Category Archives: Taxes

Sen. Emmett Hanger’s Good Idea

emmett-hangerBy Peter Galuszka

Could some seemingly small technical changes in legislative tactics and voting powers on an obscure commission clear the way for passing a state budget and expanding Medicaid in some form?

Sen. Emmett Hanger, a Republican senator from Augusta, thinks so. If he’s right, there could be a way out for both Republican House Speaker Bill Howell and Democratic Gov. Terry McAuliffe who are taking the stubborn impasse right up to the wire of June 30.

Hanger is proposing technically separating Medicaid expansion to 400,000 lower income Virginians from the budget debate, but with a twist.

There would be legislation linked to the budget requiring changes in the voting of a legislative commission known as the Medicaid Innovation and Reform Commission (MIRC) which was formed in 2013 and must agree that enough positive change in the Medicaid program is taking place to allow expansion. It would most likely occur through private insurance exchanges of some type.

“By October of this year we might be able to begin some limited enrollments,” Hanger told me in an interview.

I called him because, frankly, I didn’t understand media accounts of what he was proposing although the reports indicated that there could be some kind of breakthrough involved. My undergraduate degree is in international relations and I used to study diplomacy. I realize that such types of granular give and take can bring tremendous progress. I am intrigued.

Of course, I could be dead wrong and Virginia will not pass a $96 billion, two-year budget, the state will lose its good bond rating, government will shut down at least in part, teachers won’t get paid and those caught in health care limbo between Medicaid and Obamacare will remain there.

Talking with Hanger gave me some perspective that I didn’t have and haven’t read in the Mainstream media.

First, he said that the General Assembly has already approved Medicaid expansion. It did so last year with former Gov. Bob McDonnell in office. But it also created the 10 member legislative Medicaid Innovation and Reform Commission to identify problems and offer improvement suggestions for the state’s Medicaid program. No expansion can occur unless the commission approves. Hanger is chairman of MIRC.

By law, any expansion of Medicaid must be approved by a supermajority vote of the commission. That means that a majority of the five Senate members of the commission would have to say yes. Ditto a majority of the five House members.

Hanger’s proposal would make it a straight majority vote of six out of 10 members from both Senate and House sides. Plus, they won’t vote to approve expansion, only to disapprove it. In the meantime, MIRC would set clear metrics to benchmark what reforms are truly wanted.

Medicaid expansion would involve some kind of private health exchange (now dubbed “Marketplace Virginia”), and there would be added safeguards that there would be adequate copays by participants and ways to make sure that emergency rooms aren’t suddenly flooded with newly insured patients. He also wants a workable data system to keep track of patients and payments and other safeguards to prevent abuse. There are at least 17 categories of improvement areas.

The Senate would concede and use the House’s budget bill. The House would drop “Marketplace Virginia” from its bill and would concede that addressing additional Medicaid reforms would be required.

“Technically, it delinks Medicaid expansion from the budget bills,” says Hanger. But he adds that many seem to have forgotten that the General Assembly actually approved of Medicaid expansion last year “if a series of reforms were taken.” He says his plan would insure that just that happens and he believes it could happen quickly while the budget impasse is resolved separately.

He says that Howell, who has stubbornly resisted any Medicaid expansion this legislative session, seems amenable. So does McAuliffe.

The danger, of course, is that decoupling Medicaid from the budget bills takes away leverage points from both sides. Democratic Senator Dick Saslaw fears some kind of trick as do some Republicans.

My view is that sure there’s that risk, but it’s getting really late to keep playing chicken. My view also is that McAuliffe has done a hell of a lot more to compromise than Howell has.

Also, in my view, a private exchange is not the best way to go to expand Medicaid but the reality is that Virginia has a highly conservative legislature. Other conservative states such as Indiana have managed health care expansion through private exchanges, so I guess half a loaf is better than no loaf.

It seems that Hanger’s proposed deal might just get that, and not too late, either. It’s worth a look since the financial and health alternatives are truly terrible to contemplate.

