Bacon's Rebellion

In the Summer of 02, I asked my Virginia Senator, Marty Williams, for the analysis behind the Yes! Campaign to raise our taxes for transportation. I was the Chairman of the Poquoson City Committee and State Central Committee !st Cong. District representative, RPV. Marty’s staff sent me their inch and half book of expensive analysis.

I found the cherries the politicians had picked for sound bytes – like the $100 a year for an average family in the sales tax bite. Of course, the ‘average’ family had 2.3 people or so and an income that was well below the median of most communities in Hampton Roads.

I found the cherries the politicians ignored – like at the end of 20 years of construction delays and billions of dollars there would be substantially more ‘congested’ road miles in Hampton Roads than before all the concrete was poured. And that tolls alone could pay for most of the cost of a Third Crossing.

Yesterday, I got the latest bowl of transportation cherries from Marty. There are two aspects worth more attention. The first is the flagrant con of cherry picking the stats. The second is the issue of the model they tried to use.

First, go to http://www.thomasjeffersoninst.org/main/main.php where Michael Thompson shows the results from his institute. (Is he still running this thing out of his basement office? When we met several years ago he was). Click on ‘to see a powerpoint summary of each of the proposed tax and transportation plans’.

Look at slide 12 – Marty’s plan adds 8405 government jobs in year one and KILLS 5805 private sector jobs in year one. Oddly and magically, then the private sector employment increases by year 4. Marty only shared the last number.

Look at slide 12 – Marty’s plan LOWERS disposable real income and per capita income. Translation – Virginia’s families have less money. Then, the magic happens again and it gets better by year 4.

Keep reading the slides… conversely, the House Plan INCREASES private sector jobs and income from year 1 on. Duh.

Second, this study needs study. It’s called the ‘Virginia’ STAMP Model, but it’s actually other states’ econometric models kinda sorta made to fit for Virginia.

Like all economists the folks in Massachusetts who put this together made assumptions. If you drill down (same url as above) and click on “to see an explanation of the Virginia STAMP Model, along with the formulas, data, and assumptions used in the model when first developed two years ago. None of the formulas or assumptions have changed since that time”, you will note that this model doesn’t include the economic impact of the 04 largest tax increase in Virginia history.

See the assumptions on household taxes.
Look at how it assumes the expenditures for vehichles from a model for the NE is good enough for Virginia. Likewise, the distribution of households used is one for the NE.

This isn’t a macro-economic model for Virginia. It’s a proxy. Someone with econometrician friends at the Heritage Foundation – please share this with them.

I’d like to know the model magic that increases income after 4 years – what drives that – certainly not the tax hike?

Sen. Marty Williams is a gifted politician. Read that in many meanings. But, when it comes to analysis and economics, he should stay with his chosen employer – waste management.

Sen. Marty Williams, R-Newport News, has pulled out the big guns in the Senate’s negotiations with the House of Delegates over transportation funding — he’s detailing how much more pork the Senate plan will bring to the folks back home.

“So much of the debate so far has focused on what the two plans would cost and where the money would come from,” Williams wrote in a news release issued yesterday. “This report by the professional staff of the Senate Finance Committee reveals side-by-side what the two plans would achieve in each region.”

Here’s how much each VDOT district gets over the next two years:

• Bristol: Senate plan, $143 million; House plan, $16 million.
• Culpeper: Senate plan, $107 million; House plan, $14 million.
• Fredericksburg: Senate plan, $119 million; House plan, $16 million.
• Hampton Roads: Senate plan, $325 million; House plan, $222 million.
• Lynchburg: Senate plan, $104 million; House plan, $16 million.
• Northern Virginia: Senate plan, $470 million, House, $268 million.
• Richmond: Senate plan: $219 million; House, $26 million.
• Salem: Senate plan, $182 million; House plan, $19 million.
• Staunton: Senate plan, $116 million; House plan, $15 million.

Here’s what I’d really like know: How much the taxpayers of each district would pay in higher taxes, stacked side by side with the amount of money returned to each district.

Congratulations to Chad Dotson (Commonwealth Conservative) and Waldo Jaquith (Waldo Jaquith), who have been named contributing editors at Campaigns & Elections Magazine. They will write side-by-side columns about the intersection of technology and politics, with an emphasis on the blogosphere.

These two young men certainly deserve the recognition: They published the pioneer blogs of Virginia politics. Indeed, they were the inspiration for the Bacon’s Rebellion blog. I’d still be limited to bi-weekly newsletters if they hadn’t demonstrated what blogs could accomplish at the level of state/local politics.

Here’s what Waldo has to say. And what Chad has to say.

All I ask, guys, is this: Stay true to your roots. Don’t forget the little guys who made you famous!

The Richmond Times-Dispatch editorial page today reminds us of the circumstances in which Gov. Tim Kaine told voters he would not raise taxes:

Resurrected Quote of the Day: Tim Kaine, in response to Jerry Kilgore’s statement that “he’s going to raise your taxes if he’s elected Governor”: “There you go again, Jerry, making stuff up. You’re not fit to be Governor if you make stuff up on this stage.”

