Category Archives: Economic development

Sport of Kings Needs Peasants Playing Slots

Horse Race Slot Machine Circa 1937 (Not What’s Coming Now)

The Sport of Kings apparently cannot survive today unless between races the peasants are pumping their copper into slots.

“The new law acknowledges what several other horse racing states already have concluded: that the new economic realities to sustain a viable horse racing industry require an alternative form of gaming to offset the high cost of live racing,” writes industry advocate Jeb Hannum in today’s Richmond Times-Dispatch.

The column hit print two days after a Virginia Racing Commission (VRC) public hearing on implementing the proposal approved by the 2018 General Assembly to allow up to 3,000 “historical horse racing” machines.  No machine was on display during the meeting, and the commission apparently wants to see one before making some decisions. 

“I want to see one of those machines sitting right down here. I want someone to explain exactly how that machine works. And why it’s not a slot machine,” said Commissioner I. Clinton Miller. “I want to be able to look people in the face and say ‘This is different. This is not Charles Town. This is not Las Vegas.’”

Looks like a slot machine to me.

Taxable Wager Data from VRC Annual Report

All of this is rehash but Bacon’s Rebellion adds value. Pari-mutuel gambling has been legal in Virginia less than 25 years, making it slightly younger than the far larger and more ubiquitous state lottery. According to the VRC annual report, total wagering (the licensed kind) since 1996 is slightly under $3 billion, far less than the $37 billion taken in by the state lottery.

The placement of Colonial Downs in New Kent, instead of far more populous Northern Virginia or vacation destination Hampton Roads, ranks as the one of the dumbest economic development decision of the age. Revenue was anemic and declined rapidly after the recession of 2008.

Colonial Downs closed the track and eight off-track betting facilities in 2014, and only limited racing has taken place at other locations, detailed in the report.   Virginia Equine Alliance, Hannum’s group, has since opened three satellite wagering facilities of its own with three more planned.

Those spread the revenue to localities. Before its collapse Colonial Downs was sharing revenue with nine localities, peaking at about $1.4 million in 2006 and 2007. Last year six localities received almost $400,000 in revenue, most of it for New Kent. The localities attending the hearing Tuesday clearly want plenty of local machines.

But technology is changing. Starting in 2004 “advance deposit wagering” by internet or telephone was allowed and almost $800 million in bets were placed that way through 2017, the largest source of revenue since the track closed. Four different websites are linked to the VEA website, with this as a fair example. With the Virginia Lottery happily taking bets via subscriptions online, that will be next for horse-race gambling.

Two more interesting links for background: the key roll calls in the House of Delegates and State Senate on House Bill 1609, which authorized the expansion into machine gambling. They too were placing a bet that Virginia’s voters are less antagonistic to gaming by machine than in the past.

Can’t Get Enough of Them Bacon Bits…

Wages of the teaching scandal. Every 5th-grade student at Richmond’s George W. Carver Elementary School passed the Standards of Learning (SOL) reading test in 2016. Next year, when they took the reading proficiency test at Albert Hill Elementary School, only 37% passed. Math scored plunged nearly as badly.

A state investigation has found that a five-teacher cheating ring at Carver had inflated SOL scores by giving pupils “inappropriate” assistance during the tests. The school and its principal had garnered recognition for the high achievements of its poor, inner-city pupil population.

Public education in Virginia is massively failing lower-income kids, especially in inner-city African-American communities. Meanwhile, the usual suspects continue to peddle the “racism” narrative for the abysmal educational achievement.

The rich (regions) get richer, the poor get poorer. One of the largest employers in Bristol, Bristol Compressors, is closing — and eliminating 470 jobs along with it. The Herald-Courier has the grim story here. Meanwhile, packaged food giant Nestle is relocating its American headquarters from California to Arlington, bringing 750 jobs. Read that story in Arlington Now. Both developments will have multiplier effects, negative for Bristol and positive for Arlington.

In a truly free market economy, workers in Southwest Virginia would move to Northern Virginia to take advantage of job opportunities there. Although laid-off Bristol Compressor employees don’t have the jobs skills required by Nestle, plenty of blue-collar jobs are going being in NoVa. Trouble is, blue-collar workers can’t afford the real estate. Zoning codes and comprehensive plans in NoVa are rigged in favor of incumbent homeowners and against anyone wanting to move into the region, be they inner-city blacks or Appalachian whites.

