Bacon's Rebellion

How embarassing! Will Vehrs at Commonwealth Conservative has scooped me on the appointment of Doug Koelemay, a Northern Virginia lobbyist and long-time contributor to the Bacon’s Rebellion e-zine, to the Commonwealth Transportation Board. Here is Will’s take.

I would add only that Doug will make an excellent appointee. He is one of the most fascinating conversationalists and has one of the widest-ranging intellects of anyone I’ve ever met. That’s why, when I decided to launch Bacon’s Rebellion nearly four years ago, he was the first person I asked to contribute to the fledgling publication. He also was the first person to accept, adding immeasurably to the publication’s credibility at at time when the e-zine format was almost unknown.

Doug will bring a balanced perspective to the CBT. On the one hand, he shares the view, widespread in the business community, that Virginia desperately needs to invest in its transportation infrastructure. On the other hand, as a devotee of technology policy, Doug is very open to doing things in new and different ways. I can’t imagine Doug becoming a proponent of the status quo.

I look to Jeff Schapiro, arguably the most loquacious and best-connected journalist covering Virginia state politics, as a barometer of the latest conventional wisdom in the Capitol. Here’s what he writes in his weekly column about the budget impasse:

The betting is that the centrist Republicans who lord over the Senate ultimately will cave on $1 billion a year in new taxes for transportation to spare the state from going without a budget after July 1, the start of the spending cycle.

There you have it. The assessment of Richmond’s political insiders, as digested by Schapiro, is that the Senate will capitulate. Schapiro then proceeds to examine the implications of the House of Delegates’ “huge, albeit temporary, victory.”

The House budget, Schapiro writes, will give transportation only a “temporary fix … just enough extra jack for roads and transit to get through ’07.” Between an expanding maintenance budget and escalating costs for new construction, he concludes, Virginia soon will run out of money for road-building altogether.

I will defer to Schapiro’s reading of the immediate political situation, but I think he is overlooking a number of factors impacting public reaction to the defeat of the $1 billion-a-year tax proposal.

First, tax hike or no tax hike, the Kaine administration is moving aggressively to finance major road construction projects through public-private partnerships. Secretary of Transportation Pierce Homer has laid out a vision for toll funding of HOV lanes or other improvements for all four of Northern Virginia’s major transportation arteries — the Capital Beltway, Interstate 66, Interstate 95 and the Dulles Toll Road — and we’ll soon see details on comparable proposals for major arteries in Hampton Roads. One of these days, the Kaine administration also may decide on how to proceed with prickly Interstate 81 public-private partnership proposals.

Second, I’m willing to bet that the House of Delegates has more to contribute on the subject of transportation financing. House leaders have been so busy fending off the tax increase this year that they haven’t had the opportunity to lay out their long-term transportation vision. I would expect House Speaker William J. Howell to propose privatizing certain transportation assets and reinvesting the proceeds in projects designed to relieve congestion-causing bottlenecks. Such proposals will be highly controversial, to be sure, but it will be impossible to paint the House as “doing nothing” on transportation.

Third, I expect we’ll see more moves to overhaul the efficiency with which the Virginia Department of Transportation spends its maintenance dollars. The Senate and House have agreed already to permit design-build contracts, and we may see additional moves to outsource more.

Finally, there is always the possibility that the Kaine administration and both chambers of the General Assembly will recognize that, in the absence of new geysers of tax dollars, they need to fundamentally re-think Virginia’s emphasis on adding new transportation capacity to accommodate every up-tick in demand. We could conceivably see lawmakers giving more attention to the demand side of the equation: congestion pricing, land use reform, telecommuting/telework, and encouraging the private sector to get more creative with carpooling, van-pooling and bus services.

One thing we can count on: The transportation debate will be with us for a very long time.

This week, both the Richmond Times-Dispatch and Washington Post trumpeted the rapid rise in the growth of African-American owned businesses over the past few years. Citing data from the Census Bureau, the media outlets noted that there are, “1.2 million black-owned businesses in the U.S., a figure that rose 45 percent from 1997 to 2002, according to a report released yesterday by the Census Bureau. There are roughly 23 million U.S. companies.” Thus, black-owned firms account for around 5% of total firms nationwide.

