I’ve long been concerned that the “climate change” debate has morphed from a subject of legitimate scientific inquiry into an ideological movement that pits liberal world views vs. conservative, and that reasoned discourse has transmogrified into tribal, us-versus-them combat. I hope fervently that Gov. Timothy M. Kaine’s commission on climate change can avoid falling into that trap.
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Virginia’s Climate Change Agenda
I find some cause for optimism after reviewing a work plan for the commission between now and November. This document, volunteered to me by Preston Bryant, secretary of natural resources, addresses many of the issues that I have raised in this blog, as well as many that I had not thought of, and it does so in a seemingly dispassionate manner.Expected impact. How will climate change affect Virginia? Topics include rising sea levels and ocean acidification; impact on agriculture, Chesapeake Bay fisheries and natural systems such as forests, wetlands and wildlife; impact on the built environment such as transportation, utilities, ports, tourism, military installations and (as I interpret it) oceanfront development.Sources of greenhouse gas emissions. Where do greenhouse gases originate in Virginia? How much comes from electric utilities and industry? What impact do development patterns have on transportation and automobile emissions? What contribution can “carbon sinks” (such as forest land, I presume, or perhaps carbon sequestration technologies) make to absorbing greenhouse gases?Adapting to climate change. What options do Virginians have to cut emissions? What emerging technologies, such as wind farms and algal biofuels, can we turn to? What potential is there for conservation through building practices, energy use management, and building codes?Cost-benefit analysis. What is the cost-benefit ratio of the various strategies proposed?Overall, the approach seems reasoned and technocratic — but I am perturbed by one inherent bias in the work plan. The Kaine administration has boxed itself in by laying out a goal of cutting greenhouse gas emissions by 30 percent compared to what they would be otherwise. That goal is all fine and good, but Virginia could cut emissions to zero and we would have an infinitesimal impact on global trends. Conservation and renewable fuels are good, very good. But, if by focusing on those goals we neglect priorities such as adapting to adverse impacts, we’re doing ourselves a tremendous disservice.Climate change will be whatever it will be, however much we reduce our greenhouse gas emissions, however much hot air we vent in debate. If sea levels are going to rise, nothing that Virginians do can stop them. If Virginia is destined to experience droughts and higher temperatures, we cannot alter that fate. But we can adapt to those conditions. How we adapt is very much within our control. That, in my humble opinion, is where the Governor’s Commission should focus more of its attention. But we’ll see how the study unfolds before drawing any conclusions.
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Coming Soon: Conservation Incentives for Natural Gas
In a rare display of bipartisanship and common sense, a Senate committee has endorsed a bill allowing a new rate structure that would encourage natural gas companies to promote conservation. The House of Delegates had previously approved the measure 98-0. Greg Edwards has the story for the Times-Dispatch.Jim Kibler, vice president of governmental relations for AGL Resources, laid out the logic for “decoupling” in a December column, “Cleaner, Cheaper, Better.” One key — not the only one, but a very important one — to conserving energy and combating climate change is to unleash the power of the marketplace. This bill represents a huge step forward.
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Warning: Don’t Let Your Legislator Play with Guns
We’ve all enjoyed a good laugh at the bull-testicles bill, but nothing strikes me as more mock-worthy than the debate over the right to carry concealed weapons in restaurants. Surely, people must have something better to worry about!I don’t own a gun, never have and never will. But I don’t get exercised about other people who do — unless they’re convicted felons, of course, or their last name is Cho. The Swiss are armed to the teeth. Every male of military age is enrolled in the national guard and stores a semi-automatic weapon in his home. But I would feel safe in Switzerland. The Swiss have a culture in which people control their emotions (in stark contrast to a United States steeped in an impulsive, Jerry Springeresque, show-us-how-you-really-feel culture where it’s considered unhealthy to repress one’s rage); as a consequence, there are very few murders in cities like Zurich and Geneva. By contrast, the Hutus didn’t need guns to massacre tens of thousands of Tutsis — they used machetes.