Normally, I save Pat McSweeney’s columns for publication in Bacon’s Rebellion, but his most recent report is too important and too timely to sit on. According to McSweeney, Gov. Timothy M. Kaine has yanked support for a bill that embodied his winning campaign issue: giving municipalities more power to block rezoning projects that would overwhelm the surrounding transportation system. This story has gone unreported as far as I can tell (in another example of the ongoing failure of the Mainstream Media to cover land use issues).

Here is McSweeney’s account of what happened:

Just last week, Kaine had another opportunity to honor his campaign promise to give localities greater authority to control growth. He was pursuing an amendment that would add his legislative proposal to a House-passed bill dealing with the use of cash proffers for road improvements.

That House bill had been reported by the Senate Local Government Committee on a unanimous vote and had strong support in the full Senate.Kaine abruptly withdrew his support for that tactic after actively pressing forward in that direction for more than a week.

The chief patron of the House-passed bill, who agreed to let Kaine use his bill as a vehicle to keep the governor’s growth proposal alive even at great risk to his own bill, felt let down by Kaine’s change of heart. Slow growth advocates expressed great disappointment upon hearing of the governor’s reversal.

Kaine’s official explanation was that he felt that the amendment might ultimately be rejected by the House of Delegates. Slow-growth advocates were more than willing to press ahead because they consider a recorded vote in the House on this measure a victory in itself.

The real reason for Kaine’s unexpected abandonment of this central element of his growth control strategy may be his desire to appease developers…

I don’t know if Kaine cut a deal with developers or not. I’m open to the possibility that there’s more to the story than McSweeney reports. And I’ll be the first to say that I had problems with Kaine’s campaign proposal, which I thought, if handled improperly, would have make development patterns more dysfunctional, not less. But if McSweeney’s report is accurate, Kaine has some ‘splainin’ to do. First, he broke his promise not to raise taxes until after a constitutional amendment protected transportation funds from budgetary raids. Now, he is betraying his Smart Growth supporters on their core issue.

Kaine may get away with this maneuver in the short run because Virginia’s political reporters have defined the transportation debate as a budgetary issue, all but ignoring the land use dimension, and the editorial writers in the major daily newspapers (save Richmond’s) are salivating for tax increases. But betraying the constituency that gave him his winning edge over Jerry Kilgore — and there is widespread acknowledgement that tapping the Smart Growth sentiment in Northern Virginia’s suburbs put him over the top — will not help Kaine govern in the long run.

Update: James Young at the Skeptical Observor has posted correspondence from Del. Robert Marshall, R-Manassas, who carried Gov. Kaine’s legislation in the House. A Marshall letter to Chris Miller, president of the Piedmont Environmental Council, confirms the basis of McSweeney’s column and, indeed, may have been the basis for it. For some strange reason, Blogger is not accepting a direct link to Young’s article. Cut and paste this URL to your address line: http://skepticalobservor.blogspot.com/2006/03/kaine-ably-abandons-growth-controls.html

I haven’t heard much about “affordable housing” in the transportation debate, but it’s been lurking there in the background. One of the mechanisms the state Senate proposes to employ to raise $1 billion a year for new transportation expenditures is a tax on real estate transactions. In an earlier post in this blog, I noted that it made absolutely no sense to tax real estate transactions in order to fund transportation projects — there was no rational nexus between those who paid the tax and those who benefited from the expenditure.

It’s nice to see that someone else fails to see the common sense in the proposal. Del. Rosalyn Dance, D-Petersburg, has spoken out against a version of the tax now being considered in the House of Delegates. In prepared remarks, she said on the House floor:

Affordable housing is essential for all Virginians. Affordability of housing diminishes each time another tax or fee is added to the homeowner’s bill. And, as all of you can attest, many of us are seeing our assessments going through the roof!

During this last election cycle, all the candidates for Governor recognized this when they proposed to protect homeowners from real estate tax bills — some of which have doubled for many Virginians in the past five years.

I hope many of you will agree with me that home equity is the single greatest source of retirement savings for most homeowners.

Real estate and grantor taxes leave Virginia’s seniors with less money in their retirement to pay for skyrocketing health care and other costs.

I hear people talking about how this tax is only a few hundred dollars — but to my constituents in Petersburg and to many of yours across the Commonwealth — a few hundred dollars is real money.

Virginia Commonwealth University Political Science Professor Robert D. Holsworth was right this last election cycle when he observed in the Washington Post that, “Virginia is on the verge of a property tax revolt in many localities…”

… Our friends in the Senate propose a plan which will require property owners to pay almost 50% more in real estate taxes in the year they sell their property.

Encouraging homeownership is really encouraging the American Dream, Mr. Speaker. This is the time when we are all going to make some difficult choices, but I encourage the conferees and the House to oppose any fee that will be a barrier to Virginians wishing to own their homes.

Call me Mr. Cranky. Sometimes, it seems, nothing pleases me. Take car tax relief, for instance. I don’t agree with anyone on that issue.

