Category Archives: Demographics

“Jac” Cales’ PPTA Monkey-Wrench

calesBy Peter Galuszka

For four decades, James A. “Jac” Cales Jr. was a fixture on the judicial halls of Hampton Roads, albeit not one to take himself too seriously.

As Portsmouth commonwealth’s attorney for a decade in the 1970s, he would lean back in his chair, his hands folded over his stomach and nod vigorously when a defendant in a drug case admitted something incriminating. He later served for three decades as a General District and Circuit Court judge, retiring officially in December.

So, it may be fitting that on May 1, while filling in temporarily, Cales issued what could be the most important decision of his long legal career. It is a decision that is turning Virginia’s transportation funding on its head.

Cales decided that a plan to have a private developer toll users for $2.1 billion in tunnel upgrades in crowded Hampton Roads is unconstitutional. Only the state has the power to tax and that’s what tolls really are, Cales ruled.

If his ruling holds, a number of critically important highways that involve privately operated facilities, such as parts of Interstate 495 in Northern Virginia, Route 895 near Richmond and a proposed $1.3 billion toll road from Petersburg to Suffolk, could be affected. State contracts for all of them could be voided.

If so, it would be a huge defeat for Gov. Robert F. McDonnell and earlier governors who have made good use of the Public-Private Transportation Act of 1995 to push ahead with highways that the tax-averse state otherwise was too short of money to build.

Cales’s case involved legal challenges to using the private toll road concept to pay for upgrades at the Downtown and Midtown Tunnels underneath the Elizabeth River connecting Norfolk and Portsmouth.

The key issues are electronic tolls that are supposed to kick in next February. Off-hour tolls for cars are $1.59 and go up to $1.84 during rush hour. Trucks would have to pay $7.36 during peak times. Business officials and commuters, many working in blue-collar jobs, are angry about the new expense. The tunnels used to be toll affairs years ago and the fees were much lower.

The pressure is on to void Cales’s ruling, lest it result in massive scrambling of road plans. Transportation Secretary Sean Connaughton, a big fan of the PPTA, warned of serious possible repercussions when he met with lawmakers Monday. “This is not consistent with almost 240 years of building toll facilities in the commonwealth of Virginia, Connaughton told the House Appropriations Committee, according to the Richmond Times Dispatch.

Cales’s ruling is due to be appealed to the State Supreme Court, but in the interim, he has refused to stay his decision. One possible outcome is that the state would be stuck with a lot of expenses that have already been paid, such as $706 million for the Elizabeth River tunnels. In all, the state could be on the hook for $3.5 billion.

The General Assembly would also be forced to perform a heavy-duty rethink of how it funds roads.

But that may be a good thing. The PPTA, heralded as a rare pioneering effort for Virginia, has been used far beyond its intended purpose. It was supposed to be a way to supplement traditional road funding. Instead, skin-flint legislators who hate “taxes” have used the PPTA as a way to fund roads through tolls instead with private companies assuming much of the risk. Democrats and Republicans alike liked this scheme of having your cake and eating it too.

The outcomes have not always been good. A relatively short toll road southeast of Richmond, the Route 895 Pocahontas Parkway, has been so underused and underfunded that it was sold off to Australia’s Transurban firm, which recently announced it was selling it to a consortium of European banks because it wasn’t making money.

Yet Another Owner for Richmond’s Unwanted Road

pocahontasBy Peter Galuszka

Richmond’s “Road to Nowhere” is about to get yet another owner, showing again how the public-private partnership craze can result in unneeded transportation projects while denying resources elsewhere.

Australia’s Transurban which owns Route 895, otherwise known as “Pocahontas Parkway” is dumping the tollroad it picked up in an emergency financial deal in 2006. At that time, the highway that connects Interstates 95 and 295 southeast of Richmond was so underused that it was about to take down the state’s stellar credit rating.

But Transurban hasn’t been able to make a go of it despite tolls of up to $3.25 per car for a short drive through the fields of eastern Henrico County. The firm plans on selling it to a consortium of European banks that have $300 million in debt. The project also owes the feds $150 million for a loan.

The Pocahontas Parkway was the pioneer project for the Public-Private Partnership Transportation Act of 1995, which has been heralded as a nation-beater and a way to have your cake and eat it too as far as road financing. The allure was that you could build roads and have the private sector manage them and help pay for them through tolls.