Even though I subscribe to the theory that guns don’t kill people, people kill people, I just can’t get exercised about the prospect of guns in restaurants — or guns banned from restaurants. Either way, I really don’t care.
But The Virginian-Pilot decided to take the concealed-weapons-in-restaurants bill seriously. In a story today, reporter Richard Quinn quoted Mike Standing, owner of the Waterman’s Surfside Grille and a gun owner himself: โWhy would somebody want to have a gun in a restaurant? In case the crab legs came alive and got angry?โ
Yuk, yuk! Pretty funny. Why would someone want to bring a gun into a restaurant… unless his name was Guido?
But then we hear from Del. Harvey Morgan, R-Gloucester: โIโve been waiting for this bill for years. I thought it was absolutely insane for someone who was legally carrying a firearm to find a way to dispose of it to get a bite to eat.โ
Morgan has been waiting for years? Kinda makes you wonder. Does ol’ Harvey pack heat? He sure sounds like someone who speaks from experience. But, yeah, I can see his point of view. You carry around a hidden gun all day, and then you want a bite to eat. What a pain, you’ve got to take the gun out of the holster and hide it in the back trunk of your car. It might take all of… 20 seconds. What a cruel hardship! I’m weeping with empathy.
Next, we hear from Del. Jennifer McClellan, D-Richmond, who says, โGuns and alcohol donโt mix. They lead to trouble.โ Sure, that makes sense. Just one little problem: The bill says you can bring a gun into bars and restaurants — but only if you don’t drink. Kinda takes the fun out of going to a bar, but, hey, the no-drinking restriction would seem to make McClellan’s concern… what’s the phrase I’m looking for? … totally irrelevant.
Finally, we hear from Gov. Timothy M. Kaine: โMy strong feeling, has been that bars and Pizza Huts where families go to have pizza with their kids, that more weapons in those places does not lead to public safety.โ Ay, yi, yi. Why do we have to drag “the children” into this? Well, there’s no turning back now. Let’s dissect this. Ol’ Harvey walks into a Pizza Hut with his wife and grandchildren. He’s packing heat. Is he going to be any more dangerous in a restaurant than he would be, say, strolling through the mall? Give me a break.
Something about guns renders their friends and foes barking mad. Maybe we should amend the bill to ban legislators, on either side of the issue, from ever talking about the topic.
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Sub-Prime Lending and the Slums of Tomorrow
American citizens have long associated the word “slum” with inner cities — and for good reason. That’s where the slums were. But Christopher B. Leinberger, a Brookings Institution fellow writing for The Atlantic, thinks the United States is on the cusp of a change: Tomorrow’s slums will be in what we commonly refer to as the “suburbs.”
The recent, deceased housing boom may represent the crest of “suburban” development. Leinberger sees changing market preferences pushing growth and re-development back into the urban core of America’s metropolitan areas. And he sees poverty leaking out of the inner city slums into the subdivisions of the aging “suburbs” outside the core. Where traditional cities once experienced fiscal stress and suburban counties prospered, he now sees the opposite:
Many of the fringe counties in the Washington, D.C., metropolitan area, for instance, are projecting big budget deficits in 2008. Only Washington itself is expecting a large surplus. Fifteen years ago, this budget situation was reversed.
A number of factors are driving this change (reader warning: This is Leinberger’s analysis as viewed through Jim Bacon’s lens.):
Consumer preferences. Surveys have shown that roughly one third of the population would prefer to live in traditional urban environments with mixed uses and grid streets designed around walkability. Another third are torn between traditional urbanism and low-density communities with segregated land uses. But only 5 to 10 percent of the housing stock in most urban areas is in walkable places. Combine that imbalance with the rising cost of gasoline, which discourages long-distance community, and the fact that families are getting smaller — hence their need for large, suburban-style dwellings is decreasing — and market demand will shift capital and developers’ energy into urban re-development at the expense of single-family dwellings on the metro fringe.
