‘Major topic of session’: Senate pushes House school construction loan bill toward negotiations | State and Regional News

The Senate Finance & Appropriations Committed amended a House bill on Wednesday to conform it with a Senate measure that originally aimed to do the same thing — create a separate fund to issue grants to local school divisions to repair or replace schools.

But House Bill 563, proposed by Del. Israel O’Quinn, R-Washington County, is now part of the larger budget debate over whether to make grants to localities or offer them interest-subsidized loans with rebates for a portion of the cost for those that can least afford to pay.

Senate Finance Chair Janet Howell, D-Fairfax, made clear she wants the legislation sent to a conference committee for negotiations with the House in conjunction with the debate over the budget.

“This is obviously one of the major topics of this session,” Howell said.

The committee approved a substitute for O’Quinn’s bill that would conform it to Senate Bill 473, proposed by Sen. Jennifer McClellan, D-Richmond, chair of the Commission on School Modernization and Construction.

The House bill also includes provisions that are identical to SB 238, proposed by Sen. Jeremy McPike, D-Prince William, to direct the state departments of education and general services to develop a way to help school divisions assess the condition of each school building and the cost to maintain it properly.

By conforming the two bills, the Senate and House will have to resolve the differences in conference committee, just as they will for the pending budgets.

The Senate budget includes $500 million in state funds that then-Gov. Ralph Northam proposed in December to help localities address a problem that would cost as much as $25 billion to replace all of the school buildings in Virginia over 50 years old, or more than half of them.

The budget also includes language that McClellan proposed in a separate bill, SB 471, that would continue to use the Literary Fund for school loans, raising the amount available and lowering the interest cost to borrowers. That bill also appears headed to a conference committee for negotiations.

The House budget eliminates that language and takes a different approach to avoid setting a precedent by using state money to pay for what has been a local responsibility.

It would establish a loan-rebate program with $292 million in state funds and $250 million from the Literary Fund that the state would use to subsidize the interest on up to $2 billion in loans, with rebates of up to 30% of the loan principal for the poorest localities. Ultimately, the House is counting on proceeds from casino gaming to replenish the fund.

The budget provision passed the House on a 52-48 party-line vote last week, with Democrats arguing that local governments can’t afford to pay back big loans without additional help, including the option for a voluntary 1% sales tax for school construction, a concept that House Republicans have blocked twice during this session.

O’Quinn told the House last week that the loan-rebate program may not be ideal, but he said, “2 billion dollars is a lot of money in any context.”

McClellan said in an interview said their bills are alike in that “the fund is the same, [but] the bottom line is the grant program.”

She is wary of using the Literary Fund, from which the state has routinely diverted money to pay for teacher retirement, for a loan-rebate program that ultimately would rely on casino gaming proceeds.

“I’m still skeptical that the casino money is going to be enough,” she said.

Despite the differences, McClellan regards the debate as a long-awaited opportunity for the state to address the problem of crumbling schools.

“I think the fact that we’re even talking and they’re willing to do something is real progress,” she said. “The question is whether they’re willing to do enough.”