Revisiting Taxation and Migration

Hit the road, Jack

Hit the road, Jack

by Timothy Wise

Your humble scribe, ElGrowlerGrande, first became interested in the issue of taxation and interstate migration after reading a paper by Ohio University economics professor Richard Vedder. We discussed this in an article in the July 28, 2003 edition of The ACTA Watchdog, focusing on the question of how decisions of the Arlington County Board affect peoples’ decisions to move or stay.

Tables 1, 2, and 3 in that 2003 edition of The ACTA Watchdog, which used IRS county-to-county migration data, provided an array of information for tax years 2001-2002, and suggested a correlation between Arlington’s high taxes and peoples’ decision to move elsewhere.

Consequently, a series of posts the past week by Lyman Stone at the Tax Foundation’s Tax Policy blog caught our eye. Stone used a 5-part blog post to  respond to a “voluminous” report, entitled “State Taxes Have a Negligible Impact on Americans’ Interstate Moves,” by Michael Mazerov of the very liberal Center on Budget and Policy Priorities (updated May 9, 2012).

Here is how Stone introduces the series, and summarizes what he consider’s the key claims in the CBPP study:

The Center on Budget and Policy Priorities’ Michael Mazerov has a voluminous new report discussing how state tax policies relate to migration. It’s an interesting debate to be had, both because migration is a major economic issue for many states, and because the two extremes of the debate tend to be so vocal. Advocates on one side appear to argue that small changes in taxes create huge changes in migration while advocates on the other seem to suggest that people don’t respond to taxes at all. CBPP’s new report says that “State taxes have a negligible impact on Americans’ interstate moves,” and so falls pretty comfortably in the “taxes don’t affect migration” camp.

The report’s key claims can be summarized as:

1. Interstate migration is small and declining, so, implicitly, it is not extremely economically important.
2. People mostly move for jobs, family, cost of living, and climate, but not for taxes.
3. Low- and middle-income households are more likely to move than high-income households, contrary to what “conservatives” claim.
4. High-tax states actually don’t have that much more net out-migration than low.”

Stone admits to there being “a grain of truth to CBPP’s position. People move for many reasons, and taxes are only one of many influential factors.”

The five parts in the series are too long to condense into even a medium-length Growls. Links to all five parts can be found here in part 5.

In part 5, Stone writes: “In a long series of tables and state-to-state comparisons, Mazerov lays out an argument that the migration flows between high-tax states and low-tax states are, contrary to public perception, actually quite similar. For example, he cites that 68.3 percent of the households moving out of New York will be replaced by households moving in, and offers a similar statistic for other states with net outward migration.” Stone then responds:

Unfortunately, he doesn’t provide the data for states with net inward migration. He also doesn’t provide information on how much income migrates; and in fact doesn’t even show the actual population changes, just the number of “households,” which may vary in size.  These omissions are particularly odd as, in the paragraph right above the incomplete chart, he says it’s important to look at “all of the available migration data” (emphasis Mazerov’s). This could lead to readers getting the wrong idea that differences among state migration patterns are small. In fact, that is exactly what Mazerov does claim, when he says “As it turns out, net migration in most states is indeed quite small compared with total or gross migration” (emphasis Mazerov’s).

Stone also provides a table of the “differences in net migration” for the years 1992-2011. Just the differences for New York and Virginia are sufficient to show the significant differences in migration patterns between states: Continue reading

Mo’ Money for a Broken System?

broken_downby James A. Bacon

The nation’s roads and bridges have a feevah and Josh Voorhees has a cure: mo’ money for the federal Highway Trust Fund. Writing in Slate, Voorhees highlights Congress’ inability to find new revenue sources to replenish the fund, which faces an $18-billion-a-year shortfall every year over the next decade.

“Current tax rates—18.4 cents per gallon of gasoline, 24.4 cents per gallon of diesel fuel—aren’t enough to prevent America’s roads from crumbling and bridges from collapsing,” he writes. Bridges are structurally deficient, he reminds us, urban highways are congested and too few Americans have access to mass transit. Adding urgency to the situation, he notes that America’s road system is ranked only 18th globally — the U.S. is losing its economic competitiveness!