Political barriers to suburban redevelopment. In theory, developers could re-develop aging subdivisions and shopping centers into walkable communities. In practice, that’s very difficult. Two problems. First, suburban utility systems and road networks are designed to support lower density populations. Re-development would require tearing much of the infrastructure and rebuilding it from scratch — very, very expensive. Second, NIMBYs and other obstructionists fight re-development that might increase density and, in their perception, congestion. While a market may exist in “suburban” counties for redevelopment, the economic and political obstacles are formidable.
Durability and livability. The quality of stick-built housing in jursdictions outside the urban core is lower than the quality of housing built four or five decades ago. (There are exceptions, of course, but as a rule this is true.) Houses will depreciate faster. Furthermore, I would add, communities of cul de sac subdivisions and shopping centers do not generate the pride of place that older communities do. People are less inspired to reinvest in maintaining and upgrading their properties. These areas will rapidly lose value compared to areas elsewhere.
The sub-prime mortgage mess. Suburban housing is way overbuilt. With foreclosures mounting, vacancies are mounting. And that creates social problems. Leinberger cites the case of Windy Ridge outside Charlotte, N.C., where 81 of the subdivision’s 132 small, vinyl-clad houses were in foreclosure late last year.
Vandals have kicked in doors and stripped the copper wire from vacant houses; drug users and homeless people have furtively moved in. In December, after a stray bullet blasted through her sonโs bedroom and into her own, Laurie Talbot, whoโd moved to Windy Ridge from New York in 2005, told The Charlotte Observer, โI thought Iโd bought a home in Pleasantville. I never imagined in my wildest dreams that stuff like this would happen.โ
Outmigration of the poor. When affluent households move back into the city and gentrify the neighborhoods, where do the displaced poor people go? Many move into decaying, inexpensive property outside the urban core — into the “suburbs.” We can see this happening in the Richmond region, as urban slum dwellers from the City of Richmond move into neighboring Henrico and Chesterfield counties, accelerating the decline of ’50s and ’60s-era neighborhoods through crime, vandalism and insufficient financial means to maintain properties.
This thesis is not entirely new. University of Virginia professor William Lucy has tracked the demographic changes I write of from census to census, and I have been making this argument myself for more than a decade now. What’s new in 2008? We’re hitting the trough of another housing cycle and the glaring deficiencies of the past are becoming more visible to all. If we look hard enough, I’m confident that we could find more than a few Windy Ridge-like subdivisions here in Virginia.
The slummification of Virginia suburbs will not be uniform. Some neighborhoods, where houses are newer and better constructed, and where neighborhood amenities are superior, will hold back the tide. In some instances, county governments will encourage re-development of mixed-use, walkable neighborhoods. But overall, the migration of the “urban” poor into suburbia is not a process easily reversed.
(Hat tip to Deena Fulchum for pointing me to The Atlantic article.)
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Transportation Revenues Still Tumbling, System Still Dysfunctional
The economic slowdown isn’t just hammering the General Fund, it’s also putting the squeeze on the Transportation Trust Fund. Reports Peter Bacque with the Times-Dispatch: State transportation revenues will be $1.1 billion less than projected over the next six years.
Virginia Department of Transportation CFO Reta Busher attributes the revenue shortfall to lower-than-expected tax receipts on vehicle, home and retail sales, fuel consumption, and vehicle licenses, as well as the pending repeal of abusive-driver fees.
Debt payments get first claim on Virginia highway dollars, followed by maintenance expenditures and state matches to federal funding. That means the cuts will fall hardest on the new construction budget. Local street and highway construction will see an average 44 percent reduction, and funding for transit will decline an average of 10 percent per year.
Bacon’s bottom line: Virginia’s transportation financing system is broken. Clearly, Virginia needs to invest more in its transportation system. But there’s no more agreement on how to raise the money than there is on where to invest it. Little wonder: There is no transparent nexus between who pays and who benefits from the current system.
The only way around the logjam is to move to an explicitly user-pays system so citizens can see a direct link between what they pay and the benefits they receive: (a) a gasoline tax (with plans to convert eventually to a Vehicle Miles Traveled tax) to cover maintenance and to match federal funds; (2) privately funded ventures to build major new projects, paid for with tolls; (3) congestion tolls for gridlocked corridors and urban districts; (4) impact fees and/or proffers for secondary roads; (5) CDAs and TIFs to tap the increased value of private property made possible by public improvements, especially as a means of mass transit funding; and (6) no General Funds for transportation.