Immigrants seem not to have a problem finding places to live. My pet theory: They tolerate overcrowded living conditions — sometimes in violation of local codes — that native-born Americans would not.

Christmas banned from Metro buses. The Catholic Archdiocese of Washington wanted to run an ad on Metro buses depicting with three shepherds, sheep and a bright star, reports the Washington Times. The words “Find the Perfect Gift” were displayed on the ad, along with a website address and social media hashtag. The website promoted the Catholic Church with a link to “Parish Resources,” prayer cards and daily reflections.

The Metro refused to run the ad on the grounds that it was religious. The Archdiocese retorted that Metro runs ads for yoga, which has links to Buddhism and Hinduism. Metro didn’t buy the argument. And neither did the U.S. District Court for the District of Columbia. Wrote Judge Judith W. Rogers: “City buses … enjoy no historical tradition like parks and sidewalks because transit was a private enterprise in most American cities until the second half of the twentieth century.”

And people wonder why cultural conservatives say there is a war against Christmas. I find the Metro policy incomprehensible. As far as I’m concerned, any faith — Judaism, Buddhism, Islam, Wicca, the Church of the Flying Spaghetti Monster, or, gasp, any of the dozens of offshoots of Christianity — should be allowed to advertise. Question: Does atheism (my personal belief) count as a religion?

More HQ2 Madness

Amazon has listed a job posting online for an economic development manager to locate in the Washington metropolitan area, spurring a new round of speculation that the technology giant may locate its second headquarters facility in the region.

According to Inside NOVA, job responsibilities include “working directly with state and community economic development, workforce and labor, taxation, and other key government agency officials, as well as chambers of commerce, utilities, and other key public/private stakeholder groups.”

(The Inside NOVA article linked to the job posting. Since then, apparently, Amazon has taken it down. The URL now delivers a the-page-you’re-looking-for-seems-to-have-disappeared message.)

Meanwhile, Las Vegas odds makers now rate Northern Virginia as the top contender to win the Amazon sweepstakes, followed by Washington, D.C., with Montgomery County, Md. also a contender. From the Odds Shark website:

Which City Will Win the Bid to Host Amazon HQ2?

Odds as of July 26 at Bovada

  • Northern Virginia, Virginia +240
  • Washington, D.C. +350
  • Austin, Texas +400
  • Boston, Massachusetts +450
  • Toronto, Ontario +500
  • Atlanta, Georgia +900
  • Montgomery County, Maryland +1200
  • Philadelphia, Pennsylvania +2000
  • Raleigh, North Carolina +2500
  • Pittsburgh, Pennsylvania +3000
  • Chicago, Illinois +4000
  • Nashville, Tennessee +4000
  • New York City, New York +4500
  • Denver, Colorado +5000
  • Dallas, Texas +5000
  • Indianapolis, Indiana +5000
  • Columbus, Ohio +5000
  • Newark, New Jersey +5000
  • Los Angeles, California +6000
  • Miami, Florida +7500

Brace yourselves, folks. Amazon is expected to make an announcement by the end of the year.

The Underground Saga Continues: I-66

October 2017: Legislators and Prince William County supervisors announce support for an underground transmission line paid for almost in full by other people’s constituents. U.S. Senate nominee Corey Stewart is second from left, Hugo fourth from left.

The saga of expensive underground transmission continues:  Now comes the Dominion Energy Virginia 230-KV line along I-66 which is needed for an Amazon facility and the growing data center industry. The State Corporation Commission has signed off and reports in the order a cost of $170 million or more to build it.

Every step in this process has been heralded by press releases from Delegate Tim Hugo, R-Centreville, who sponsored legislation to order the SCC to approve the underground approach, which then became a major chip in the poker game behind the 2018 Dominion Energy legislation. The power line to serve the data center was first opposed outright, and then the push was to bury it. The parties reached an agreement on this route a few months ago.

“Now that the State Corporation Commission has accepted Dominion’s application, western Prince William County residents can be assured that the Haymarket power lines will be buried,” said Del. Tim Hugo, R-Centreville, in  a release Friday. “This community-led effort, which I was proud to contribute to, will ensure the quality of life in western Prince William County is maintained. Last year, I promised to pass legislation to bury the power lines, and working together, we did.”