The good guys in his article are those who implemented, or at least advocated, higher federal taxes for transportation. Alas, he laments, “Recent history suggests such days of good policy winning out over good politics are behind us.”

The fact is, there hasn’t been good transportation policy at the federal level for the decades. The federal gas tax, enacted by Herbert Hoover, was necessary to pay for construction of a system of national highways. That it did, quite successfully. But federal programs never declare, “Mission Accomplished.” They morph into something new. And the “Highway” Trust Fund has evolved into a program that doesn’t just underwrite construction and maintenance of highways but one that subsidizes mass transit and all manner of other non-road spending, not the least of which is the cost of administering the federal program itself.

The best thing Congress can do is dismantle the federal transportation bureaucracy and transfer the gas tax revenue to the state transportation bureaucracies. It is axiomatic here in Virginia that federal money bogs down the lengthy approval process for transportation projects with even more bureaucratic process and, thanks to the strings attached, runs up the construction costs. Cutting Uncle Sam out of the loop would save both time and money.

I harbor no illusion that states are any less likely to spend money on boondoggles than Uncle Sam. While the states are closer to “the people,” they are also closer to developers and other special interests who lobby for projects that benefit them at the expense of the public. But cutting the federal strings and overhead at least would make the boondoggles cheaper.

The conventional wisdom conveyed by Voorhees’ article is riddled with other assumptions that I do not accept such as, for example, the notion that the federal government should do more to offset maintenance under-funding. The under-funding of maintenance is a problem, perversely enough, that the Highway Trust Fund helped create. The program entices states to undertake expensive mega-projects by sharing the up-front capital cost. States leap for the “free” money to help cover the up-front costs — the problem is especially prevalent with mass transit projects — oblivious to the fact that new capacity adds to ongoing maintenance and operations costs. States overbuild their transportation systems, maintenance & operations obligations escalate, and they scrimp on repairs to find money for the next new project.

Another issue: In the business world, corporations continually review their portfolios of assets, sloughing off divisions and subsidiaries that don’t justify continued investment. When was the last time the state or federal government ever reviewed its portfolio of transportation assets? Once a road gets built, it never gets downsized. How many lane-miles of highway serve counties with dwindling populations? How many country roads revert from paved to gravel? The United States has erected a system that only grows and never retracts. As long as Uncle Sam is doling out cash, states have little motivation to reconsider.

These and other travesties can happen only in a country in which citizens are convinced that “someone else” should pay to build and maintain everything from city streets to highways, bicycle lanes to light rail lines… a country in which there is no accounting for life-cycle costs… a country in which transportation planning is divorced from land use planning… a country in which accountability for results is diffused between federal, state and local governments…

I don’t mean to pick on Voorhees — many others think as he does — but the idea that raising taxes is the default solution to our nation’s transportation challenges is ludicrous beyond words. The transportation system does need more investment. But until the ramshackle structure for financing highways, bridges and rail is fixed, Americans should have no confidence that the money will be well spent.

Rethinking David Brat

BratBy Peter Galuszka

Knocking David Brat as I did a couple of days ago got the predictably nasty response from Rebellion-land.

So, I went back and looked into it a little more, without an eye towards his Tea Party links.

What did I find a mixed  bag for the economics professor who’s challenging Republican House Majority Leader Eric Cantor. There also is some bad news involving rabidly right-wing media celebrity Ann Coulter, a true rug-biter.

The interesting news comes from Brat’s Website:

“Throughout his entire career, Eric Cantor has supported countless measures and budgets to increase our debt and grow government. Despite his fiscal rhetoric, Eric Cantor voted for new spending measures like Medicare Part D, TARP bailouts, Chinese bailouts, Wall Street bailouts, two unfunded wars, and backed the kick-the-can-down-the-road Ryan-Murray budget.”

No argument there. I will never forget my interview with Eric Cantor during the Great Recession and he told me, emphatically, “We have to get the federal government out of the capital markets!”