Advantage #1: Requiring drivers to pay the cost associated with their road use will dampen automobile travel demand, thus reducing Vehicle Miles Traveled and easing the strain on the system.
Advantage #2: Such a system would not be dependent upon political vagaries for funding. Funding would materialize as demand materializes.
Advantage #3: A user-pays system would eliminate the inter-regional transfer of funds to build new roads and bridges. Citizens could be assured that they’re not getting reamed by politicians and lobbyists manipulating the system.
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Whatever Happened to the Lockbox for the Transportation Trust Fund?
Gov. Timothy M. Kaine delivered some bad news to the Axis of Taxes yesterday, saying that a state Senate plan to raise the gas tax by five cents per gallon won’t make it through the House of Delegates. Reports Jeff Schapiro with the Times-Dispatch (my italics):
Kaine, who favors new taxes for transportation but won’t fight for them this year, said House Republicans are firm in their opposition to any tax increase.
“They haven’t decided the way they’re going to kill them, but they’re going to kill them,” Kaine, a Democrat, told reporters yesterday.
Does anybody remember when Tim Kaine was running for office? Does anyone remember his promise not to raise taxes for transportation until an amendment to the state constitution prevented any budgetary raids on the Transportation Trust Fund? I still remember but Mainstream Media has been seized with amnesia. You can argue that the lockbox is a moot point as long as Kaine is not actively plugging for hikes in the gas tax, as opposed to merely expressing sympathy for them. But you’d think that maybe, just maybe, a reporter would ask him, “Whatever happened to that lockbox idea? Why aren’t you trying to move that forward?”
Here’s my hunch: The lockbox idea was a ploy to make tax hikes for transportation more palatable — not born of a genuine conviction that it was needed. It serves no useful political purpose anymore, so it has been all forgotten. For what it’s worth, I still think it’s a good idea.
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Nichols Ally Resigns from W&M Board
Protesting criticism of former President Gene Nichol by fellow board members, Paul Blair has announced his resignation from the William & Mary Board of Visitors. In a letter to the William & Mary community posted on a Student Assembly web page, he praised Nichol’s track record of promoting diversity at the university. Nichol resigned last week after the Board refused to new his employment contract.
Blair’s letter lends some insight into the reaction of Board members to the firestorm set off by Nichol’s abrupt resignation.
In praising Mr. Nichol I in no way seek to diminish the critical work and achievements of our former President Tim Sullivan. They are many. Some would try
to drive a wedge between Mr. Sullivan and Mr. Nichol, because Mr. Nichol takes credit (and is blamed) for progressive policies now in place, some of which I think built upon Mr. Sullivan’s work. …There has been an incipient effort by some members of the Board of Visitors to pick apart President Nichol’s accomplishments. To what end? They gained their stated objective. I have also seen mean-spirited communications that are not worthy of the professional deliberations of any managing board, but most especially not the Board of Visitors of William and Mary. Such communications call into question the real motivation for the initial decision not to renew the President’s contract.
I know the reasoned reactions, as well as the emotional ones, of Board members are in response to the President’s message of February 12th to the William and Mary Community. Would I have refrained from some of what Mr. Nichol said? Certainly, but then I knew more than he.
Based on this letter, I have to modify a key statement that I included in a previous post (“The Nichol Resignation Narrative Looks Weaker and Weaker“): that the Board of Visitors decision not to renew Nichol’s contract was unanimous. As Blair makes clear, Blair was one among “several” board members who fought for the renewal of the contract. (However, Board member John W. Gerdelman confirmed to the Daily Press that board members were unanimous in their final decision, although no formal vote was taken.)