The picture in Virginia and in Metro Washington is even brighter, where “about 8 percent of Virginia’s roughly 530,000 businesses are run by a black entrepreneur.” In Metro Washington, “the increases included huge jumps in the previously small number of black-owned firms in Prince William County, which increased 103 percent, to 2,010, and Howard County, where black businesses grew by 87 percent, to 3,293.”

This amazing growth is both a sign of social progress, as well as, an indicator that the economic fortunes of black Americans are continuing to look upward. Entrepreneurship is the bedrock of the American economy, and only through full participation in what Alexander Hamilton deemed, “the commercial republic” can some of the more pressing issues that the African-American community faces be adequately addressed.

This rise in black entrepreneurship also has political ramifications. As blacks gain greater access to the upper-echelons of the economy, it can be expected that they will take on similar voting behaviors as their socioeconomic cohort. Inevitably, their individual economic circumstances will influence their outlook on government, for reasons as simple as keeping more of their hard-earned paychecks or as complex as advocating business-friendly regulatory schemes.

As the Post article noted, “black-owned businesses appear to be going the way of the…black population, which for the past decade has been increasingly lured into the suburbs.” This increased suburbanization, coupled with higher income-earning opportunities brought on by increased “boot-strapping” entrepreneurship, stands to redefine the relationship of both the Democratic and Republican Party to the African Americans.

In the end, this latest economic good news is not about honing in on race as much as it is about acknowledging the steady march of progress that has been powered by the American marketplace. In the words of one Richmond area businessman, “What I’m seeing now is more and more people are realizing there are more quality businesses out there that are minority-owned.” Black business owners are managing to overcome negative perceptions and prove their ability to compete. As such, their continued growth will pay dividends for all Americans.

Any sign yet that anyone in Virginia’s political leadership is rethinking the state’s commitment to a transportation policy adapted to an era of cheap energy?

No, I didn’t think so.

If you disagree with the nostrums of the Washington Post, its editorial writers condemn you as an ideologue or a fool. Their arrogance is on display once again, attacking Del. L. Scott Lingamfelter, R-Prince William, for suggesting that Virginians are overtaxed.

Citing studies that show Virginia to be a low/moderate-tax state (the same studies cited on this blog recently), the Post refers scathingly to Lingamfelter and his “fact-averse” Republican colleagues in the House for their opposition to raising taxes for transportation.

Mr. Lingamfelter and his colleagues are allergic to a fact-based analysis of tax burdens because the facts are not on their side. That is ridiculous enough when downstate lawmakers mouth this nonsense, heedless as they are of Northern Virginia’s nightmarish traffic. It is galling coming from Mr. Lingamfelter…

The debate boils down to which facts you pay attention to, and which ones you ignore. The WaPo has certain facts on its side, but chooses to ignore others, such as the fact that Virginia has been running chronic budget surpluses since the passage of the 2004 tax increase. When Del. Lingamfelter suggests that Virginians are overtaxed, I suspect he’s referring to the fact of the budget surpluses.

Here’s another fact: Virginia has one of the strongest state economies in the country. Several Virginia MSAs are growing faster than the national average (in order of growth): Winchester, Lynchburg, Northern Virginia, Blacksburg, Roanoke and Richmond. One reason — not the only reason, but one of them — is that Virginia has one of the lower tax burdens in the country. Innumerable studies have demonstrated that low taxes are correlated with higher rates of economic growth. That, too, is a fact.

Low taxes, I would add, are particularly important to downstate Metropolitan Statistical Areas that don’t have the luxury of the federal government, with its power to redistribute the nation’s wealth, to pump up their local economies. We need a low-tax business climate to prosper.

We could argue all day long on who is more “fact-averse” — the WaPo editorial writers or Del. Lingamfelter. But onl the WaPo is arrogant enough to think that it has a monopoly on the facts.

