By Peter Galuszka
By Peter Galuszka
As the holidays approach, what happens to the gifts after you give them?
Many end up in the trash.
I pondered those questions in the December issue of the Chesterfield and Henrico Monthlies. It deals with a polyglot of forces including the planned obsolescence of many goods, especially electronics, global trade cycles, and, most important of all, how Virginia communities deal with disposing of their gifts once they are no longer the latest “in” thing?
“The Throwaway Society” dates back maybe 70 or more years. It is not a new concept at all and it actually hit its prime in the 1940s when it was popularized by the very same industrial designer who gave us the Oscar Mayer Wienermobile.
Today, the cycle often begins at a Chinese wharf and circumnavigates the world. Playing integral roles are lowly county dumps and the companies they hire to recycle what they can and dispose of hazardous materials found in virtually anything electronic.
It’s an off-beat story but it may be a fun read.
Not to spoil your Christmas or anything.
Spotlighting once again just what a parallel universe Virginians live in, federal probation officers have recommended an unusually lengthy sentence for Robert F. McDonnell, a Republican who was the first present or former governor ever to be convicted of public corruption in the Old Dominion.
The recommended sentence is a minimum of 10 years and one month with the maximum being 12 years and seven months. If U.S. District Court Judge James R. Spencer follows the recommendations, which statistics show is likely during sentencing Jan. 6, McDonnell could technically be in jail until he is past 70 years old.
The irony, according to The Washington Post, is that McDonnell could have gotten a maximum sentence of three years and a minimum of probation had he accepted a plea deal a year ago. He could have pleaded guilty to lying on a bank application. His co-defendant, wife Maureen who was also convicted of corruption, would never have been charged had the deal gone through.
The federal process for recommending sentences is regarded as a thorough and rigorous process. It shows just how serious the convictions against McDonnell are.
This reality is in marked contrast to the series of opinions and wishful thinking one reads in the blogosphere (and here as well) that McDonnell is an innocent who was framed. Among the ideas are that the conviction is tainted because in one instance star prosecution witness Jonnie R. Williams gave conflicting information during his four days of testimony.
A more bizarre idea is that Spencer, a Reagan appointee, is conflicted because McDonnell and other Republican legislators voted down his wife’s nomination for a state supreme court judgeship back in the 1990s.
I gather they can all float away in their sea of delusions. We had to endure their insistence that there was no case against the McDonnells because everybody does it and this is Virginia. Well, the jury didn’t buy it and didn’t take all that long to come back with ringing guilty verdicts. Now federal probation officers are reminding us once again about what we’re really dealing with.
by James A. Bacon
Governor Terry McAuliffe’s great gift is salesmanship. He approaches the job of Virginia’s chief economic development officer with great enthusiasm, and he loves to wheel and deal. It’s not surprising, then, that his new strategic plan, “New Virginia Economy,” calls for an increase in the Governor’s Opportunity Fund to keep it “competitive with other states.” The fund is nearly depleted after the first year of the biennial budget, and the economic-development game won’t be much fun without more incentives to dangle.
The problems with incentives are well known. First, it is unknowable whether incentives actually induce a particular company to invest in Virginia, or whether the company simply takes the money because it is there for the taking. Second, there is an inherent unfairness in taxing existing citizens and businesses in order to shower benefits to newcomers.
What’s refreshing about the strategic plan is that it does recognize the need to scrutinize state incentive programs. In particular it proposes to prioritize the allocation of state dollars by conducting Return on Investment (ROI) analysis on different incentives and programs to see which yield the biggest bang for the buck. “New Virginia Economy” mentions three specific ideas:
Evaluate current policies and study the ROI on incentives and programs. The idea of setting up an “internal working group” to review performance is a good idea. All programs should be continually scrutinized by outsiders to see if they deliver value. I would argue that scarce public funds should be channeled to programs that yield the greatest ROI and poorly performing programs should be shut down.
The fact is, administrators of the programs themselves cannot rarely be trusted to give an honest evaluation. Bureaucrats have an instinct for self preservation. They want to maintain their programs — to grow them, if possible — and can be counted on to cherry pick evidence to justify continued funding. The best counter to this all-too-human tendency is to have outsiders ask tough questions. Private companies have elaborate systems for allocating capital within their organizations with the goal of maximizing ROI. State government needs to create comparable processes for allocating public funds.
Enhance state research capacity for conducting ROI analysis. The strategic plan only hints at what the authors have in mind, but it seems self evident that it is impossible to conduct ROI analysis without data. In the realm of economic development, that means evaluating programs in light of the number of jobs created, how well those jobs pay, the level of capital investment, the impact on the state and local tax base and other basic data. A more sophisticated level of research would look for second-order effects. Would recruiting a new business to Virginia contribute to building a competitive and self-sustaining industry cluster? Would the company create contracting opportunities for other Virginia businesses? The list of questions is endless.
