Is McAuliffe Crying Wolf on the Economy?

naval shipyard By Peter Galuszka

Just how bad is the Virginia economy, really?

Gov. Terry McAuliffe, who released a rather modest state budget proposal just a few days ago, has said that the state’s economic picture is bleak because of government spending cuts, most of them at the U.S. Department of Defense, the state’s largest employer, and at other agencies.

“We’re looking down the barrel of a gun,” he told reporters, noting that automatic cuts in federal spending due to sequestration and the run-down of military spending after more than a decade of fighting in Iraq and Afghanistan are badly hurting the state.

There are two curious points. The Washington Post notes that McAuliffe had based some of his gloomy thinking after revenues dipped by $439 million earlier this year. This relates to the $2.4 billion shortfall in the biannual budget. Now, says Finance Secertary Ric Brown, revenues have picked up as the governor and lawmakers have worked to close the shortfall.

There is also a story in this morning’s The Virginian-Pilot that the Norfolk Naval Shipyard (located in Portsmouth, actually) plans to hire some 1,500 workers by this coming September. This will be a net gain of 800 workers making about $21 an hour. The other 700 workers will be to replace retiring ones.

The shipyard, which can handle work on large nuclear ships like aircraft carriers, has a total workforce of 9,500 and the extra hires will take it past 10,000, the highest number since the early 1990s. Most of the new jobs are in skilled trades such as welding and ship fitting.

The Pilot reports that Hampton Roads will lose a total of 18,000 skilled workers by the end of the decade as older employees retire. Replacing them should help mitigate the cuts in federal spending and McAuliffe is doing the right thing by focusing on jobs training and credentialing that will boost high-paying blue collar jobs that don’t require a four-year college degree.

The state’s 23 community colleges are working to come up with a plan required by the federal Workforce Innovation and Opportunity Act, passed this year, to streamline training and make sure that trained workers pass certain requirements.

The Joint Legislative Audit and Review Commission recently issued a scathing report on just how disjointed job training is in the state. It said that there was no system to track how $341 million was spent in state workforce training programs and that only 16 percent of the companies in the state use it. The new federal law may help change that by requiring states to come up with four-year plans on coordinating training.

It could be that McAuliffe is crying wolf to shake up the General Assembly before it convenes Jan. 14. He’s doing just that by including funding Medicaid in his budget again and by calling for restrictions on gun sales (needed). But it may be important to keep in mind that things may not be all that bad, economically.

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5 responses to “Is McAuliffe Crying Wolf on the Economy?

  1. Who knows but it would not be a bad thing for McAuliffe to “remind” everyone just how dependent we are on the Federal teat for our “economic” well being and just how inept and disjointed, ineffective and corrupt our current economic development efforts are.

    and to remind Virginians once again, especially working Virginians that we already pay taxes to fund the MedicAid Expansion – and we CHOOSE to refuse the money – to provide primary care for WORKING Virginians and CHOOSE instead to continue to have them visit ERs where all of us will pay for their visits.

    In other words – McAuliffe is trying hard to pull Virginia out of the FAUX Conservative STUPID-IS as STUPID-DOES method of governance …

    we CHOOSE not only to deny spending OUR taxes on working Virginians but as the same time spend tobacco money on 30 million for Dominion instead of using it to provide health clinics for the parts of Virginia in need of it.

    So we DING our working fellow Virginians TWICE – once by denying the access to primary care then again by not providing them access to community clinics..

    How dumb can we be? Well, about as dumb as we are.. right now.. and we proudly call it “conservative” governance… !!!!

    • Larry, how do you explain the fact that, in both Oregon and Washington State, their expansion of Medicaid led to more ER visits by the indigent than when they were not covered? The two states did NOT have cost savings, but rather, experienced higher costs for caring for the indigent after they expanded access to Medicaid. I’ve been trying to get an answer from Medicaid expansion supporters for well over a year. They either make bald statements – it won’t happen here – totally unsupported – or try to change the issue.

      If Medicaid expansion can be shown to be more cost effective than the status quo, I’ll jump into the fray in support of expansion.

      Please try to respond by sticking to my question and not giving me the usual “it’s not fair.” If I was in court, I’d ask the judge to direct the witness to answer my question. Proponents of expansion argue Medicaid expansion is less expensive than the status quo. But they then refuse to address Washington and Oregon’s experiences with expansion. Absent a reasonable answer (and especially in light of Grubergate), why should anyone believe a Virginia Democrat on Medicaid expansion?

  2. I don’t know if McAuliffe is crying wolf or not, but it’s a legitimate question to ask. As Peter suggests, the Guv may be preparing the political battlefield in advance of the General Assembly.

    On the other hand, it behooves governors to be cautious. Given the constitutional requirement to balance the budget, we should err on the side of budget pessimism. Otherwise, we could end up with large sums to cut from the budget and, say, only six months to do it, in which case the cuts become all the more debilitating and disruptive.

  3. For several years Virginia’s growth in Gross State Product was more than 100% attributable to growth in federal spending. In other words, if Virginia didn’t receive more federal spending its economy would have shrunk.

    Sequestration did happen. The DoD budget was cut. Commercial real estate vacancies in NoVa are at historic highs (for NoVa at least).

    McAuliffe is probably right.

    • One of the good things developers and citizens groups agreed to in the Tysons Comp Plan amendment in 2010 was the tying of growth to infrastructure. Everyone agreed that, as the pace of development increased or decreased, the pace of infrastructure construction should follow in the same direction and at the same basic speed. This needs to apply elsewhere.

      With huge vacancies (19% in Fairfax County and as high as 30% in Rosslyn), why are we looking to build more density, including commercial space, with heavy public investments in transportation infrastructure? I can see finishing the work necessitated by BRAC and a need for more improvements should the FBI go to the Lee District in Fairfax County. But with excess capacity in both Tysons and the Reston-Herndon corridor, why are we considering massive investments in such places as Bailey’s Crossroads, Route 1, Annandale and Seven Corners? Smells like more corporate welfare and an over-allocation of public resources to the real estate industry. McAuliffe needs to stick even tighter to the legislative requirement that transportation dollars be spent on projects that provide the most congestion relief and ignore the begging businessmen and their lobbyists.

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