I replied: “But you voted for TARP.”

There was a 25 second pause and then the Congressman said, “It was a crisis situation.”

There was another one of these spending things involving the ultra-capable but ultra expensive new jet fighter, the F-35. Veteran aircraft engine maker Pratt & Whitney had the Pentagon OK to make the engine for the fighter. But General Electric and Rolls Royce wanted part of the multi-billion-dollar expenses and pressed to have an alternative engine made as well, adding to the overall cost. The Pentagon didn’t want it.

But Rolls Royce had just moved their North American headquarters to Northern Virginia and was building a jet engine factory near Petersburg. So guess which budget-hawk, cost-slashing super  hero pushed the second engine? Eric Cantor, that’s who. I don’t believe the second engine went through, but you get my drift.

It was also way too much inside baseball when the Richmond Times-Dispatch acted as a personal shill for Cantor while his wife served on the board of Media General, which owned the newspaper. Warren Buffett’s outfit eventually bought the paper but the conflict was rather odious while it happened.

Now don’t get me wrong. I fault Barack Obama for NOT SPENDING ENOUGH to get America out of the recession and disagree with Brat on just about everything economically. But I must admit that he’s right about noting Cantor’s two-faced posturing as a fiscal conservative when he went along with every budget-busting scheme George W. Bush could dream up,  especially two wars that we haven’t paid for yet. One of them wasn’t even necessary.

What I don’t like about Brat is that he attracts the wistful eye of someone like Coulter who is on a tear to deny amnesty to undocumented aliens. And since she claims that if amnesty occurs, Texas will be swamped with lots of new workers from “you know where” and you know what color they will be.

Is this a racist view? Damned right it is. OK, all you commenters, led by ultra-tough DJR, I want to see a lot of piling on this time! I am ready for you! Bacon can participate but he is basically a pantywaist.

Coulter and the Tea Party give me plenty of pause about Brat although he’s right about Cantor on many things.

Cantor’s Brat Problem

BratBy Peter Galuszka

The jockeying for power among Virginia conservatives is certainly curious if not frightening. It seems the diminished Tea Party is trying to make a comeback and relive its heyday of 2010 at the expense of moderates.

I personally hope they don’t because the movement brings up far too much hateful baggage of xenophobia, racism and mindless cost cutting while posturing as true-blue Americans. The more they do this, the more they conjure up some unsavory memories in American history such as the Know-Nothings or the Ku Klux Klan.

The flash point seems to be David Brat, an economics professor at Randolph Macon College in Ashland. Brat is trying to give House Majority Leader Eric Cantor a run for his money, which in itself, is not a bad thing.

Cantor has long been the tool of the white Richmond area elite. He used to be solidly Main Street although he did try to jump ahead of the Tea Party parade in 2009 and 2010 and it seemed very awkward. By conservative standards, Cantor is much more of a moderate than one might expect. The Heritage Action for America rates Cantor at 52 percent for conservative voting. Robert Goodlatte gets a whopping 75 percent Mark Warner (good for him) only 2 percent.

This is where it gets weird. Brat complains that Cantor isn’t conservative enough or tough enough on undocumented workers and the like. Cantor fires back with over-the-top ads claiming that Brat is a closet liberal for having worked on a bi-partisan economics group for Democratic Gov. Tim Kaine.

Meanwhile, reliable GOP operative Linwood Cobb gets ousted by Tea Party firebrand Fred Gruber as head of the 7th Congressional District Republican Committee.Cantor’s 7th District stretches from the booming, mostly white suburbs of Henrico County to rural, sleepy farmlands into Madison. There’s plenty of Main Street and Tea Party to spare in the district.

According to The Washington Post, the fringe conservatives in the GOP are angry that moderate Republicans are going forth with more sensible policies than sticking it to the innocent children of undocumented workers and trying to turn the clock backwards to ban same-sex marriage.

