Division of Legislative Services > Legislative Record > 2005

HJR 707: Joint Subcommittee Studying the Balance of Power Between the Legislative and Executive Branches

September 19, 2005

The Joint Subcommittee to Study the Appropriate Balance of Power Between the Legislative and Executive Branches held its third meeting on September 19, 2005, and continued its dialogue with representatives from the Office of the Secretary of Finance and the Department of Taxation on ways to improve the current revenue-forecasting process.


Pamela Currey, Deputy Secretary of Finance, responded with additional information to the following three questions initially posed by subcommittee members at the June 28 meeting:

Question: Is Gross Domestic Product (GDP) a better indicator of the Commonwealth's future tax revenues than the Virginia Department of Taxation's econometric model currently used for revenue projections?

The Tax Department's model proved superior-resulted in a smaller tax
deviation-in 12 of the last 15 years.
Ms. Currey explained that GDP is not a good indicator for predicting Virginia's revenue because it is very broad and includes factors affecting the global economy. Virginia's econometric model is better because it is designed to capture the activities and phenomena that more directly affect Virginia's economy.

Question: Can first quarter tax revenues be used to estimate the general fund revenue for the year?

Although using this type of ratio method is simple and appears reasonable, Ms. Currey pointed out that statistically it is not a good predictor of end-of-the-year revenues. The Tax Department's econometric model proved superior to the first quarter ratio model in 15 of the last 25 years. In fact, if the first quarter ratio model had been used, the Commonwealth would have experienced a budget shortfall in 14 out of the last 25 years. Using the Tax Department's econometric model resulted in only 3 budget shortfalls.

Question: How long was the Missouri budget impasse?

The budget impasse in Missouri lasted for six months from November to April.

Members expressed concern that the econometric models for the past few years were underestimating tax revenues and not allocating adequate weight to certain factors, including population growth, money supply, and federal spending. There was also disappointment regarding the lack of availability of information on the leading indicators of the economy and tax data that would have shown a surge in the economy during the critical months prior to the passage of the budget in May 2004. The administration explained that some of the tax data has a lag time, for example, two months for sales tax activity and one year or more for federal income tax information for large filers. Legislative members do receive real-time revenue forecasts each month by e-mail. However, the data does not contain in-depth analysis that would assist members in understanding the revenue drivers and the current economic landscape. The joint subcommittee asked staff for the next meeting to determine the cost to establish an independent revenue-forecasting division in the legislative branch that would be responsible for analyzing economic and tax collection data, identifying economic trends, and providing independent evaluation of revenue projections.


Staff presented the joint subcommittee with the following three options to address time constraints inherent in the present legislative sessions:

  • Amend the Constitution to allow 60-day sessions during odd-numbered years without requiring a two-thirds vote.
  • Amend the Constitution to permit an organizational session of the General Assembly in December. Many states hold organizational sessions prior to the regular session to swear in members, elect officers, assign members to committees, and adopt rules. The General Assembly could also use this time to confirm some of the gubernatorial appointees and to elect incumbent judges and other judicial officers.
  • Amend the Constitution to allow the General Assembly by less than the currently required two-thirds vote to apply to the Governor to call for a special session of the legislature.

The subcommittee requested staff to prepare draft legislation of the first two options for review at the next meeting. In addition, members discussed the merits of limiting the number of bills a member could introduce as another way to better manage the workflow of the legislative session. However, the subcommittee agreed that this proposal probably lies within the province of the Joint Rules Committee as it deliberates the procedural resolution.


At the time of this publication, the joint subcommittee had not scheduled its fourth and final meeting when it will receive a progress report from the Joint Subcommittee on Gubernatorial Appointments and consider and finalize its recommendations to the 2006 Session.

The Hon. R. Steven Landes

For information, contact:
Ginny Edwards, DLS Staff



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