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RVA Snapshot: Nice Vision, but the Devil’s in the Details

rva_snapshotby James A. Bacon

The Capital Region Collaborative, a not-for-profit dedicated to building a more livable, prosperous Richmond region, has just published RVA Snapshot, a set of metrics that compares Richmond to six peer metros of comparable size. The accompanying commentary summarizes the conventional wisdom regarding the region’s strengths and weaknesses, and articulates a “shared vision” for the future.

I find the aspirations particularly interesting, as they express the values of the business, political and civic leaders who influence how the region allocates resources to advance the public good.

Education: The region ensures that every child graduates from high school college or career ready.

Job creation: The region enjoys a diverse economy that is competitive in the global marketplace and provides job opportunities for all.

Workforce preparation: The region aligns workforce skills to employer needs.

Social stability: The region embraces our social diversity as a strong community asset and supports a community where all residents have the opportunity to succeed.

Healthy community: The region transforms into a metro area known for an active lifestyle.

Coordinated transportation: The region maintains its status as one of the most uncongested transportation networks in the country while supporting all modes of transportation.

James River: The region will make the James River a centerpiece for entertainment, recreation, and commerce.

Quality of place: The region is the most appealing and attractive destination for arts, culture and entertainment on the East Coast.

By necessity, these aspirations are watered down to appeal to a broad cross section of the population. It’s hard even for a curmudgeon like me to take exception to any of them. The tricky part is figuring out which tangible actions will advance these goals. And that often boils down to political philosophy — what role should government play? To what extent does the community achieve its goals by taxing, spending and regulating, and to what extent does it rely upon voluntary, bottom-up initiatives?

Needless to say, I favor voluntary, bottom-up initiatives. For example, the Capital Area Farmer Markets Association is creating a food guide listing all restaurants, farms, grocers, markets and other businesses where consumers can purchase local food. I doubt I’ll go out of my way to patronize these establishments, but if other people do, that’s great! I’m all for increasing consumer choices.

I’m less excited by the uncritical emphasis on public transit, which the document kinda, sorta endorses by noting that the Richmond region is 8th lowest ranked among its peers with regard to transit coverage and job access. That may be true, and creating affordable transportation options for the public may be desirable, but expanding mass transit is not a win-win proposition, it’s a win-lose. Money is involuntarily transferred from one group of people (taxpayers) to another group of people (transit riders), usually with little regard to economic efficiency or emerging transportation alternatives.

Regardless, all the right-thinking people in Richmond are lining up behind Richmond’s proposed bus rapid transit system. I have yet to see a discussion of appropriate land uses along the bus corridor or streetscape improvements needed to make the corridor more hospitable for passengers walking from the stations to their destination. Nor has anyone considered how the Uber revolution might be extended to privately operated vans and buses as a way to provide affordable transportation access to the poor. Having dealt with none of these issues, the City of Richmond will incur a long-term obligation to continue operating a money-losing service.

Which brings me to my final point: RVA Snapshot gives no consideration to the long-term fiscal health of local governments in the region. Apparently, is it assumed that AAA and AA bond ratings are a birthright that require no special attention. Trouble is, local governments are hard-pressed to maintain the services at current tax rates without expanding their commitments and setting themselves up for future failure. Sound finances are the bedrock of any community’s long-term prosperity. I would add the following aspiration:

Fiscal health: The region embraces sound fiscal practices that support the ability of local governments to maintain competitive tax rates and pursue excellence in core functions over the long run.

Another Disrupter…

On the horizon… all-weather solar cells.

What will that do to the economics of the electric grid — and will we be prepared for it?

Disrupting Education and Health Care

steve_case

Steve Case

by James A. Bacon

Education and health care are the two most moribund economic sectors in the U.S. economy, plagued by lagging productivity and poor outcomes. Not coincidentally, both sectors are joined at the hip with government. Democrats are determined to preserve the status quo, while Republicans offer no clear market-based alternative. Is there any reason to think anything will change?