That just ain’t going to happen with lawsuits popping up all over the place and court rulings overturning. Eleven state and federal courts have ruled in favor of ending same-sex marriage bans, including Virginia. In fact, the Old Dominion’s case was heard at the federal Fourth Circuit Court of Appeals this week and it, another or all will end up at the Supreme Court at some point. The momentum is clearly towards allowing same-sex marriage.

Brat has said he wants to return power from the federal level to the states, but if it means facilitating discriminating marriage bans I hope he fails.

It will be fascinating watching this all play out. The Tea Party rode a wave of bitter frustration resulting from the Great Recession that cut across both parties. It hit upon a mixed, mash-up of themes involving populism, raw Americanism, anti-Obamaism, and so on. It has been, by turns, a reaction to the tremendous inequality imbalance and pure racism. In other words, it’s part of many unrelated and sometimes unsavory themes. I went to some Tea Party meetings and found some bright folks and also people I thought should be locked up as border-line dangerous.

What seems to be lacking now is any intelligent policy planning for the slowly growing economy. While the feds have bailed out failing banks, there’s little help for the average borrower who needs help. Thus, they are forced or choose to hang on to cash and spending is anemic.

If Brat is supposed to be an economist, one would assume he might understand these things. I guess it wouldn’t matter anyway, because Virginia’s system of state and federal electoral districts is rigged so that a tiny minority of outspoken crackpots gets to be kingmaker. This is not likely to happen with Cantor during this June’s GOP primary but it a scary and real possibility.

And it is yet another reason why the Democrats like Terry McAuliffe and Mark Herring are increasingly turning to or are considering turning to independent or executive actions (not supporting the same-sex ban, stripping back McDonnell-Cuccinelli-era regulation of abortion clinics, possibly expanding Medicaid by order).

The Brats and the Cantors have done plenty to destroy bipartisanship. The state and the nation face far more serious challenges than letting gays get married or putting the screws to a hard-working, tax-paying worker who happens to be undocumented because he or she was brought to this country at age four.

Richmond’s Incredible Blindness

Mayor Jones

Mayor Jones

By Peter Galuszka

Following up on Richmond Opening Its Kimono post from Monday, I note some significant news developments and points:

First, the Richmond City Council has restored $10.6 million of the $13.6 million Mayor Dwight Jones wanted to keep his plan to build a new baseball stadium, slavery museum and mixed use development worth a total of $79.6 million. This ensures that the project will move forward.

Incredibly, at the same time, the council cut school maintenance from $3.2 million to $2 million when schools are in deplorable condition. “It’s been very encouraging to see the outpouring of support for public schools this year,” Jones said.

Secondly, I am deeply appreciative to commenter CRB who laid out many of Richmond’s problems that obviously are in need of immediate attention despite the Ruling Elite and Mayor Jones’ stubborn and relentless push for their dubious and unneeded Shockoe Bottom plan.

The clarity is so crystal here that it is overwhelming.

Richmond has among the worst schools in the state. It has the worst health conditions of any large city in the state. It has among the highest poverty levels in the state. So what gets cut? Funds to resolve serious and immediate problems. What gets funded? Pie-in-the-sky.

As BR commenter CRB states:

“They need to explain how a baseball stadium is the answer for economic development when the city ranks 121 out of 133 counties in Virginia in overall “health outcomes” – including (to name just a couple of markers) almost twice the number of premature deaths than the rest of the state, three times the number of reported sexually transmitted infections. In addition, only 7% of third graders PASSED the SOL math test during 2012-13 school year. We have the worst schools in the state of Virginia, and we have one of the lowest percentages of primary care physicians, dentists, and mental health providers. The brokenness of this city goes on and on and this group suggests that putting a baseball stadium, using public funds is the answer instead of using those funds to begin addressing the societal infrastructure. It’s simply heartbreaking.”

I did a little research that backs up CRB. The University of Wisconsin’s Population Health Institute published a recent student comparing health rates of all Virginia’s cities and counties for 2012. Guess where Richmond ranked? No. 125, which is dead last for big Virginia cities.