The SCC estimated the cost of the 5-mile overhead project, which includes a new substation, at $51 million. So, that’s our cost to deliver reliable power in that region to Amazon and others, and $120 million extra is charged to maintain the lustrous beauty of I-66 through three miles of the  route. Much of the route east of Haymarket is lined by subdivisions and 100-foot towers would be hard to miss.

Again, as with the previously-discussed plan to place 4,000 miles of small residential tap lines underground, the cost is paid by all company ratepayers,  it is paid off over a very long period with a comfortable profit margin, thus the final all-in cost is more than twice the initial window sticker. As seems to be the rule now and not the exception, the General Assembly and Governor overruled the decision made by the commission to go with a lower-cost option. What the SCC “accepted,” to use Hugo’s word, is its reduced circumstances.

Utility transmission improvements should be paid for by ratepayers across the system, but the trade-off is that the regulator should be zealous about demonstrated need and reasonable cost. The idea is to prevent the raw political horsetrading on display here.

The neighborhood underground program is paid for with a special rider on everybody’s bills, Rider U, but this Haymarket transmission project will eventually be incorporated in the larger Rider T. The enactment clause in the 2018 bill that ordered the SCC to approve the underground approach also authorized a second “pilot project,” yet unnamed (a card still face down on the table.)

A powerful precedent has been set and those two projects may be followed by more. Large overhead power lines are very unpopular and the path to force them underground has been found. The added cost also adds profit for the utility. This is just another skirmish in the overall battle plan to leave the SCC and anybody else putting consumers first dying in a ditch.

Want more evidence? I commend to your reading a report in the Times-Dispatch that, buried in the recent 200-plus application by Dominion Energy Virginia on its grid enhancement plan, is a request to avoid any cost-benefit analysis of that at all.

Boost Virginia Film Incentives? Bad Idea.

“More. More, I say. More!”

The state of Georgia is throwing $500 million a year down a film-subsidies rat hole. Virginia throws only $14.3 million down its own film-subsidies rat hole. If we want to stay competitive with Georgia, we need to up our game and flush even more cash down our rat hole.

Essentially, that is the argument of Virginia Film Office Director Andy Edmunds in defense of Virginia’s film incentive program.

Boosting tax credits for film production in Virginia could help boost the number of productions, create infrastructure and cement the state’s place as a filming destination, Edmunds says in Inside Business, the Hampton Roads business journal. “Demand is growing exponentially,” he said. “This creates an opportunity.”

Demand is growing exponentially for free money? Wow, let’s jump on the bandwagon!

Sure, with the emergence of Netflix, Hulu, Amazon Prime and other streaming media services, film producers are cranking out more movies and series than ever before. Everyone wants a piece of that pie. And many states are willing to give something away to get it. Georgia spent $500 million in tax credits in 2015, awarding up to 30% of a movie’s production cost. The film industry spent $2 billion in the Peach State in 2017.

In Virginia, qualifying film producers get a 15% base tax credit — 20% if the project is filmed in an economically distressed area. In fiscal 2016 the state handed out $14.3 million in tax credits and grants. (I’m not sure how that squares with another statement in the article that there is a $6.5 million cap on incentives.) According to a 2017 Joint Legislative Audit and Review Commission (JLARC) report on film incentives, the film industry supported 580 jobs and $51 million in state GDP.

Not mentioned in the article, the JLARC report also concluded: “The film tax exemption has little effect on film location decisions, a negligible benefit to the Virginia economy, and provides a negligible return on the state’s investment.” Moreover, the subsidies were not spread evenly throughout the state: 90% of the tax credit and 80% of the grant funding was awarded to productions in the Richmond area.

Nationally, the overwhelming majority of movie-making activity takes place in California and New York where the infrastructure and crew skill sets are located. Other states are competing at a huge competitive disadvantage. Concludes JLARC: “Stakeholders reported that although the state has seen a modest increase in some film industry infrastructure, including production and post-production activity, Virginia still lacks crew depth (availability of skilled film production staff) and has significant gaps in areas such as preproduction, production design, script supervising, and wardrobe.”