As part of a nationwide crackdown, federal immigrant officials and state police have raided a Henrico County pallet manufacturer, IFCO Systems, and detained 30 workers as illegal immigrants. The feds also have arrested seven current or former managers of the Texas-based company and charged them, according to the Richmond Times-Dispatch, with “conspiracy to transport, harbor and encourage and induce illegal immigrants to live in the United States for commercial advantage and private gain.”

The conspiracy offense carries a penalty of up to 10 years in prison and a fine up to $250,000 for each illegal immigrant. More than half of the company’s 5,800 U.S. employees in 2005 had invalid or mismatched Social Security numbers.

Let’s see… Potentially 2,900 illegal employees nationwide… At $250,000 each, fines could reach $725 million. That’ll be tough for these managers to pay off during the 29,000 years they could be spending in prison! That’ll teach ’em.

So, for all you readers who said we need to get serious about arresting employers, not just the illegals, you got your wish!

The College of William & Mary will boost the cost of tuition, room, board and fees for in-state students by nine percent next year. That strikes me as excessive. But, hey, the administration can get away with it. Generating great buzz as the best small public university in the country, W&M suffers no shortage of applicants.

The Board appears to be embracing a policy of charging what the market will bear. With the cost of attending W&M still “only” $15,422 a year, the market clearly can bear a lot more. The Richmond Times-Dispatch has the story here.

Gov. Timothy M. Kaine laid out his environmental priorities in a speech delivered yesterday to the Environment Virginia Symposium in Lexington. The Virginian-Pilot has the story here.

A top goal is to protect 400,000 acres of land from development over the next four years. As reporter Scott Harper notes:

That would double the amount of property the state has set aside since 1968 and would push Virginia beyond its land-conservation commitments under the Chesapeake Bay cleanup accords, signed in 2000.

The state needs to protect an additional 360,000 acres by 2010 to keep its promise. Bay cleanup partners Maryland and Pennsylvania already have achieved their conservation goals.

To achieve the 400,000-acre goal, Kaine plans on a mixture of tax incentives for property owners and outright purchase of land. Sounds like that will put him on a collision course with his budgetary allies in the state Senate who have been striving to cap tax credits for conservation easements.

In the latest edition of the Bacon’s Rebellion e-zine, I profiled Aneesh Chopra, Virginia’s new Secretary of Technology. With the Virginia Information Technology Agency (VITA) and Virginia’s Center for Innovative Technology (CIT) functioning as a quasi-independent entities, the SecTech has the lightest administrative responsibilities of anyone in the governor’s cabinet. Chopra is using the freedom from day-to-day drudgery to, among other things, advance Gov. Timothy M. Kaine’s goal of streamlining the state’s Medicaid program.

In our interview, Chopra discussed upgrading state Medicaid information systems. By sharing data with Virginia’s major health care systems, he hopes to provide better care for patients, reduce the number of redundant tests and procedures and achieve other efficiencies. Read the details here.

Phil Rodokanakis, president of the Virginia Club for Growth and a Bacon’s Rebellion columnist, suggests that Chopra may be overlooking the biggest cost savings of all: the opportunity to eliminate good, old-fashioned waste, fraud and abuse. Says Phil:

The Medicaid system is fraught with waste, fraud and abuse—both at the federal and state levels. Designing and implementing data mining projects that can readily locate false claims in the system should be like shooting fish in a barrel, for a tech savvy person.

Waste, fraud and abuse is the low-hanging fruit in Medicaid expenditures, Rodokanakis suggests, and that is where Chopra should first focus his attention.

Mass transit is one of those ideas that may sound better in theory than in practice, especially when the public sector is in charge. The Washington Metro is an undisputed managerial disaster, and the Virginia Railway Express ain’t lookin’ too sharp right now either.

The Fredericksburg Free Lance-Star has the goods: Last year, from July through November, trains were late on the Fredericksburg line 30 percent-40 percent of the time. Then the service had its first derailment in January, which shut down service for the rest of the day.