Steve Case, the legendary co-founder of AOL who now runs investment firm Revolution LLC, thinks that a “third wave” of Internet innovation will transform both sectors from the bottom up. He writes the following in the Wall Street Journal today:

While the presidential candidates discuss the merits of abolishing or expanding the federal Education Department, entrepreneurs are revolutionizing how instructors teach and students learn. Venture capitalists see what’s coming. Funding for EdTech startups hit $1.85 billion last year, according to EdSurge, up from $360 million in 2010. Former teachers are leading companies that are unleashing—finally—personalized and adaptive learning. While the pundits debate education policy, the innovators are in the trenches improving classrooms all across the country.

Or look at health care. As the candidates pitch plans to abolish or build on the Affordable Care Act, the real action to improve America’s medical system is coming from entrepreneurs. They are inventing better ways to keep us healthy, and smarter ways to treat us when we get sick. The revolution in health care is being led by the innovators who are working tirelessly to improve outcomes, enhance convenience and lower costs. And again, investors sense this: Last year health care companies raised a record $16.1 billion in venture capital, this newspaper reported, an increase from 2014 of 34%.

But there is no divorcing government from the process, argues Case.

Third Wave innovators … won’t be able to go it alone; they’ll need to go together. They’ll need to engage with governments, as regulators and often as customers. And they’ll need to recognize that revolutions often happen in evolutionary ways. Success will require many alliances, as well as constructive dialogue with regulators.

This entrepreneurial revolution offers Virginians an alternative to the stale and polarized alternatives of the past. Virginia may or may not be where these new companies originate and create product-development, back-office and headquarters jobs. But our approach to public policy will influence where these entrepreneurs do business first. The more flexible and open we are, the greater the likelihood of attracting investment and re-energizing our education and health-care sectors. This is a once-in-a-generation opportunity. Will we take it or squander it?

Fairfax County bans Christian immigrants

Fairfax, VA – The Fairfax County Board of Supervisors (BoS), in a raucous meeting last night,  voted 7 – 1 to ban any more Christian immigrants from entering Fairfax County.  The board cited a “clear and compelling danger” posed by Christians importing deadly rattlesnakes into the county.  The few stunned onlookers who could gather their thoughts enough to speak expressed skepticism over the both the legality and practicality of a county board banning immigration into a county based on religion.  However, seven of the eight board members were adamant that the board had the legal, moral and God-given right to protect the citizens of Fairfax County against the scourge of Christian rattlesnakes.

In a post-vote news conference, Board Chairman Nod Pmurt explained the reasoning behind the ban.  “It has come to our attention that some Christian sects have taken to collecting and handling rattlesnakes as part of their religious observance.  Fairfax County is a rattlesnake-free county and we can’t have Christians collecting rattlesnakes and bringing them into Fairfax County.”  Chairman Pmurt went on to say that he saw an expose on the Christian ritual of collecting and handling rattlesnakes on a 60 Minutes rerun so he knew it must be true.  Researchers at The Radish have located the 60 Minutes piece in question. (See video above.)

Fairfax County has a long standing domestic poisonous snake problem centering around copperheads.  County animal control officials have generally reduced the incidence of copperhead attacks although there have been notable exceptions.  Last year, for example, a copperhead bit a General Assembly member from Fairfax County during an outdoor luncheon meeting.  However, the General Assembly member was so intoxicated it was the copperhead that died.  Some in the county now worry that the good progress made in fighting home grown copperheads will be reversed as Christian refugees from other counties introduce rattlesnakes.

After the press conference Chairman Nod Pmurt stood under the statue of Gerry Connolly in front of the Fairfax County Government Center and said, “My forbearers didn’t come to this county from Pallendromia so their descendants could be eaten by rattlesnakes brought here by Christians.  I know most Christians are law abiding citizens but that’s faint solace to those who find themselves staring into the white cottony mouths of one of those killer reptiles.  And what comes after rattlesnakes?  Cobras?  I can tell you for a fact that the good citizens of Fairfax County will not see their taxes raised to buy a mongoose for every animal control officer in the county.  I think it’s perfectly reasonable to curtail Christian immigration into this county until we get a better handle on the rattlesnake problem.”