Economists have articulated the concept of alternate opportunity cost. What would have been the impact of investing the $14.3 million in a different set of economic development incentives. Film and TV production constitutes a tiny percentage of total “film production” in Virginia. But there is a non-insignificant activity in filming commercials, corporate videos, and the like. Could Virginia get more bang for the buck by targeting commercial film-making sector? Could it reap greater rewards targeting tourism? Would we be better off by letting the money circulate untaxed in the economy according to the wishes of Virginia consumers and businesses?

The “film production” industry is broader than movies and television, incorporating corporate and commercial video and film production. in Virginia movies and television comprise a small fraction of the whole. Source: JLARC

The overall impact of movie making on Virginia’s economy has been minimal. “Since 2012—when the tax credit took effect and available grant funding increased—Virginia’s film industry employment has been slightly higher (100 additional jobs per year on average) than estimates of what it would have been if Virginia did not have the incentives,” JLARC concludes.

Do the math: $14.3 million a year in incentives, 100 jobs created that wouldn’t have been created otherwise. That’s $143,000 per job created. Even if the numbers are off by an order of magnitude, that’s still a huge sum of money to create jobs that are inherently temporary in nature. The the movie wraps, the jobs disappear!

Sure, it’s fun to be able to say you got to see Claire Danes, the star of “Homeland,” while working as an extra. But is that a legitimate investment of tax dollars? Is Hollywood even an industry that Virginians want to be subsidizing? I don’t think so.

Back In Top 5, The Challenge Is To Stay There

Corks are popping all over Richmond as the business network CNBC announced this morning that Virginia is back in the top five of its annual survey of best states for business, ranking number 4.  It is the only state in the top five east of the Mississippi. The full Virginia report is here.

The photo on the CNBC page shows a Huntington Ingalls-built warship, but one of the amphibious ships built in Pascagoula, Mississippi.  Perhaps the web designers remember that the first time Virginia topped this list as number one the announcement was made from pier 3 at Newport News Shipbuilding with the future U.S.S. George Bush in the background as Governor Robert McDonnell took the bow.

Governor Ralph Northam will get to enjoy the spotlight this time, and should, but the credit needs to be spread widely. The person doing handsprings should be Stephen Moret, president of the Virginia Economic Development Partnership, who has been focused on improving these rankings since coming to Virginia to fix a broken agency its reputation.

Speaker Bill Howell and the others who joined with McDonnell in pushing forward the transportation tax package years ago deserve a nod, as those projects are starting to come on line. Virginia’s rank for infrastructure improved from number 25 in 2017 to number 20 for 2018, and may continue to rise now.

Also improved over last year was the ranking for education. Despite growing costs Virginia’s higher education system, public and private, remains the envy of many other states, but the focus now extends beyond degrees to work-related certifications.

This ranking is a marketing coup with no immediate value to the average Virginian. Staying in the top five over time will have value, however, as more business location or investment decisions start with Virginia on the short list.

Looking at the details there are only a handful of individual categories where the state ranked extremely well (workforce, education, business friendliness) and only two where Virginia was below the median – the related categories of cost of living and cost of doing business.  First or second quintile scores in several categories resulted in the good overall score.

Those outliers deserve some attention. A huge component of the cost of living and cost of doing business is the cost of electricity and other forms of energy, and the trend lines there are bad despite the energetic public relations efforts of a certain large utility. Another huge component of both is state and local taxes, which are under growing pressure to rise and where Virginia has a chance to be creative thanks to federal tax reform.

Not a time for any resting on any laurels. But some martinis at lunch are indicated.

Huzzah for Middle-Aged Startup Entrepreneurs

Many communities are obsessed with making themselves attractive locations for Millennials on the theory that recruiting and retaining skilled and educated young workers will boost the entrepreneurial economy. Come to think of it, I might have contributed to that line of thinking. But maybe localities should be appealing to an older crowd. Successful start-up entrepreneurs are more likely to be middle-aged than youthful.

According to data published by Pierre Azoulay and three other economists in a National Bureau of Economic Research paper, “Age and High-Growth Entrepreneurship,” Americans are more likely to start up new enterprises between the ages of 35 and 45 than at any other age. The likelihood of starting high-growth enterprises skews even older.

“The view that young people are especially capable of producing big ideas — whether in scientific research, invention, or entrepreneurship — is common and longstanding,” the authors state. “Famous individual cases such as Bill Gates, Steve Jobs, and Mark Zuckerberg show that people in their early 20s can create world-leading companies. Meanwhile, venture capital firms appear to emphasize youth as a key criteria in targeting their investments.”