Problem was, nobody seems to need the highway. It was billed as a way to expedite I-95 traffic to I-64 and I-95 around Richmond and perhaps open up relatively untapped areas east of the city for suburban sprawl development which hasn’t really happened.

The Richmond Establishment is loath to admit this, but the Richmond airport which has undergone a big expansion is not getting the flights and traffic it had hoped for. The Parkway was supposed to have helped promote the airport by providing easier access to it.

PPPT funding has been replicated in other areas in Northern Virginia and Hampton Roads, but a Portsmouth judge seems to have finally put a legal dagger through  the heart of the program by ruling that in the case of a local tunnel project, the state had unconstitutionally given its authority to tax to a private entity.

It isn’t clear what the ruling means for the PPT program, but the gist is clear. Democrats and Republicans alike want to live a fiction that you can transfer the state’s traditional responsibility to raise taxes and build roads and hand it over to private interests. It seems such a sweet arrangement – you get to keep Virginia from having to raise taxes, avoid violating the no-tax dogma  and not piss off voters while getting highways and construction jobs. It sounds too good to be true and it is.

Oh well. I wonder who will inherit the White Elephant when the European banks can’t make it work either.

Has Washington Reached Escape Velocity?

Achieving orbital escape velocity. Orbital Science Corp.'s Antares rocket is just one sign of the Washington region's economic dynamism.

Achieving orbital escape velocity: The Antares rocket, designed by Orbital Sciences Corp., is just one sign of the Washington region’s economic vitality.

by James A. Bacon

It was long the conventional wisdom — which I shared, by the way — that the Washington regional economy was cruising for a bruising when the federal government encountered its inevitable reckoning with fiscal reality. Well, sequestration, a sort of semi-reckoning, has kicked in, and the Washington economy appears to be shrugging it off.

Indeed, the main thesis of a front-page Wall Street Journal this morning is that private-sector growth is replacing government growth as a source of economic dynamism. Federal spending as a proportion of the regional economy has slipped from 40% to 36% since 2010 — yet the regional economy continues to grow faster than the national average.

What’s happened? The region’s deep talent base is part of the story. But Washington has had a deep talent base for decades. What’s different is that the region now has a generation of successful entrepreneurs who have cashed in their chips from the government-contracting businesses they built and now are investing in start-ups that have no government connections at all.

Writes Elizabeth Williamson:

More than a generation of heavy federal spending, it turns out, has provided the seed money for a Washington economy that now operates globally—less tied to the vicissitudes of the capital’s political rhythms.

The new moneyed brain trust is being led by professionals in defense, intelligence and data—many of whom excelled initially due to government ties. They’ve propelled the D.C. region as a leader in the cybersecurity and data sectors, as well as in more-specialized arenas including educational products and health-care data management.

Along those lines, Stephen Fuller, George Mason University’s regional economist, attributes the economic dynamism to the fact that the region has  “become more business-based. … The stuff we learned how to do for the federal government can be sold to other people—a different economy is going to emerge that in the long run may be a better-balanced economy than the one we have now.”

Bacon’s bottom line: If Fuller’s thesis is correct, if the Washington regional economy has reached escape velocity from federal spending, then that is positive news indeed, both for Northern Virginia and for Virginia as a whole. One of my nightmares, frequently articulated on this blog, is that a slowdown in federal spending would have devastating consequences for the economy, tax revenues and the fiscal strength of state and local governments. The WSJ article awakens me to the possibility that those fears may be exaggerated.

There is a second level of re-appraisal that must occur. I have frequently raised the specter of slower economic growth in Northern Virginia as justification for mistrusting the long-range job and population forecasts that underpin infrastructure spending (especially transportation spending) plans for the region. If the region continues to grow like gangbusters, I’ll have to scrap that argument.

Whatever the region’s growth rate, the debate over transportation and land-use policy in Northern Virginia will continue without let-up.

How Good Is Chmura’s Economics Data?

chmuraBy Peter Galuszka

In the 40 months since Robert F. McDonnell has been in office, the launch of many of the governor’s policy initiatives seems to be accompanied by a press release touting the supportive findings of a small, Richmond-based research firm named Chmura Economics & Analytics.