— Reporting for The Radish, DJ Rippert

Cycling Rolls through Chesterfield, but Will it Reach the Finish Line?

bicycles

By John Szczesny

It’s official, maybe: 360 new miles of bike paths and trails in Chesterfield County. Whether the plan endorsed this week by the Board of Supervisors in a 3-2 vote ever gets funded (and built) remains to be seen, but there’s no doubt cycling advocates scored a big victory.

Given county staff’s initial price tag — pegging the per-mile cost of bike paths between $250k and $1 million — early odds had favored denial in the low-tax, conservative Republican stronghold that sent Dave Brat to congress.

There remains strong opposition from residents who argued against the scope and astonishing cost of the plan. The growing county has multiple competing budget demands, and it’s fair to ask where bike paths should rank compared to education, public safety, infrastructure, and other concerns. But with over 1,000 petition signatures and a vocal lobbying effort in favor of the plan, county residents clearly want safe bicycling facilities in auto-dominated Chesterfield.

It remains to be seen whether county officials can acquire all the necessary right of way to construct the pathways, as any missing link could doom an entire trail. As innocuous as bike paths may seem, this complex project likely will require the services of outside engineering consultants for overall project management and full-scale paving, grading, and drainage plans. In addition, recently enacted and more stringent EPA storm water requirements must be reckoned with.

Cycling proponents can savor victory for now, but there’s still a bumpy road ahead in Chesterfield. So far they’ve proven willing and able to hang on for the ride.

The Politics of Big Data

big_databy James A. Bacon

Yesterday I blogged about the All-Payer Claims Database, which has the potential to provide unprecedented insight into medical outcomes and charges in Virginia. By consolidating medical claims data for hundreds of millions of health claims, the database will enable employers, insurers and hospitals to conduct analytical studies that were impossible previously.

There is a lot of maneuvering behind the scenes regarding the database, as I have learned from an informed source whom I will not quote because we were chatting informally and he might have thought we were off the record.

Participation in the database is voluntary, so it took years of coaxing and wrangling to persuade Virginia’s private insurance companies to relinquish their data. Anthem Blue Cross-Blue Shield, the state’s largest insurer, is the most ambivalent about the project. With more than one million Virginia customers, its database is big enough that it can go solo with the kind of analysis people envision for the statewide database. That ability confers it a significant competitive advantage over its smaller rivals. If Anthem dropped out, the value of the statewide database would diminish significantly. Accordingly, the General Assembly may consider legislation in 2016 to make participation mandatory.

That raises an interesting philosophical question: Is it justifiable for state government to mandate the sharing of outcomes data? In an era in which data confers tremendous marketplace power, any such mandate would penalize Anthem. The insurer could advance a plausible argument that a requisitioning of its data would amount to an uncompensated seizure of valuable property — property far more valuable than its office buildings, computer networks and other tangible assets.

But Anthem’s right to protect its property from government seizure conflicts with the public good that can be achieved through the sharing of data. The bigger and more comprehensive the database, the greater the benefits to public health that can be achieved by mining it.

Politicians comfortable with the exercise of state power will have no moral or philosophical compunction about extracting the data from Anthem against its wishes. But what of conservatives and libertarians who respect private property and distrust the arbitrary exercise of government power? Should we insist that any sharing be voluntary? Or should we compel Anthem to share?

I think there is a case to be made for mandated data sharing on conservative/ libertarian grounds that it can drive market-based reforms of Virginia’s health system. Health care in America is not a market-based system, it is a corporatist system negotiated between the federal government, hospitals, insurers, physicians and pharmaceutical companies. Prices are opaque to the patient-consumer. Accountability is so diffused throughout the system as to be meaningless. Making price and quality data available to the public, formatted in such a way that the public can understand it and act upon it, is essential to creating a market-based system.