Reform the Tobacco Commission. The Tobacco Indemnification and Community Development Commission was founded with high hopes that it would revitalize the economies of Southside and Southwest Virginia, beset by the erosion of tobacco cultivation and the decimation of its mill-town manufacturing economy. The Commission has been criticized for a lack of oversight, which allows powerful politicians on the Commission to reward favored constituencies. The strategic plan calls for reforming the Commission to “maximize ROI on Commission investments” and to create a long-term sustainable funding model.
If we accept the premise that state government should dispense subsidies, tax breaks and other incentives to business — I personally don’t accept that premise, but the practice isn’t going to change any time soon — then we ought to ensure that the money is spent to the great public benefit.
By Peter Galuszka
What seems to be strong opposition to a host of initiatives by President Barack Obama and the U.S. Environmental Protection Agency to curtail carbon and other forms of pollution is no mere coincidence.
According to a deeply reported story in Sunday’s New York Times, some state attorneys general, most of them Republicans, are part of what seems to be a covert conspiracy to oppose carbon containment rules in letters ghost-written by energy firms.
And, there’s a big Virginia connection in former Democratic Atty. Gen. Andrew P. Miller and George Mason University which have been bankrolled by conservative and Big Energy money for years.
The cabal has drawn its modus operandi from the American Legislative Exchange Council, funded by the ultra-right, oil-rich Koch Brothers of Kansas. In that case, ALEC prepares “templates” of nearly identical legislation that fits the laissez-faire market and anti-government and regulation principles held dear by the energy and other big industries. Many marquee-name corporations such as Pepsi, McDonald’s and Procter & Gamble have dropped their ALEC membership after public outcries.
In the case of the attorneys general, big petroleum firms like Devon Energy Corporation of Oklahoma draft letters opposing proposals that might hurt their profits such as ones to regulate methane, which can be a dangerous and polluting result of hydraulic fracking for natural gas. The Times notes that Oklahoma Atty. Gen. E. Scott Pruitt then took Devon’s letter and, almost-word-for-word, submitted it in his “comments” opposing EPA’s proposed rules on regulating fracking and methane.
The secretive group involves a great deal of interplay involving the Republican Governor’s Association which, of course, helps channel big bucks campaign contribution to acceptable, pro-business attorneys general. In 2006 and 2010, Greg Abbott of Texas got more than $2.4 million from the group. Former Virginia Atty. Gen. Kenneth Cuccinelli got $174,5638 during his 2009 campaign.
One not-so-strange bedfellow is former Virginia Atty. Gen. Andrew P. Miller who was in office from 1970 to 1977 and is now 82 years-old. He’s been very business promoting energy firms. As the Times writes:
“Andrew P. Miller, a former attorney general of Virginia, has in the years since he left office built a practice representing major energy companies before state attorneys general, including Southern Company and TransCanada, the entity behind the proposed Keystone XL pipeline. The New York Times collected emails Mr. Miller sent to attorneys general in several states.
“Mr. Miller approached Attorney General Scott Pruitt of Oklahoma in April 2012, with the goal of helping to encourage Mr. Pruitt, who then had been in office about 18 months, to take an even greater role in serving as a national leader of the effort to block Obama administration environmental regulations.
“Mr. Miller worked closely with Mr. Pruitt, and representatives from an industry-funded program at George Mason, to organize a summit meeting in Oklahoma City that would assemble energy industry lobbyists, lawyers and executives to have closed-door discussions with attorneys general. The companies that were invited, such as Devon Energy, were in most cases also major campaign donors to the Republican Attorneys General Association.”
“Mr. Miller asked [West Virginia Attorney General Patrick Morrisey] to help push legislation opposing an Obama administration plan to regulate carbon emissions from existing coal-burning power plants. Legislation nearly identical to what Mr. Miller proposed was introduced in the West Virginia Legislature and then passed. Mr. Morrisey disputed any suggestion that he played a role.”
Not only that, but George Mason has an energy study center that is bankrolled by Big Energy and tends to produce policy studies of what the energy firms want. It also has the Mercatus Center, a right-wing think tank bankrolled by the Koch Brothers.
So, when you see what seems to be a tremendous outcry against badly needed regulations to curb carbon emissions and make sure that fracking is safe, it may not be an accident. And, it comes from attorneys general who should be protecting the interests of average residents in their states instead of being toadies for Big Energy.
by James A. Bacon
Henrico County has just scored an economic development coup — for the measly cost of $500,000, it has persuaded McKesson Medical-Surgical Inc., a major distributor of medical supplies, to occupy the remaining space at the old Circuit City headquarters building. The state will match the sum with another $500,000. Said county Supervisor David A. Kaechele: “It’s good news all around.”
Just one little problem: McKesson Medical-Surgical is already headquartered in Henrico County. The million dollars in government funds merely moves McKesson from one county location to another. It’s not as if Henrico is recruiting a new business enterprise to the region.
Gary McLaren, Henrico’s economic development director, justifies the incentive payment on the grounds that the company was looking at other locations in the Richmond region and potentially outside the region, according to the Times-Dispatch. The company, he says, had a site outside the state “under serious consideration.” The stakes were high: Over five years, the growing company plans to add 225 employees with compensation averaging more than $100,000 a year.