The letter also highlights what some board members are not saying publicly: They were angered by the way in which Nichol, in his resignation letter, had hogged the credit for achieving greater diversity at William & Mary — presumably at the expense of his much-beloved predecessor Timothy Sullivan. Not all BoV members, it appears, were as willing as Blair to overlook Nichol’s one-fingered salute to them on his way out.
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Financial Terrorists
Payday lenders got a black eye yesterday when Cameron Blakely denounced in a press conference yesterday the predatory lending practices he engaged in last year as manager of a Washington, D.C., Check ‘n Go. As the Associated Press reports, Blakely said he was trained to encourage people to take out the maximum $500 payday loan as a way to keep them coming back for more money.
“I realized I was working for financial terrorists, bent on financially enslaving as many hardworking Americans as they possibly could,” Blakely said at a news conference. He appeared with John LaCombe, founder of CapAmerica, a group of former payday loan borrowers and whistleblowers.
Check ‘n Go attorney Yancy Deering countered that the company does not lend the maximum amount to people it doesn’t think will be able to repay the loan. “We want the product to work, and for it to work people must be able to pay it back on the date that the loan becomes mature.”
Blakely’s charges, if true, would prove very damaging to the Payday lending industry. It’s one thing to offer emergency loans with high interest rates and high fees — the loans are small, short-term, expensive to adminster and inherently risky. It’s quite another to deliberately entrap customers in a cycle of indebtedness. The Payday people had better present some convincing evidence that Blakely’s charges are either untrue or an aberration, or they’ll lose me, an otherwise consistent defender of the industry, just as they’ve lost many others in this debate.
I would say this, though. Rather than imposing all sorts of restrictions on interest rates and other lending terms and conditions, shouldn’t the General Assembly simply ban the practice of deliberately cultivating indebtedness? I can’t think of how that would be done, but there must be a way that more precisely targets the abuses that Blakely described than the restrictions the Payday foes are clamoring for.
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Sidewalks to Nowhere
One of my pet pieves is sidewalks that don’t connect anything — they just take up space because some county ordinance required some developer to build one. It turns out that sidewalks to nowhere bother other people, too. In fact, there is a website entitled Sidewalks to Nowhere with illustrations from around the country. (That’s where this image, from Fletcher, N.C., came from).Cortney Langley, a staff writer with the Virginia Gazette in Williamsburg, sees the nonsensical nature of disconnected sidewalks as well. “Along Mooretown Road [in James City County],” she writes, “you can take a stroll along a freshly poured sidewalk. For about 200 feet. … Throughout the county there are signs of the seemingly absurd: small patches of disconnected sidewalks that begin or end randomly, often with no connecting path in sight.”
County ordinance requires that new development, even commercial, provide sidewalks out front, no matter where theyโre built. The idea is that someday they will link up. Bill Porter, development manager for the county, said that for the most part, it works pretty well. Especially for the county, which gets the sidewalk expense covered by the builder.
Maybe the sidewalks will link up one day. But even if they do, the question remains: Will anyone use them?
To be useful, sidewalks must connect multiple destinations in close geographic proximity. You can use them to walk to your next-door neighbor or to a friend’s house down the street. You can walk two or three blocks to the corner store to pick up some tomato sauce. You can walk to a pocket park, to a restaurant or a neighborhood video store. Sidewalks don’t work in low-density environments that translate a 10-minute walk into a 40-minute trek.
In Henrico County where I live, the problem isn’t so much sidewalks that go nowhere — although there are some that do — it’s sidewalks that are utterly uninviting. More than a few are located just a few feet away from cars whizzing by at 45 miles per hour. Henrico sidewalks are uninviting also because of the vast distances that must be covered. In my observation, the few people who use them are joggers and strollers looking for exercise. Almost no one uses the sidewalks to actually get somewhere. For the most part, sidewalks are a recreational amenity, not a tool to promote mobility and access.
In scattered, low-density areas where houses, offices and stores are rigidly separated, sidewalks are more useless than teats on a boar hog. Building them simply creates a commitment for someone to maintain them. Frankly, I see no point in requiring developers to build the darn things.
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How About a Dulles Busway?