Petersburg was close at No. 123. Roanoke at No. 116 and Norfolk at No 106. Counties are healthy. Chesterfield was No. 39 and Henrico was No. 36.

Addressing health care should be a huge concern. Richmond boasts of Virginia Commonwealth University Health System and the former Medical College of Virginia that offer advanced level care for trauma, cancer, reattaching severed organs and so on. But why is that if you walk a few blocks north, west or east of the sprawling medical campus, you have horrendous conditions that lead to truly bad numbers? Where are nurses and primary care doctors? Preventive programs? Child care services? Elder-care?

As for cutting possible increases in school maintenance, all you need to do is click on this site and look at the photos by Style chief photographer Scott Elmquist and the story by reporter Tom Nash. Rather shocking, I’d say.

As for the 26 percent poverty rate, Mayor Jones has created some commissions and has brought in some Harvard-educated academics but it is hard to see what the trajectory is other than more studies.

So, there you have it, sports fans (excuse the fun). It’s the middle of the 9th inning. The score:

Shockoe Bottom: $10.6 million.

School Maintenance: $2 million.

The Kimonos Are Opening in Richmond

richmond-flying-squirrels-comic-nutzy By Peter Galuszka

There’s an old expression called “opening your kimono” that dates back to the 1990s but seems to have roots in Japan. It means having no secrets. When a Japanese husband and wife greet each other, they draw open their clothes to show they are being open – full disclosure in other words.

That’s the good news about the current debate in Richmond, a city chocked full of possibilities yet hamstrung by an infuriating level of pomposity that goes on in perpetuity.

It’s breaking open long-simmering rifts between the counties and the city and exposing flaws on all sides. It also is pointing out that the city’s Ruling Elite, hailed along by its metropolitan daily newspaper, essentially has feet of clay. Despite Richmond’s pretense, it is incapable of doing things that other Southern cities, like Atlanta or Charlotte, handle with ease.

The issue is where to locate a minor league baseball stadium. It is now on Boulevard conveniently located near Interstates 95 and 64. Fans like the current location. Some 64 percent of those who responded to a newspaper survey said so in September. But the stadium, the Diamond, is nearly 30 years old and is crumbling. The region’s inability to do anything about it is one reason why the AAA Richmond Braves bolted to suburban Atlanta after the 2009 season. They have been replaced by the AA Flying Squirrels – a team that has profound marketing savvy and patience.

Now for the players in the drama:

The Richmond Elite. It consists of Jack Berry, a former government bureaucrat who now heads Venture Richmond, a local, non-profit marketing group, Kim Scheeler, head of the chamber of commerce, and Thomas A. Silvestri, the publisher of the lackluster newspaper, the group’s propaganda organ.

Berry revitalized the idea of moving the Diamond to Shockoe Bottom in an op-ed piece in the city’s Pravda (RTD) last summer. Richmond Mayor Dwight C. Jones has made it a personal campaign. He wants an $80 million project in the Bottom that includes the stadium, apartments, a hotel, a publicly funded parking garage, a grocery store and so on. Also in the group are some developers in the Bottom who stand to make lots of money and an engineering firm that will, too. Lots of public money through bonds sales will be involved.

This group also wants a museum to slavery in the area where selling human beings flourished  to blunt criticism that launching a big in-city development based on entertainment, outdoor bars, baseball and nightlife. It might not suit with Richmond’s horrific history of once being the No. 2 slave trading market in the U.S.

Counter groups. Development proposals are also swirling to rebuild a stadium at the current site and to develop corresponding retail and perhaps some mixed use development there. One idea that came up comes from RebKee Company, a commercial real estate firm based in suburban Midlothian that had been working with Dan Gecker, a Chesterfield County Supervisor who is a commercial real estate developer. Unlike the Mayor and Berry’s Bottom plan, the RebKee idea would not involve public money. In other words – no public risk if it doesn’t work out.

