Koelemay's Kosmos

Doug Koelemay

Taking Care of Business

The year 2005 will bring developments, such as a record year of job creation in Northern Virginia, that exceed in importance to the Commonwealth mere elections for constitutional offices and General Assembly delegates. The future is less about who holds political power and more about who responds quickly to take advantage of opportunities.

Regardless of who occupies the governor's office or speakership of the house, Virginia will face shortages of skilled workers, tight housing supplies and clogged transportation arteries, the combination of which could choke off the nation's greatest economic success story.

The evidence that business will lead in 2005 is in: George Mason University Drs. Stephen Fuller and Roger Stough presented it to a regional conference early in January. Greater Northern Virginia (which includes the District of Columbia and its Maryland suburbs) outperformed every other major metropolitan area in the United States by a wide margin in 2004, even carrying the dead weight of 8.7 percent unemployment in the District. The regional economy has shrugged off terrorist threats, Iraqi insurgents, zooming oil prices, rising interest rates and soft consumer confidence to add 223,000 jobs since 1999, far more than Phoenix, San Diego, Houston or Philadelphia. Los Angeles, Dallas, Seattle, Boston, New York and Chicago lost jobs in that period. San Jose actually lost 147,000.

Past successes as state capitals or university centers didn’t seem to make a difference for other metropolitan areas in the overall equation. Instead, the federal government served as the drive wheel for Northern Virginia with spending increases over 11 percent in 2003 and 9 percent in 2004. Federal procurement grew even faster, almost 17 percent in 2003 and 12 percent in 2004. And that took place under the leadership of the political party of that trumpets its commitment to smaller government.

Dr. Fuller foresees federal spending growing less robustly in the next two years and poses interesting questions about who will take up the slack. Fortunately, other important sectors that grew in 2003 accelerated their growth in 2004. This second set of shots in the arm came from the hospitality industry, the international sector, the building industry and, more than the others combined, the technology sector. The tech sector grew over four percent in 2003, then by seven percent in 2004. Solid 6.5 percent tech growth is forecast in 2005 and another 6 percent in 2006.

Led by the federal government and technology industry, therefore, Northern Virginia will be improving on its job creation numbers in 2004, when it added 45,000. Northern Virginia is projected to add 52,000 jobs in 2005, another 48,000 in 2006 and 44,000 in 2007. Counting those income tax increases will make it good time to be governor or a member of the General Assembly. But these successes pose their own challenges, including demands for innovation and competitiveness and for a state government that keeps its commitments.

Through a wide variety of initiatives, such as the Virginia Information Technologies Agency, various public-private transportation partnerships and charter status conferring more flexibility and autonomy upon Virginia state colleges and universities, the Commonwealth is fast reorganizing to get beyond its past limitations. State government officials are recognizing that they are not as responsive or predictable as they need to be when it comes to projects and commitments that extend beyond their own terms of office. The Commonwealth’s stop-and-go planning and appropriations patterns with regard to public education, clean streams, mental health and transportation responsibilities haven’t inspired confidence among many non-state government partners. Instead of using discipline to honor its commitments, for example, the General Assembly this year is likely to insist on a constitutional amendment that requires transportation trust fund dollars to be used for transportation. The amendment, aimed at the General Assembly itself, cannot be approved by voters before November 2006.

Fortunately, state government officials are taking cues from the private sector to organize around core services and contract for everything else. In the process government hopes to escape its dilemma of trying to meet the demand for more and higher quality services without raising the tax and fee revenues to support them. That delivering more and higher quality services can generate the very revenues they need to support those services just doesn’t occur as readily to those in public life as to those in the private sector. Some of the most ideologically bound even argue awkwardly that increased revenues or improved transportation networks and environmental improvements may not be good things, so, therefore, it is really better to ignore the goals they have set for citizen services. Go figure.

Not fully appreciated is that these reorganizations and private partnerships actually require the Commonwealth to be more responsible and responsive than ever before. Private sector partners, after all, don’t have to assume risks they don’t want or tolerate arbitrary accounting and capricious decision-making driven by partisan politics. If government really wants private sector cooperation and investment, it will have become much more businesslike, more pragmatic and less political. That goes for both houses of the General Assembly, both political parties and whichever candidates become Virginia’s next governor, lieutenant government and attorney general.

Virginia's business community, especially that of Northern Virginia, should provide the leadership to help reshape state government into a better partner for private investment. After all, the population center, economic center and job-creating center long ago moved to Northern Virginia without regard for how district lines are jiggered for delegates and senators. And projections by two George Mason University professors again illustrate that the most educated, adaptable and diverse workforce can drive both the economy and the level of public resources available for the infrastructure investment that underpins their success.