Lo and behold, what happened next? Ridership declined.

During the first three months of 2006, ridership was down an average of 4.2 percent compared with the first three months of 2005. … VRE knows there is a connection between the dip in passengers and delays, spokesman Mark Roeber said.

Update: I cry “uncle.” It was rash of me to suggest that VRE’s on-time performance problems are related to its status as a state entity. VRE’s problems may well be attributable to its ticklish relationship with CSX Corp., which owns the railroad tracks, and the priority CSX gives its freight trains. I have no evidence to suggest otherwise. (See reader comments for criticism of my stance.)

As lawmakers deadlock over taxes and transportation, they should pay heed to what’s happening in Virginia outside the state capitol complex — especially to what’s happening in the private sector, where people invest their own money, not the taxpayers’. Vienna-based KSI Services, one of the nation’s 20 largest developers, is totally revamping its business plan. Reversing its traditional emphasis on suburban sprawl-styled development, the company will focus on “Transit Oriented Development.” The company has announced plans for seven new transit-friendly communities near rail and Metro stations in Northern Virginia.

In “Tipping Point,” writer Peter Galuszka finds that the dramatic shift in KSI corporate strategy is illustrative of a national trend driven by changing demographics and consumer preferences, increasing traffic congestion and the rising cost of car ownership. KSI is betting that it can sell and lease more real estate (like Harbor Station, in rendering above) by marketing mass transit and other alternatives to the one-man-one-automobile lifestyle. In an existing project, Residences at Lorton Station, KSI is promoting slugging, van pooling and Flex Cars. Two-driver families can save up to $7,000 a year if they can live without one of their cars.

There is so much underutilized land near Metro and rail lines in Northern Virginia, observes E M Risse, a fellow Bacon’s Rebellion columnist, that redevelopment around those transit nodes could provide enough housing and related development to accommodate the region’s population growth for the next 20 years — or longer. It makes sense to encourage growth to take place where infrastructure — not just roads, but utilities and public services — already exist.

While the private sector is adapting to the new market realities, Virginia’s lawmakers remain committed to the notion that the answer to Virginia’s transportation woes is to find more money somewhere, whether through taxes, tolls, budget surpluses or privatization, mainly to build more roads. Admittedly, lawmakers do seem willing to make transit a larger part of the budget mix, but transit will fall far short of its potential unless the right kind of transit-friendly development takes place around existing and proposed rail stations. Many obstacles to development, especially at the local level, must be addressed.

I suppose you have to be a political junky to appreciate Attorney General Bob McDonnell’s humor at the 58th annual shad planking, but I found some of his jokes pretty amusing. You can read them all here. Read them soon, though. Most have a shorter shelf life than a politician’s campaign promise. A sampling of the jokes that tickled my funny bone:

• Jim Webb is with us. Jim, as a fellow veteran, I salute your service. But I am a little confused; does your campaign as a Democrat for Senate mean that your annual Summer Republican Cook-Out is canceled? Just need to know if we should reschedule. … Jim is already doing his part to fit into the party of John Kerry. After all, Jim Webb was for George Allen before he was against him.
• It has been a contentious session as you know. Unfortunately it now seems like thing have gotten even worse. Last update I heard: Speaker Bill Howell has introduced the Nebraska Plan, calling for a unicameral legislature with the abolition of the Senate. In a rare show of unity the House passed the bill overwhelmingly.
• And I’ve been doing a lot of outreach in office, including the brave new world of the Blogs. I might be the only officeholder who has spoken to the real Larry Sabato and the blogger named “Not Larry Sabato” all in the same day.

Update: Columnist Ray McAllister notes the evolution of the Shad Planking from a colorful “good ol’ boy” event into a yuppified garden party.

Got an email memo from Sen. George Allen on Illegal Immigration to Mr. and Mrs. Virginia (April 7, 2006).

“The legislative priority should be to secure our borders and stop the flow of illegal entry. A country that cannot control its borders, cannot control its own destiny. I have advocated and supported measures to address this neglected responsibility with more border patrol personnel, detention centers, sensors and virtual and physical fences where necessary to stem the flow.”