Another wild card is Douglas Wilder, the country’s first African-American governor and former Richmond mayor, who wants to locate a slavery museum downtown near Broad Street at a former Baptist Church that was famous during the civil rights movement and is owned by VCU. Wilder’s earlier plan to build a national slavery museum near Fredericksburg turned into a disaster. However, the fact that such a prominent politician is going against Dwight Jones and his group is extremely significant. Not only does Wilder muddy the waters, he steals Jones’ thunder since Jones is also African-American – a fact that helps provide cover for the rest of the Richmond Elite which is predominately white.

The Average Joes. These are the Flying Squirrels fans who seem very happy with the new team, which does a much better job of keeping them involved than the Atlanta Braves, which owned the previous Richmond ball club. At least half of the fans are from the suburbs and tend to like the Boulevard area since it is easy to get to. Many Richmonders feel the same way. The Squirrels are privately owned and are associated with the San Francisco Giants. The old Braves seemed to be run by a gigantic and bloodless insurance company.

After Berry wrote his ex-cathedra epistle proclaiming the new Bottom vision, Richmond has been subjected to a steady drum beat of Times-Dispatch agit-prop for the idea. But they were stunned when gadfly Richmond Councilman Jon Baliles suddenly floated the RebKee possibility and launched something like the Great Schism (as in Church history). Continue reading

Fracking the Mother of Presidents

fracking rigBy Peter Galuszka

Controversial hydraulic fracking appears to becoming a distinct possibility in areas south and east of Fredericksburg on land that is famed for its bucolic and watery splendors along with being the birthplaces of such historical figures as George Washington, James Monroe and Robert E. Lee.

After several years of exploring and buying up 84,000 acres worth of leases from Carolina to Westmoreland Counties, a Dallas-based company that uses a post office box as its headquarters address participated in the first-ever public discussion of what its plans may be.

According to the Free-Lance Star, the meeting was put together by King George County Supervisor Rudy Brabo to air concerns and hear plans of Shore Exploration and Production Co., which is based in Dallas and has offices in Bowling Green. Its headquarters address is registered with the State Corporation Commission as P.O. Box 38101 in Dallas.

About 100 people attended the meeting April 14, but judging from the newspaper’s account, not many questions were answered. Participants repeatedly asked Shore CEO Ed DeJarnette what his plans were regarding fracking and who would be responsible for damages if something went wrong.

DeJarnette responded that his firm is merely buying up leases and is looking to sell them to other gas drillers and operators. The state’s Department of Mines, Minerals and Energy issues permits one at a time and is responsible for enforcing them, he said.

Hydraulic fracking and horizontal drilling have touched off a revolution in the American energy industry in recent years, particularly in the Marcellus Shale gas formations that stretch in the Appalachians from New York State to southwest Virginia. The methods have also been used to reach rich shale oil deposits in North Dakota and other western states.

Fracking has been used as a drilling process for years according to media accounts and authors such as Gregory Zuckerman whose recent book “The Frackers” covers the process’s increasingly widespread use in the past several years.

Among concerns are that the toxic chemicals mixed with water and then pumped hundreds of feet underground could eventually ruin groundwater serving streams and wells. Other concerns are that the inevitable “flowback” in drilling will require surface ponds to handle toxic waste. In places such as Pennsylvania and West Virginia where fracking is permitted, quiet country areas are badly disturbed by the roar of diesel generators at drilling sites and from trucks that are constantly delivering drilling supplies. Methane can leak from drilling rigs, further complicating global warming issues, and flash fires can be problems. Fracking can also consume great amounts of water which often has to be trucked in.

On the plus side, holders of mineral leases can receive great sums in royalties and various taxes and other payments can boost local tax coffers. Natural gas is cleaner and less deadly source of energy than coal, plays a big role in electricity power generation in the Mid-Atlantic.

At the King George meeting, DeJarnette told the audience that he preferred using nitrogen as an element in fracking rather than water, but there were few details in the newspaper story.

While providing scarce details on who would actually handle the drilling, how it would be done and who would be responsible for damages, DeJarnette repeatedly emphasized the monetary benefits and jobs fracking would bring.