Instead of building a heavy rail line to serve the Dulles corridor, Virginia should build a bus corridor, or “busway” in the median of the Dulles toll road, contends Gabriel Roth, a research fellow with the free-market Independence Institute in the Washington Times. The busway could run spurs to Tysons Corner, Reston and Herndon.
Bus service is not highly regarded in the United States today, Roth concedes, but he believes a Bus Rapid Transit system could work in the Dulles Corridor. First, he notes, buses would enjoy unimpeded mobility, allowing them to move quickly and keep to schedules. Second, buses could be outfitted to higher standards than typical city buses — to whatever level the market demands. (Again, I’ll tout my preference for buses that allow passengers to plug in their laptops and access the Internet so they can read e-mail and surf the Web on the way to work.)
While the capital costs of BRT would be a fraction of heavy rail, a busway would have a much higher theoretical carrying capacity. The maximum travel forecast for Dulles Rail is 9,000 passengers per hour. An unimpeded highway lane can carry 1,000 buses per hour. If the market doesn’t support that many buses and mini-buses, a busway could accommodate other high-occupancy vehicles such as vans.
As with all such analyses, Roth assumes a Business As Usual scenario for land use. At the risk of sounding like a broken record, transportation planning cannot occur in isolation from land use planning. Where would the bus stations be located, how would passengers access those stations, and what are the appropriate densities and urban-design features around those stations? Any serious bid to serve the Dulles corridor with BRT would have to answer those questions. But Roth does makes a good case for at least taking a serious look at BRT.
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Bus Rapid Transit Studied for Charlottesville
As part of its effort to clean up the congested U.S. 29 North corridor, Charlottesville and Albemarle County leaders have made a commitment to build a more robust bus system. Next year, they plan to ask the General Assembly to give them authority to create a regional transportation authority that can float bonds and levy fees. The money would help create a bus network linking downtown Charlottesville, the University of Virginia and the regional airport by way of the 29 corridor.
The big question now is whether to go a step further and create dedicated lanes for moving the sleek new buses faster and more reliably, reports the Daily Progress. Such a Bus Rapid Transit system would cost an estimated $138 million. That’s a lot of dough for a region the size of Charlottesville-Albemarle. Albemarle Supervisor David L. Slutzky thinks that future presidential administrations will be more transit friendly and willing to subsidize the project.
Bacon’s bottom line: BRT might be a good idea for the Charlottesville area: I would like to see an authoritative analysis. But relying upon the federal government for hand-outs is not. If BRT makes sense, the region should find a way for riders, property owners, employers and other beneficiaries to pay the tab. Taxpayers from Dubuque, Iowa, should not pay for Virginians’ regional transportation projects any more than we should pay for theirs.
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Heavy Rail and Flying Pigs
Ken Orski, publisher of Innovation Briefs, makes the case that the era of massive federal funding for system-building investments in urban rail transit is coming to an end. Rail transit funding will continue, he writes, but “it will shift to incrementally expanding existing rail networks and commuter rail services rather than embarking on construction of brand new rail transit systems.” Writes Orski:After 30 years of sustained federal investment in urban rail systemsโ an investment program that resulted in the construction of 22 new light rail systems and 5 new heavy rail systemsโ the New Starts program is beginning to run out of cities that can afford or justify cost-effective rail transit investment. Norfolk, VA, has been the only new urban area to have joined the “club” of rail cities in recent years.
Such conclusions are probably warranted under the current Business-As-Usual paradigm in which transportation projects are made in isolation from land use decisions. The economics of rail could improve dramatically, however, if projects were part of a more encompassing process that combined planning for transportation and land use together. Of course, if pigs had wings…
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Republicans Finally Squabbling with Democrats Instead of Each Other
As the budget-making drama unfolds in the General Assembly, we’re seeing a very different political dynamic at work. In contrast to past years, in which Republicans tore themselves to shreds, Elephant Clan senators and delegates appear to be acting with common purpose. The party conceivably could emerge stronger than when Elephants ruled the chamber under the leadership of nominal Republican John Chichester.