But price and quality data are only part of the picture. Virginia has other state-level barriers to a market-based system, including the Certificate of Public Need (COPN), which restricts competition, and state-imposed insurance mandates, which force insurers to offer expensive plans with broad benefits. Price transparency cannot by itself drive the transformation to a competitive, market-based system. But as part of a bundle of reforms including the repeal of COPN and insurance mandates, data sharing could bring about a net gain in freedom, competitiveness and prosperity that would appeal to the conservative conscience.

McAuliffe Adminstration Gives P3s a Second Chance

Transportation Secretary Aubrey Layne. Photo credit: Daily News.

Transportation Secretary Aubrey Layne. Photo credit: Daily News.

by James A. Bacon

The McAuliffe administration has spent much of its first two years unwinding the legacy of botched and controversial public private partnerships inked by the McDonnell administration: radically truncating the plan to to build a U.S. connector between Petersburg and Suffolk, and revising significantly the tolling for Norfolk’s Midtown-Downtown tunnel project. Now, after the enactment of significant legislative reforms, the McAuliffe transportation team is turning to the P3 tool to help fund and/or operate its ambitious plans for Interstate 66 in Northern Virginia.

Transportation Secretary Aubrey Layne is confident that he can avoid the pitfalls of the previous administration, and that a public-private partnership can make a major contribution to improving mobility along a transportation artery that Governor Terry McAuliffe variously described Thursday as a “parking lot” and “the most congested road in America” at the 2015 Governor’s Transportation Conference in Virginia Beach.

“We’ll be a big supporter of P3s,” elaborated Layne in his own remarks to the conference. “We need to share risk with the private sector. [Virginia] will very much continue to be a leader.”

The I-66 initiative essentially consists of two separate plans: one for inside the Beltway and one for outside the Beltway. The outside-the-Beltway plan entails widening the Interstate, installing HOT lane tolls and ramping up commitment to mass transit. The Virginia Department of Transportation (VDOT) has generated 13 responses from private-sector players on how to structure the P3.

Where Sean Connaughton, Layne’s predecessor as transportation secretary, regarded P3s as a way to leverage finite public dollars with private investment, thus maximizing total dollars invested, Layne emphasizes the role of P3s in allocating risk. That feedback has been invaluable in surfacing cost and risk issues that VDOT had not considered. “Transparency is the way you have price discovery and risk discovery,” he said.

One set of risks revolves around building a major project on budget and on time. Another major risk is “demand risk” — the likelihood that traffic and revenue forecasts will materialize as projected. There also are risks associated with operations and maintenance. Layne is open to assigning those risks to a private-sector contractor. He has been far more skeptical, however, of relying upon private-sector capital. Private-sector demands for higher financial returns on investment can add hundreds of millions of dollars to the price of a project.

Layne’s approach is to establish public policy first — what does the Commonwealth want to accomplish along I-66, and how? The administration has made it clear that the I-66 corridor will be multi-modal, including transit, and that the state will not agree to covenants that would restrict for decades construction on other roads that might divert traffic, as the previous administration did in the Downtown-Midtown tunnel project. Those parameters are non-negotiable, except perhaps at the margins. Once those guidelines have been established, he said, the private-sector input can be extremely valuable.

In other remarks, Deputy Secretary of Transportation Nick Donohue told the conference that Virginia and California lead the country with their P3 laws, and that delegations from other states frequently visit the Old Dominion to see what has been done here. Stymied by transparency laws from talking to private corporations “off line,” he explained, other states cannot enact laws like Virginia’s. And that curtails the ability to put together deals like Virginia’s.

An open and transparent process is critical to Virginia’s P3 law, said Donohue, but so is the ability to engage in confidential negotiations. He believes that Virginia has done a good job, based upon its extensive experience with P3s, in threading the needle between transparency and confidentiality. “Steps we have taken in the last couple of years have addressed a lot of problems” with Virginia’s law, he said.

The decision-making process for the I-66 corridor will put the administration’s faith in P3s to the test. The issue of inside-the-Beltway tolls has exploded into a political furor. More controversy is bound to follow as the administration moves from the concept stage to specific proposals.