When McDonnell was pushing his transportation plan to come up with $3.4 billion road funding by eliminating the gasoline tax and increasing the sales tax, the Chmura firm was hired to research the impacts. The results were glowing: McDonnell’s signature plan would eventual result in 13,058 new jobs and $9.5 billion investment.

When McDonnell and his Transportation Secretary Sean Connaughton wanted a $1.4 billion toll road linking Petersburg with Suffolk near U.S. 460 that not many other officials seemed too keen about, Chmura served up a report saying it would create 14,000 jobs, including more than 8,000 jobs from advanced manufacturing or automotive firms that would locate by the end of the decade at two “megasites” in Isle of Wight and Sussex counties. A little problem: the Isle of Wight site is just gearing up and the one in Sussex hasn’t been built yet.

There are other examples of questionable data in Chmura reports involving the Redskins moving its summer training center from Ashburn to Richmond and in the capital pitching a 2015 international bicycle race. The former involved considerable monetary incentives to the rather wealthy Redskins NFL club.

The economics firm is headed by Christine Chmura, an economics Ph.D. with impeccable credentials at a Richmond bank and the Federal Reserve. Fourteen years ago, she founded her firm and built it up in this state and in her native Ohio. She is a popular speaker on the economics and policy circuit. (Full disclosure, when I edited a business magazine about 10 years ago, I hired Chris several times for economic analysis and was pleased with the results).

There does seem to be something wrong and when I wrote a cover this week for Style Weekly, I detail some of the issues. Style filed Freedom of Information Act requests and we reviewed some of the Chmura contracts. The Virginia Department of Transportation some her firm’s payments, including one for the new toll road, under “advertising/public relations.”

Read more here.

City of Richmond Leads Regional Population Growth

The Lofts at Canal Walk in Richmond's Shockoe Bottom

The Lofts at Canal Walk in Richmond’s Shockoe Bottom

It’s only one year’s worth of data, so I don’t want to make too much of it, but new U.S. Census numbers confirm my argument that the center of gravity of population growth and development is shifting back toward the urban core — at least in the Richmond region. Between July 2011 and July 2012, reports Graham Moomaw with the Times-Dispatch, the population of the City of Richmond grew faster than Henrico, Chesterfield or Hanover Counties.

The numbers:

population_gain

That’s all the more remarkable when you consider how many years the population of Richmond shrank. But the the city’s outstanding performance should come as no surprise to anyone who has visited downtown, Shockoe Bottom and Church Hill recently and seen the number of warehouse-to-condominium conversions that have taken place.  And there’s a lot more urban housing stock to come.

The picture really couldn’t be any clearer. The fastest population growth occurred in the walkable, mixed-use urban center, the slowest growth in auto-centric, low-density exurbia (Hanover County) and middling growth in the medium-density suburbs of Henrico and Chesterfield. The only thing likely to skew this trend, to my mind, is if the Innsbrook office park in Henrico successfully transforms itself into a second node of walkable urbanism.

Update: Clearly, this is a national trend, as reported by this Associated Press article, among others.

– JAB

Virginia Poverty: Better and Worse than We Thought

Source: Weldon Cooper Center. Updated poverty measures suggest that regional disparities in poverty aren't as wide as commonly thought.

Source: Weldon Cooper Center. Updated poverty measures suggest that regional disparities in poverty aren’t as wide as commonly thought.

Motivated by the many drawbacks of the official U.S. measure of poverty, the Weldon Cooper Center for Public Service has introduced a “Virginia Poverty Measure” (VPM) to account for regional differences in the cost of living, the impact of government assistance and other factors.

The more nuanced statistical analysis does not alter the overall poverty measure very much. In contrast to the official measure of 11.6% of Virginians living in poverty in 2011,  the VPM finds that 11.9% do. But digging deeper into the data, author Dustin Cable draws some interesting conclusions:

  1. Although Northern Virginia counties and cities enjoy some of the highest median incomes in the nation, the VPM shows that the extent of economic deprivation in the region is significantly greater than what official poverty statistics suggest. For example, by capturing the impact of the region’s high cost of housing, the VPM finds many more Northern Virginia residents in or near poverty, particularly those living inside the Beltway.

  2. The VPM poverty rate for children is dramatically lower than the official rate. Official statistics do not account for the impact of many government programs targeted favorably towards families with young children. By including these tax code provisions and in-kind benefit, the VPM recognizes the full range of resources available for families with young children.