This is key to fixing the problem and a wedge issue to winning the GOP nomination and the election in 08.

No policy on what to do with the 11 or 12 million or who knows how many illegal aliens in the U.S. is worth anything until we, as a Nation, decide to close and control the border or not. Nothing matters until that problem is solved first.

Our current Republican President has failed in his Constitutional duty to protect the Nation.

I’m one of the voters looking for a candidate who will enforce the borders – immediately. Then, we can consider the alternatives for illegal aliens in country.

Del. Ben Cline, R-Rockbridge, has blamed Virginia’s tax-and-spend policies for the Ford Motor Co.’s decision to close its Norfolk pickup-truck assembly plant. The Newport News Daily News quotes him as follows, comparing Virginia to Michigan:

“We are reaping the same results from this type of tax-and-spend policy with the events in Norfolk and the announcement of the Ford plant closing,” he said. “We’re seeing the same effects that Michigan has seen from their tax and spend policies.”

I agree with Cline’s premise that Virginia has adopted a tax-and-spend policy towards transportation, and I totally support his effort to hold the line on tax increases. But I also think it’s important to base arguments on well-founded facts. And the fact is, Cline has absolutely no evidence that Virginia’s tax burden — which, as the Kaine administration has pointed out, is relatively low compared to other states — was responsible for the Ford announcement.

Based on the press reports I’ve seen, Ford has given only the vaguest of explanations for its decision to shut down the Norfolk plant. The company has indicated that it wants to shift to a new system of flexible manufacturing, a system that entails the ability to shift production rapidly and inexpensively from one auto model to another. This new methodology requires a very different factory layout than the old manufacturing paradigm in which auto plants produced long runs of the same model.

I would conjecture that Ford’s Norfolk plant, which was built in 1925 — making it 80 years old — has a layout and configuration, literally locked in steel and cement, that is impossible to adapt to flexible manufacturing methods. I don’t know this to be the fact, but it sounds far more plausible than the notion that Virginia’s business taxes were too onerous. It would be helpful if the reporters covering the Norfolk plant closing would probe that angle.

Based on the information disclosed so far, there is no evidence to justify pinning the Norfolk plant closing on Virginia’s “tax-and-spend Democrats.” If anything, one could plausibly argue that Virginia’s business tax burden was a point in favor of the Norfolk plant. But we just don’t know because Ford isn’t releasing details.

The case for low taxes must be built on supportable facts, not fanciful speculation, or we risk losing credibility with the public.

Update: Here’s the Virginian-Pilot’s coverage, quoting a Ford spokesman as explicitly denying that taxes were a factor in the decision… And the reaction of Will Vehrs at Commonwealth Conservative.

Never let it be said that I refuse to publish information that contradicts my pet theories. The Kaine administration is touting two studies affirming Virginia’s status, despite recent tax increases, as a “low tax” state.

The Tax Foundation ranks Virginia 41st in state/local tax burden (with 1st being the worst) — an improvement since the 1970s, when it logged as high as 34th in the nation. State/local taxes amount to 9.5 percent of state income, compared to 10.6 percent nationally.

According to the Council on State Taxation, Virginia has the lowest state/local business taxes in the country expressed as a percentage of gross state product: 3.7 percent compared to 4.8 percent nationally. Let that sink in — lowest business taxes in the nation. Pretty impressive.

I still would argue that in a globally competitive economy, Virginia needs to focus relentlessly on driving down the cost of state/local government while at the same time ensuring the efficient functioning of core obligations. Just because we’re one of the better states in the nation doesn’t mean we’re good enough to maintain our prosperity in the face of competition from China, India, the Asian Tigers and the more dynamic European countries. Still, intellectual honesty compels me to concede that, in light of these studies, it is difficult to argue that Virginia is grotesquely overtaxed.

Update: For another take on these studies, read Dan Radmacher’s column in the Roanoke Times. Too bad he uses these studies as a launching pad to justify higher taxes for transportation!