The evidence for change can be seen in what Tyler Whitley and Jeff Schapiro are billing in today’s Times-Dispatch as “a revolt” of the state Senate’s Republican minority. In a departure from the Senate’s traditional “bipartisan comity,” they write, seven Republicans on the 16-member Senate Finance Committee opposed the Democrats’ proposed revisions to the two-year, $78 billion budget submitted by Gov. Timothy M. Kaine.
In contrast to previous years, in which a Chichester-dominated Republican caucus warred with the Republican House caucus, Elephant Clan senators are aligning themselves closely this year with their counterparts in the House. Arguably, Republicans have as much power now as when they supposedly controlled both chambers. As Whitley/Schapiro paraphrases Sen. Charles J. Colgan, D-Prince William: Without bipartisan backing for the Senate version of the budget, the Dems will have little leverage against House negotiators in cobbling a compromise budget.
Most interesting is the change in Sen. William Wampler, R-Bristol, once an ally of Chichester and, like him, a frequent advocate of higher taxes. Now Wampler maintains that the state should cut state agency budgets by six percent instead of raiding the Rainy Day fund and expanding the pre-K program. Chastened by conservative unrest during last year’s primaries and freed from the Rasputin-like influence of Chichester, Republican senators appear to be taking up the banner of fiscal conservatism.
The result of this realignment could be the emergence of the Elephant Clan as a genuine spend-less, tax-less party. But the Republicans have a long road to travel before than can rightfully claim that mantle. Until they repudiate the shyster-like mechanisms for raising new transportation funds that they enacted last year — increasing a wide variety of taxes, fees and fines by small amounts in obscure places in the hope that no one would really notice — they won’t deserve to be taken seriously.
Hiking the gas tax, favored by Senate Democrats, is a far preferable mechanism for raising revenue. The tax is easy to administer, it is transparent, and it encourages people to drive less, thus incrementally reducing the demand for additional improvements. Only when Republicans fully embrace the principles of tax transparency, efficiency and user-pays, will I believe they’ve had a genuine change of heart.
Update: Seth McLaughlin confirms this analysis in today’s Washington Times.
It’s no longer House Republicans versus Senate Republicans. It’s Republicans versus Democrats. “The dynamics are different now,” J. Scott Leake, spokesman for Senate Republicans, told The Washington Times. “You have a divided Senate and united House.”
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Grouchy about the Grantor’s Tax
Uh, oh, it looks like the Northern Virginia Transportation Authority won’t have as much money as it hoped to finance its transportation improvements. The NVTA, reports Dan Genz with the Washington Examiner, is expected to slash its revenue estimates for seven new taxes and fees because of the regionโs economic downturn.
More than half of the $336 million slated for road and rail projects was expected to come from a tax on property sales — the so-called “grantor’s tax.” But home sales have plummeted 50 percent in Fairfax and Loudoun Counties, and have declined elsewhere across the region. NVTA officials, Genz says, expect revenues to drop below $300 million.
Once again, I nod my head in wonder: How did legislators ever devise such an abomination of a transportation scheme? As Hans Bader, a staffer with the Competitive Enterprise Institute, points out:
Itโs an odd source of funding for transportation, since a homeownerโs sale of her home contributes nothing to transportation costs. And the tax is anything but fair. It is paid only by Virginians, not the out-of-state motorists who make up much of the traffic on Northern Virginiaโs roads.
And, of course, it is a notoriously volatile revenue source that varies with the business cycle. Bader has had more to say about the grantor’s tax in the Examiner, the Times-Dispatch, and Openmarket.org, the staff blog of the CEI.
Bacon’s bottom line: A rational system, as opposed to the Rube Goldberg contraption we have, would scrap all miscellaneous revenue sources like the grantor’s tax and raise the gas tax by a like amount. The gas tax is relatively stable, so transportation planners can actually plan. It is also transparent. That means drivers know what they’re paying, and they can adjust their driving behavior if they don’t like paying it. Once we’ve shifted to the gas tax, then we need to start planning for the inevitable demise of the gas tax (when people shift to hybrids, electric cars, fuel cells, etc.) by beginning the spadework for a Vehicle Miles Driven tax.