  3. By including calculations for taxes and adjustments for cost of living, the VPM classifies a greater number of people as “near poor.” However, by including more government programs and subsidies for the poor, the VPM finds fewer Virginians in “deep poverty.”

– JAB

IG of the Day: Teen Birth Rate

Source: Atlantic Cities Blog

Source: Atlantic Cities Blog

This map, posted by Richard Florida to the Atlantic Cities blog, shows state-by-state variations in the teen birth rate. Florida makes an unconvincing case that ties higher teen birth rates to the practice of religion, posture on birth control and red state governance, confusing correlation with causality. “Despite all the hectoring and moralizing,” he writes, “teen births are higher in red states and more religious states.”

Toward the end of his post, he does observe that, yes, there might also be a connection between teen birth rates and socio-economic status, and there might be a connection between teen birth rates and pockets of concentrated poverty. The culture of class is a key variable, as sociologist Charles Murray has demonstrated vividly. Florida is a brilliant guy in many ways, but it disheartens me to see him conduct such superficial analysis that tries to score cheap partisan points. Frankly, it casts a shadow over his good and valuable work.

On the other hand…. It’s good to see that Virginia has one of the lower teen birth rates in the country, a standing that I would attribute largely to the fact that it also has one of the lowest poverty rates in the country.

– JAB

The Cooch’s Freak Show Dream Team

cooch dream teamBy Peter Galuszka

Ken Cuccinelli just can’t keep away from the bizarre, but perhaps that’s what makes him what he is.

He stages a convention instead of a primary to neuter Bill Bolling. And since a convention is smaller, it draws more GOP hard-righters than  June bugs on a humid night and they succeed in getting Bishop E.W. Jackson and Mark Obenshain selected. They underline the social conservatism that turns millions off and makes Virginia the butt of jokes on late night talk shows.

The Bishop is an even bigger gay basher than Cuccinelli and says that Planned Parenthood is responsible for more fatalities among African-Americans than the Ku Klux Klan. This may be new to a Harvard Law graduate, but women of any color have a legal right to an abortion within limits. The U.S. Supreme Court said so. Look under Roe vs. Wade.

Then there is the attorney general candidate Mark Obenshain of the legacy Republican family. He proposed and withdrew legislation to require any woman in Virginia who miscarries a pregnancy to report it to the police. The idea is so repulsive it is beyond words. A woman may have miscarried to her great sorrow due to medical reasons and then would have to go through the added horror of having to report to the police? Yes, this comes from a cabal that otherwise wants to keep the government out of your lives. Even Josef Stalin wouldn’t think of this.

What does the dream team have to say on the many policy issues facing a troubled state? We have a bunch of lame and poorly thought out tax cuts and Cooch playing hardware store populist. Cuccinelli was against McDonnnell’s mammoth road building tax plan and has since backed away from his opposition.

Is this good news for Terry McAuliffe, who has plenty of issues of his own? Yes, I would think. Cuccinelli doesn’t need the fringe hard right voters. He’s already got them in his pocket. He needs the center and Mark and the Bishop aren’t going to be much help there.

It boggles the mind how Virginia is so schizo. It is attracting hundreds of thousands of newcomers who are running the state’s economy and are dragging it into the 21st century world. Yet the Republicans put up people like this who aren’t dragging us to Virginia’s recent dark past but to medieval times.

Global investors might think twice or three times before investing in this freak show.

Role Reversal: Poverty Increasingly a Suburban Phenomenon

Houses with boarded-up windows in Henrico County

Houses with boarded-up windows in Henrico County

by James A. Bacon

Mirroring national trends, poverty in Richmond region suburbs has grown far more rapidly since 2000 in suburban counties than in the City of Richmond, according to the Richmond Times-Dispatch, reporting numbers published in a new book, “Confronting Suburban Poverty in America.”

Writes the T-D’s Graham Moomaw: “From 2000 to 2011, the number of poor people in Richmond-area cities grew by 30.5 percent, while the number of poor in the suburbs grew by 69.8 percent, according to the study.”

The poverty rate still remains roughly three times higher in the city compared to outlying counties (which the T-D did not identify, but presumably include Henrico, Chesterfield and Hanover). But the shift marks a dramatic change since the 1970s and 80s when poverty was a negligible problem in the Richmond region’s fast-growth counties.

