capital-improvement projects such as a long-needed fire station replacement.

“This is all working towards allowing the locality to try to alleviate this,” Aird told the panel. “But when it’s worst-case scenario and they are unable to do so, that we have a framework for someone to come in and aid the locality in getting this done.”

In her presentation, Aird did not specifically mention Hopewell, but she did say that she has “two localities within my district” that have teetered on fiscal distress.

Hopewell’s years-long efforts at Band-Aiding its money matters prompted the Youngkin administration last year to hire an outside audit firm to look at Hopewell’s books and make recommendations on how to resolve them. However, a majority on council rebuffed those efforts in highly contentious public discussions with the administration and told the administration it could handle its own affairs.

The city then hired the Robert Bobb Group – a private firm known in the area for pulling Petersburg out of fiscal ruin eight years ago – to work with City Manager Dr. Concetta Manker and staff on reconciliation. That agreement came with a price tag totaling $1.85 million, but in weekly reports to council, RBG claims major success in creating both a project-management process and a cohesive understanding of Hopewell’s government checkbook.

Sen. Jeremy McPike, D-Prince William County and chair of the Senate panel, said the bill was not necessarily picking on Hopewell because “we’ve had localities year over year over year” not file those audits.

“Every part of the commonwealth has had localities in fiscal distress,” McPike said before suggesting a committee vote be delayed for a week.

Aird said the substitute includes feedback from the Virginia Municipal League, the Virginia Association of Counties and state Finance Secretary Stephen Cummings. Cummings was the point person for the Youngkin administration in last year’s back-and-forth with Hopewell and drew some council ire when he referred to Hopewell’s fiscal affairs as a “five-alarm fire.”

A House companion bill from Del. Carrie Coyner, R-Chesterfield County, is expected to be redrawn as well before a House Counties, Cities & Towns subcommittee hears it later this week.

While most Hopewell councilors have expressed disdain for the bill, two members are openly supporting it, including Mayor Johnny Partin Jr.

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: Senate delays action on rewritten fiscal-distress legislation