Younger people are less beholden to existing paradigms of thought and practice, according to this train of thought, and they are less distracted by family obligations. But Azoulay et al. find that the most successful entrepreneurs tend to be middle-aged, not young. “The mean founder age for the 1 in 1,000 highest growth new ventures is 45.0. … We further find that the ‘batting average’ for  creating successful firms is rising dramatically with age.”

Mid-life entrepreneurs have had more time to accumulate human capital (deep experience and knowledge in their field), financial capital (money), and social capital (contacts and relationships), yet the still maintain high levels of energy and ambition.

Bacon’s bottom line: A half year ago, I compiled some research for a client comparing economic trends for the City of Richmond, and the counties of Henrico, Chesterfield and Hanover. With its walkable urbanism, Richmond has positioned itself within the region as the preferred abode for Millennials, and many businesses are relocating from suburban locations to downtown Richmond in order to recruit the Millennials. I expected Richmond, with all that youthful energy, to outpace the counties in start-ups and entrepreneurship.

Source 2017 Inc. 5000

Richmond does, in fact, host more fast-growth start-up companies, as measured by 2017 Inc. 5000 entries, than Chesterfield, Hanover or Powhatan counties. But Henrico boasted the most of all, accounting for nearly half of the 29 fast-growth companies in the entire metropolitan area. Henrico has precious little walkable urbanism to sell; land use is dominated by traditional sprawl-style development. What the county does have is lower taxes, good schools, low crime, upscale retail, and neighborhoods with spacious houses — primary considerations for middle-aged families raising kids.

I think Henrico could benefit from more walkable urbanism, which would make a killer land use in a jurisdiction with low taxes, low crime, and good schools. But the larger point is that a middle-aged population and entrepreneurial vitality need not be incompatible. Indeed, the two traits go hand-in-hand.

Prosperity Bomb

What if Amazon dropped, to borrow a phrase gaining currency these days, a “prosperity bomb” on Washington, D.C., by selecting the District as the location of its HQ2 project?

Martha Ross with the Brookings Institution worries about the implications of creating 50,000 jobs and pumping $5 billion in investment into a city already marked by huge racial disparities in wealth and income. (D.C. has greater wealth inequality than any of the 50 states.) Amazon, she argues, would create few jobs for lower-income Washingtonians. It would push already-pricey housing costs even higher, displacing lower-income households. And it would strain the fiscal resources of the district government to the tune of $60 million to $80 million a year in direct incentives and pot sweeteners.

A project as big as HQ2 would create enormous growth-related stresses on any local government. Under ideal circumstances, growth would pay for itself through higher tax revenues. But giving tax breaks and subsidies to Amazon would shift the burden of paying for expanded infrastructure and government services to others. Even subsidizing workforce training and higher education poses moral issues for progressives. As Ross points out, such spending benefits the college educated, not the poor.

I have sympathy for some anti-Amazon arguments, little patience with others — such as the specter of thousands of Amazon-employed Yuppies buying and fixing up cheap inner-city properties, pushing up real estate prices, and displacing the poor. Ignored is the fact that 50,000 Amazon workers also would support a whole lot of tradesmen, retail clerks, landscapers, house cleaners, restaurant workers, and other service-sector occupations. By creating job opportunities for unskilled and semiskilled workers, Amazon employees would support higher wages for Washington’s urban poor.

The problem with prosperity in tech hubs like San Francisco, San Jose, and Amazon’s home town of Seattle isn’t the influx of jobs and investment, it’s the inability or unwillingness of local governments to increase the supply of housing. Homeowners fight any development project that they think, rightly or wrongly, might negatively impact their property values, and it’s oh, so easy, especially in cities dominated by progressives, to demonize and defeat the developers who want to add to the housing stock. The reason the working class can’t find housing in these cities is that no one is building enough.

It would be naive to argue that growth is always good — if a mega-project doesn’t pay its own way, it can unfairly shift costs to others. But the growth-is-bad argument is folly. If you want to see what a no-growth economy looks like, go visit Southside or Southwest Virginia. A prosperity bomb is a problem they would love to have.

Virginia’s Competitive Advantage in Green Power

Solar power is looking better and better by comparison to wind power, and that’s a good thing for Virginia.