I suppose one could argue that $500,000 ($1 million, if you include the state funds) is cheap insurance against the risk of losing a major corporate citizen to another state. There is no way for us as taxpayers, however, to know how serious that threat was. Certainly, the cost to McKesson of relocating would be extremely expensive and disruptive — far more than $1 million. But if the competing jurisdiction was dangling incentives, too, it’s conceivable that Henrico’s subsidy was justified.
While recognizing the necessity of preserving the region’s business base — and McKesson is one of the larger, more successful companies headquartered in the Richmond region — corporate welfare rubs me the wrong way. McKesson doesn’t need this money to prosper. It’s taking the money because it can. No such consideration is given to citizens or small businesses.
Perhaps most frustrating is the way this transaction symbolizes the bankruptcy in thinking about economic development in Henrico — the way to keep business is to bribe companies to stay. Needless to say, only big, highly visible businesses need apply. Meanwhile, I hear rumbles of how the county is alienating other businesses by shaking them down over utility fees.
The biggest problem is the failure to comprehend how labor markets and the corporate site-location calculus are changing, and the failure to make the necessary adjustments. It takes more than a low property tax rate to entice business to stay in Henrico County. Increasingly, employers are looking for the kind of amenities typically found in traditional core cities — the experience commonly referred to as “walkable urbanism.” Henrico is creating scattered pockets of walkable urbanism but the initiative is coming almost entirely from developers. The county isn’t making the transition any easier. Our elected officials are providing no strategic vision. They’re simply responding to events as they occur and declaring a victory when a company like McKesson can be bribed to stay.
It won’t be much of a victory if every other major employer in the county has to be bribed the same way.
Dominion Resources, the powerful, Richmond-based utility with $13 billion in revenues, has strangely been getting $30 million public funds to bring a natural gas pipeline to a new generating plant in Brunswick County.
Odder still (or maybe not so) the public funds are coming from the GOP-controlled Virginia Tobacco Indemnification and Community Revitalization Commission which has figured in a wave of corruption since it was formed in 1999.
Even more bizarre, the tobacco commission made up of politically-appointed people arranged for Dominion to receive millions more than its own staff recommended, according to an intriguing report by the Associated Press.
The tobacco commission was created to use money from a massive 1996 settlement that 46 states received from four top tobacco companies in health-related lawsuits. Many states used their funds to promote health and anti-smoking campaigns. Virginia did some of that but created a pork barrel commission to dole out $1 billion to projects allegedly aimed at helping residents of Virginia’s Tobacco Road along the state’s southern tier for economic development projects.
In the Dominion case, the utility says it never lobbied for grants, but somehow it got $30 million – or $10 million over three years for a pipeline to its $1.3 billion Brunswick gas plant. The commission’s own staff said $6.5 million should have been sufficient for the first installment.
So, you have a situation where Dominion, which is a huge contributor to political campaigns, says it never really wanted grants, the commission staff recommended one amount and the tobacco commission awarded a much bigger one. And, according to the AP, no one seems to know anything about it.
Well, that’s about par for the course. Here’s something I wrote for The Washington Post in September:
“No one seems to be checking whether commission projects are worth it. A 2011 study by the state’s Joint Legislative Audit and Review Commission found that, of 1,368 projects funded for $756 million, only 11 percent were measured for results. “They are just handing out money,” Del. Ward Armstrong (D-Henry) said in 2011.
John W. Forbes II, a former state secretary of finance and a tobacco commission board member, was convicted in 2010 of defrauding the commission of $4 million. He used the money for “The Literary Foundation of Virginia,” which he created, and set up himself and his wife with six-figure jobs. The rest was siphoned to shell companies.
The commission has awarded $14 million in grants to the Scott County Economic Development Authority, which is headed by John Kilgore Jr., Terry Kilgore’s brother (Terry heads the commission and his brother Jerry is major Republican politician). Meanwhile, their father, John Kilgore Sr., heads the nonprofit Scott County Telephone Cooperative’s board, which has received $7 million in tobacco money to expand broadband access.
The Kilgore family affair isn’t illegal, but it looks bad. The tobacco stench just doesn’t go away. In June, federal agents subpoenaed commission records in their probe of former state senator Phillip P. Puckett. The powerful Democrat from Russell was supposedly discussing a lucrative staff job on the tobacco commission with Terry Kilgore just before a key vote on expanding Medicaid. Puckett resigned in time to throw the vote toward opponents, most of them Republicans.”
The gas pipeline apparently would connect with a major interstate pipeline operated by Transco and runs from the Gulf State gas fields through Virginia to the Northeast. And, Dominion is one of four utilities planning a brand new $5 billion that would take natural gas fracked in West Virginia, over sensitive tops of the Appalachians, southeast to North Carolina. That project includes a spur line to the Dominion Brunswick plant.
One wonders why Dominion needs two pipelines to one plant — especially one built with funds intended directly for public service.
Well, as they say in the giant newsroom in the sky, good stories only get better.