If it proceeds, fracking in the Taylorsville Basin would likely be confined to Virginia, which is more business-friendly than Maryland where the basin also extends. The field stretches across the Potomac River into Charles, St. Mary’s, Calvert and Anne Arundel Counties but Maryland has a moratorium on fracking until it can be studied further.

DeJarnette says he wants drilling to start by late this year or in 2015. Major oil firms explored the Northern Neck area and found some evidence of oil and gas deposits there in the 1980s.

Virginia State/Local Tax Take: 30th in Country

alcatrazOne parting shot before the Bacon family departs on spring vacation to a destination very relevant to the smart growth…

The Tax Foundation has published its updated ranking of states where state and local taxes took the greatest share of state income in 2011. No surprise, New York ranked at the top with a grab of 12.1%. New Jersey, Connecticut and California followed in the next three spots.

Virginia ranked 30th. State and local taxes took 9.2% of income in 2011. That’s actually an improvement from the previous two years, when taxes took 9.6% (in 2010) and 9.7% (in 2009). The numbers should change for the worse when 2012 data is considered — that’s the year the McDonnell transportation tax hikes went into effect. Still, Virginia state/local taxes likely will remain within a narrow band of 9.0% to 10.% where, according to Tax Foundation figures, it has stayed since 1977.

Hopefully, we can dispense with the nonsense that Virginia is a “low tax” state that starves its public sector. We’re not out of control like the aforementioned big tax-and-spenders but we’re well within the middle of the pack, with very small percentages differentiating us from those immediately above and below.

– JAB

Richmond’s Huge and Hidden Problem

The Seahawk's Wilson

The Seahawk’s Wilson

 By Peter Galuszka

There’s been plenty of image-building on this blog site in favor of what is perceived to be a “new” Richmond.

In this view, the former Capital of the Confederacy famous for its gentile white elite and, unfortunately, race politics, is being transformed to a major draw for talented young people and active retirees with plenty of diversity. Some evidence bears this out, such as the wealth of arts and culture and increasing upscale apartment rentals in the city.

The image is being pushed along by Richmond Mayor Dwight Jones who wants to anchor his downtown drive by placing a controversial baseball stadium in Shockoe Bottom. There is plenty of angst about his idea given that the city has other, more pressing concerns. They include its 26 percent poverty rate and the fact that the mostly white suburban counties seem to be moving farther from the Richmond sphere of influence.

There’s yet another big and unaddressed problem that may spell the ultimate fate of the city. Its school system is decrepit, as two recent stories in Style Weekly to which I contribute, point out.

One is a deeply reported cover story this week by Tom Nash that takes readers on a horrifying tour of several Richmond schools. Thompson Middle School has ceiling that ooze gunk. Diluted tar falls in classrooms. Fairfield Court Elementary needs a new roof. A tile fell on a student but the fix is $90,000 or one fifth of the district’s school budget for the year. Tom reveals more problems at Carver Elementary and Armstrong High, among others.

Most of Richmond’s school buildings are more than 60 years old. Dana Bedden, the system’s new superintendent, says school buildings are the worst he’s ever seen and that includes a stint in the District of Columbia. Reports say that $26 million is needed just this year to make a corrective dent in the problem.

Another Style story of note is an opinion piece by Carol A.O. Wolf, a former journalist and school board member. It was published in February, just after the Seattle Seahawks crushed the Denver Broncos in the Superbowl. The star was Seahawk quarterback Russell Wilson who grew up in Richmond.

Wilson’s dad placed him at Collegiate, a highly regarded private school in the West End. The Sporting News reported that when Wilson was a ninth grader at Collegiate, Richmond public schools started angling to recruit him to play ball for them. Dad said no. According to him, “I didn’t put Russell in Collegiate for sports, I put Russell in Collegiate to get the best education he could get.”

So much for Richmond’s public schools. It’s really too bad, as well, that the public school system is so neglected and that the mayor and other opinion makers are ignoring huge municipal problems in favor of top-down development like the new baseball stadium of questionable value.