In Germany, a global pioneer of wind power, hundreds of wind turbines are experiencing metal fatigue and other issues as they pass their 20- to 25-year design lives — and they are literally falling apart. Turbines are falling to the ground. Blades are snapping off and flying hundreds of feet. Razor-sharp glass fiber splinters have been documented to have flown 800 meters away. So far, no one has been hurt, but one expert speaks of a “ticking time bomb.” (Die Welt has the story here.)

Problems with an energy-production source often don’t become evident for decades. That certainly was the case with coal and oil. Now, a couple of decades after the widespread deployment of wind turbines, we’re learning about a downside of wind. Compared to Deepwater Horizon-scale oil spills and mountaintop-removal coal mining, flying turbine debris may be small potatoes. But as we think about our energy future, the comparison isn’t between wind and coal or oil — no one is building new coal or oil plants — it’s between wind and solar. The great virtue of solar panels is that they just sit there… except when hurricanes tear them off their mountings. But, then, high winds are a problem for wind turbines, too.

Assuming we can design and test turbines to withstand hurricane-force winds, there will be a place for wind in Virginia’s long-term energy future. Wind turbines work at night, which solar panels do not, so they can partially offset the daily drop-off in solar production. Furthermore, if Virginia taps large-scale wind resources, most turbines will be located offshore. Flying turbine blades are less of a problem when people are 20 miles away. But solar power poses none of these issues, and solar is being rolled out on a large scale today. Right now.

The biggest barrier to solar power in Virginia isn’t technology, it isn’t grid reliability (not at this stage of development) and it isn’t obstruction in Richmond. State law now proclaims large volumes of renewable energy to be in the public interest, and Virginia’s largest utility, Dominion Energy Virginia, is forecasting the deployment of more than 5,000 megawatts of solar in its service territory alone. The biggest barrier is local zoning codes, as we are reminded by a story today in The News Virginian.

The Augusta County Board of Supervisors adopted an ordinance yesterday by a narrow 4-3 vote that allows for the leasing of county land for solar energy use. However, critics said the requirement for a 1,000-foot setback from other residences will discourage solar development. The ordinance also does not allow for solar projects on land zoned industrial.

Roger Willetts, who owns the 44 acres in Stuarts Draft, said his property is taxed $6,000 a year by the county. But he said if a solar farm is allowed, he could generate $60,000 in revenue a year. “I think it is an appropriate use. It won’t employ anybody and it won’t have any bathrooms,” Willett told supervisors.

But under the ordinance approved Wednesday, Willetts’ property would be excluded because solar energy on industrial land is not allowed.

Augusta County, situated in a once-beautiful stretch of the Shenandoah Valley, is not a “rural” county with pristine viewsheds of farms and forests. It is characterized by what I call “rural sprawl” — scattered, low-density residential, commercial and industrial development smeared across the countryside. The viewsheds are despoiled already. Sad to say, solar farms aren’t any uglier than what’s already there.

Everywhere a developer proposes to build a solar farm — arguably the most benign form of energy production known to man — the NIMBYs come out and call for restrictions. NIMBYs don’t want gas pipelines. They don’t want electric transmission lines. They don’t want wind turbines. They don’t even want solar farms.

Ironically, solar power could be a boon to the sluggish economies of Virginia’s non-metropolitan cities and counties. Not only do Virginia’s electric utilities envision more solar, the potential exists for Virginia, long a net importer of energy from other states, to export solar power. Virginia is the southern-most state (excluding the northeast corner of North Carolina) in the PJM electric transmission region. For both political and business reasons, there is an insatiable demand for more renewable power within that 13-state region, which stretches from Virginia north to New Jersey and Illinois. Much of that demand comes from Virginia itself, the nation’s leading location for data centers, because West Coast cloud providers insist upon renewable energy sources. PJM creates a  wholesale market for that region, which makes it easier for energy producers located within it to sell into the wholesale market than it is for energy producers on the outside.

While wind-swept Midwestern states in the PJM region are better situated for wind, Virginia is the best situated for solar. As the southern-most state, the Old Dominion has greater solar energy potential — more sunny days and a latitude closer to the equator — than its northern neighbors. As seen in the table above, Virginia has the highest percentage of sun — defined as the percentage of time between sunrise and sunset that sunshine reaches the ground — as well as the largest number of annual hours of sunlight of any PJM state.