Here’s the larger and more significant point, which the T-D did not make: There is no evidence that the shift in poverty from city to suburbs is slowing. Indeed, I would go so far as to suggest that there is a tipping point at which the shift will accelerate, and that it is possible that the poverty rate — and all the drawbacks associated with it, such as crime, social dysfunction, problems in schools, higher tax burdens — will be worse in the suburbs than the city 20 to 30 years from now.

Several factors are driving this reversal. First is continued gentrification in Richmond, similar to the trends we see in Washington, D.C., and other major cities, in which more affluent households move back into the city to be closer to job centers, cultural amenities and walkable neighborhoods. (Gaining proximity to mass transit is not, in my estimation, much of a motivator for affluent Richmonders.) The dramatic decline in the crime rate makes people far more comfortable living in the city than they once did. The poor quality of schools, especially middle schools,  and higher tax rate still remain deterrents — but that could change in time.

Meanwhile, poor people are leaking into the suburbs — typically into  unwalkable, lower-density neighborhoods that the middle and professional classes no longer find desirable. Unlike older city neighborhoods, with houses set on smaller lots within walking distance of retail, these older suburban tracts offer nothing to the affluent home buyer. Because their owners have been unwilling to reinvest in them, they have deteriorated and lost value. The poor are the only people willing to move into them now.

So, Henrico and Chesterfield now find themselves dealing with the problems associated with poverty — higher levels of crime (though down from the peak), social dysfunction and disruptive kids in school. Now, just like in the city, there are dicey districts in the counties where public safety is an issue. Now there are schools in the county to which  affluent households avoid sending their kids. Now counties have to share in the fiscal burden of dealing with poverty.

As I have argued elsewhere, human settlement patterns in the City of Richmond are inherently more fiscally efficient to maintain and replace than the scattered, disconnected, low-density settlement patterns of the outlying counties. That differential was masked while Richmond was coping with a 19th-century sewer-storm water system and the counties were basking in the newness of their infrastructure. But now, counties have aging infrastructure, too. At some point, a strengthening tax base in the city and an eroding tax base in the counties will be reflected in a shrinking tax differential between the two. When city taxes are no higher than county taxes, poof, there goes another reason to live in the counties.

When it comes to the distribution of poverty, the Richmond metropolitan area will be barely recognizable 20 to 30 years from now. The authors of “Confronting Suburban Poverty in America” fret that suburban counties are not prepared. They lack the soft infrastructure of governmental and not-for-profit social services, and poor households residing in the auto-dependent suburbs will be even more isolated than their counterparts in the city, who at least have access to mass transit.

To some people, the year 2043 might sound like the far-distant future. But the far-distant future has a way of arriving with frightening speed.

A Whole Lot of Commuting Going On

Source: Governing Magazine

Source: Governing Magazine (Click for more legible image.)

The Governing magazine blog has published some fascinating U.S. census data on commuting patterns in the U.S., and though the author did not pick up on this particular angle, the data shows Virginia as a real outlier.

The chart above, extracted from the census data, shows Virginia counties with populations of 60,000 or more. There are 796 such counties in the United States. Arlington County ranks at the very top of the list, higher even than Washington, D.C., as measured by the percentage of the county workforce that commutes from outside the country. York County, Va., ranks No. 4 in the country — just behind New York County, N.Y. Five other Virginia counties make the Top 50. And Montgomery County (where the town of Blacksburg is located), the bottom-listed county in Virginia, still makes it into the top half for all U.S. counties.

This is remarkable: Virginia’s most populous counties appear to lead the nation in the extent to which workers drive to work from other jurisdictions.

What does it mean? I’m not sure. The phenomenon is conceivably an artifact of the fact that Virginia is the only state in the country in which cities and counties are separate jurisdictional entities, not overlapping entities — although I cannot readily see how that would make any difference.

Another possibility is that there is an extraordinary amount of sprawl going on — Arlington residents commuting to D.C.; Fairfax residents commuting to Arlington; Loudoun and Prince William residents commuting to Fairfax; and residents of outlying counties commuting to Loudoun and Prince William.

Conversely, it’s conceivable (though, based on anecdotal observation, not likely) that a tremendous amount of reverse commuting occurring.

If anyone has any thoughts as to what is going on please submit your observations in the comments. (Hat tip: Rob Whitfield.)

– JAB