The transportation-financing system we have now defies all reason, is counter productive, and is something that only politicians could love.
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The Inscrutable Meaning of the Shrinking Trade Deficit
Buried on page 2 of today’s Wall Street Journal is a single-columned story headlined “Slow Spending Helps Narrow Trade Deficit.” After decades of a stagnating exports and steadily rising exports, the United States trade gap narrowed 6.9 percent in December to $58.8 billion. Despite higher oil prices, the trade gap for the full year narrowed 6.2 percent — the biggest decline in percentage terms in 16 years. At last, the positive impact of a weaker dollar is kicking in.
Why does the shrinking trade gap matter to a blog that focuses exclusively on Virginia? Because Virginia’s economy is inextricably tied to global trading patterns. Not only that, but lawmakers are being urged to make massive infrastructure investments based on those global trading patterns.
Hampton Roads is undergoing a massive expansion of port capacity predicated on the view that the volume of imported containers, mostly from China, will continue basically forever. Anticipating a surge in the volume of cargo shipments, port and maritime interests are urging lawmakers to spend billions of dollars to build a Third Crossing and upgrade U.S. 460 in order to accommodate those trucks. To pay for those multi-billion investments, Hampton Roads politicians have yoked the citizens and businesses of the region with significant transportation taxes.
But no trend continues in a straight line forever. Even the world’s largest economy cannot sustain balance-of-payment deficits approaching $1 trillion — that’s trillion with a “tr” — a year forever. Inevitably, the value of the dollar has plummeted, and there is little prospect, given the easy-money regime of the Federal Reserve Board, that it will get stronger any time soon. Americans have seen the downside of the weak dollar in the form of higher prices for oil and other imported goods. Now we’re finally seeing the upside. Exports rose to a record $144.3 billion in December. More to the point of this blog post, as the WSJ reports:
Exports rose while imports fell. That underscores a shift in the economy as domestic consumer spending slows and foreign demand for U.S. goods remains strong. … The drop in nonpetroleum imports — a major gauge of consumer demand — was widespread. … “Disturbingly, the drop in imports was led by autos and consumer goods,” wrote Lehman Brothers economist Drew Matus.”
As far as the Ports of Virginia are concerned, it shouldn’t much matter whether exports and imports are rising and falling as long as the same volume of goods gets funneled through the ports. But the ratio of imports to exports very much matters to transportation planners. Right now, thousands of trucks pick up containers in Norfolk, haul them to inland destinations, and then dead-head back to the port to pick up more containers. Rising imports implies the need for more trucks — and highway capacity. But a leveling off of imports suggests that the anticipated surge in truck traffic may not materialize. The surge in exports poses no comparable problem because rising volumes can be accommodated by filling up trucks now driving back empty to the ports.
What worries me is that the business-political establishment of Hampton Roads will plunge ahead blindly with its monumental road improvement projects, saddling the region with a massive extra tax burden in order to handle an increase in imports that never materializes. Hold gun firmly in hand. Cock trigger. Point gun to head. Pull trigger.
Declining imports and rising exports have other implications that Bacon’s Rebellion shall explore as occasion permits. One trend worth watching: A surge in exports could underpin the U.S. economy, strengthening the manufacturing sector to offset weakness in the homebuilding and financial sectors. The economic downturn may not be as severe as anticipated. That may be good news for lawmakers in Richmond fashioning the next two-year budget.
A second trend worth watching: A newly competitive U.S. manufacturing sector is very, very good news for Virginia’s mill towns, which have seen their manufacturing-based economies hollowed out for some three decades now. With U.S.-based manufacturing suddenly looking more competitive, Virginia should consider investing more heavily in the Virginia Economic Development Partnership, the organization that promotes both Virginia exports and inbound manufacturing investment. We could well see a pick-up in the number of announcements like the one made yesterday in which Com.40 Ltd, a Polish manufacturer of mattresses and upholstered furniture, will invest $36.3 million and create 813 jobs in the City of Danville.