Local government officials in Virginia should think of solar power as an economic development tool. Solar farms provide a royalty-income stream to landowners, and they augment the local tax base. While they create few long-term jobs, they do deliver a burst of short-term construction work. As utilities invest in grid modernization, Virginia can provide solar energy for its own needs — up to 30% of the electricity supply, some say, without diminishing grid reliability — and it can export green power to states to the north. This looks like a once-in-a-generation economic opportunity for rural Virginia. Let’s not blow it!

State to Support Shipyard Hiring of 7,000

Rendering of the Columbia-class submarine

Governor Ralph Northam announced this morning a partnership with Newport News Shipbuilding to support the hiring of almost 7,000 people, including the creation of 2,000 new jobs, over the next five years.

These new hires will support shipyard contracts to build components for new Columbia-class submarines in addition to existing work such as construction of Virginia-class submarines, the refueling and complex overhaul and defueling of the Nimitz-class aircraft carriers, and the construction of Ford-class aircraft carriers, according to a press release from the Governor’s Office.

Today’s announcement was part of a larger “Build Virginia” initiative to “connect workers throughout the Commonwealth with training and employment opportunities in the skilled trades.” This effort will focus initially on connecting jobseekers and employers in the shipbuilding industry, but will broaden to other industries such as construction and advanced manufacturing.

“Newport News Shipbuilding’s success is important not just for Hampton Roads, but for the entire Commonwealth. Therefore, it is critical that we support growth of this magnitude with an innovative partnership between state agencies that will address the company’s workforce and training needs and supply a pipeline of skilled talent,” said Northam. “We have a responsibility as a Commonwealth to ensure that every single one of these jobs gets filled with a skilled and trained Virginian who is ready to succeed.”

As the U.S. economy reaches full employment and critical skills shortages are hindering expansion in industry after industry, even major players such as Newport News Shipbuilding, a division of Huntington Ingalls Industries, are having trouble meeting the demand for labor. The surge in hiring has overwhelmed the capacity of the company’s renowned apprenticeship school, where enrollment is limited to about 225 apprentices.

Virginia has a long history of state support for the giant shipbuilding company, an anchor of the Hampton Roads economy. In 2016, according to the governor’s press release, the General Assembly approved the Advanced Shipbuilding Production Facility Grant Program providing up to $46 million to help Newport News Shipbuilding upgrade its foundry and invest in facilities necessary to build Columbia-class submarines. The company will be eligible for these grants if they make capital investments of at least $750 million and create at least 1,000 jobs in the Columbia-class submarine program.

The governor’s announcement does not assign a monetary value to the initiative. While Northam describes the partnership as “innovative,” the only tangible new commitment noted in the press release is the appointment of Secretary of Commerce and Trade Brian Ball to “coordinate support from existing economic development programs.” These include:

  • The Virginia Economic Development Partnership’s Virginia Jobs Investment Program will provide state-funded consultative services and funding to support-employee training activities.
  • A GO Virginia grant and state funding will create the nation’s first workforce program in digital shipbuilding at Old Dominion University. The Virginia Digital Shipbuilding Workforce Program will develop a curriculum that can be shared with education and training partners statewide to prepare the current and future workforce for digital manufacturing jobs in shipbuilding.
  • The Virginia Employment Commission will continue to support Newport News Shipbuilding’s job creation through its Career Works Centers in Hampton and Norfolk, which host hiring events, pre-screen applicants, and support employer interviews.
  • The Virginia Community College System offers training and credentials pertinent to shipbuilding through FastForward, a workforce credential program.
  • The New Economy Workforce Credential Grant Program (WCG) was developed during the 2016 Virginia General Assembly session to sustain a supply of credentialed workers to fill high-demand occupations. WCG funds supported 441 enrollments in welding, pipefitting, machining, milling, and electrical in fiscal 2017, and 767 enrollments in fiscal 2018.
  • The General Assembly also provided funding from January 2012 through June 2014 for marine-skilled trades training. Under this program, Newport News Shipbuilding partnered with three regional community colleges to offer three-week pre-hire training programs in seven trades that have produced over 400 trainees to date, of whom 95 percent have been offered jobs at the shipyard.