The Political Class doesn’t like car tax relief because it diverts too much money from spending on their favorite government programs. Well, that ticks me off because taxpayers do deserve a break! Giving the Political Class more tax money is like giving a crack addict “just one more hit.” If you give politicians the money they want, they lose all pressure to think creatively and spend with discipline. What we need is more creativity, innovation, productivity and discipline in government — not more money.

Take Gov. Mark R. Warner. When the state faced a fiscal crisis, he did a tremendous job of cutting expenses and rationalizing government. As soon as the crisis was over, it was back to business as usual, looking for ways to spend all the money — and more — that came rolling in. The impetus for cost cutting just died.

So, I believe in giving money back to the taxpayers. But the car tax has got to be the most jury-rigged arrangement I can think of to do it. As Ronald Reagan taught Republicans — before they promptly forgot the lessons — taxes affect behavior. If you’re going to cut taxes, cut them in a way that creates incentives for people to behave in socially useful ways.

What does the car tax relief do? It reduces the cost of car ownership. In other words, it encourages people to spend more money on newer, more expensive cars. That’s just dandy if you’re an automobile dealer, but the problem in our society today is not a lack of conspicuous consumption. If you cut taxes, cut income taxes or business taxes. Reward people for working harder or doing business in Virginia — not for buying bigger cars!

When you reward people for working harder and doing business in Virginia, you increase economic activity. Greater economic activity offsets at least a portion of the revenue you lost through the tax increase. Duh!

Instead of expending political capital on nickle-and-dime tweaks to the car tax — and raising the cap on car tax relief by $50 million is nickle-and-dime in the context of a $35 billio-a-year state budget — the House of Delegates needs to think boldly about tax reform. How about applying the concept of flat taxes to Virginia’s income tax? Eliminate the billion dollars or more in income-tax loopholes identified by the Warner administration, and use that money to reduce the top rate! Or repeal the BPOL tax and stimulate entrepreneurship. Think creatively, darn it!

I’ve always thought of Lieutenant Governor Bill Bolling as a low-tax conservative, but he sure didn’t sound like one in the Feb. 28 edition of the Bolling Report. In the newsletter, he raises the question: Where does all the money go?

Over the past 10 years, state spending has increased 80 percent, from $16 billion in 1996 to $29 billion in 2005. The average annual increase during this period was 7 percent. That sounds like a lot, he says. But it’s not as bad as it seems. When you adjust for inflation and population growth, he notes, state spending has increased only 3 percent annually.

Oh, I feel a lot better now. Actually, I don’t. Has the average paycheck increased inflation+3% a year over the past 10 years? No, not close. Most Virginians are lucky if their paychecks kept up with inflation.

Bolling is saying that state spending increased “only” 30 percent over 10 years adjusted for inflation and population growth. That sounds like a lot of growth to me. Even more alarming, the state’s appetite for money hasn’t slakened in the slightest. Now the Political Establishment wants to raise another $1 billion a year!

(Bolling does make one legitimate point. A big chunk of the increased state “spending” consists of payments to localities to reimburse taxpayers for the car tax. Take that out of the equation, and real, adjusted state spending may have increased “only” 20 percent or so, I’d guesstimate, over the decade.)

Bolling gives a laundry list of all the core functions that the state undertakes — roads, K-12, higher education, public safety, Medicaid, mental health, etc. These are all very important things. But he implicitly accepts the notion that there’s not much that we can do about the ever-escalating expenditures. He passively accepts the idea that Virginians must continue providing these core functions as we always have. There’s no mention in his missive about restructuring, re-engineering or re-thinking the way in which the state meets any of these core needs.

Here’s the brutal fact: At the end of the day, if Virginians bite the bullet and pay the taxes, nothing will change. When there is no pain, the Political Class feels no pressure to undertake fundamental reforms of any kind.

To his credit, Bolling concludes his letter by saying that, with record revenues, Virginia should not be raising taxes now. “We can have the best of both worlds,” he writes. “We can invest in the things that help improve our quality of life and keep taxes as low as possible. These goals are not mutually exclusive. It’s all about leadership.” But it’s the wimpiest case against raising taxes that I’ve seen in a long, long time.

(Thanks to Phil Rodokanakis for passing along the Bolling Report.)

Looks like Virginia has its own version of an anti-Wal-Mart bill. A bill winding its way through the General Assembly may not force the retail giant to pay health insurance to all of its employees, as our neighbor to the north did, but the legislation does restrict the ability of Wal Mart and other giant retailers to compete in Virginia.

The Senate Commerce & Labor Committee has endorsed a bill that passed 98 to 0 in the House of Delegates that would prevent Wal-Mart or other retailers from opening branch banks in their Virginia stores under the auspices of an industrial loan association. But the bill specifically grandfathers First Market Bank, which is owned in part by the Ukrops family and located in most Ukrops grocery stores in the Richmond region.

I’m a big fan of the Ukrops brothers, who have contributed generously to worthy Richmond causes, and I shop regularly at their stores. But I don’t see why they should be allowed to put branch banks in their stores while their competitors cannot. There may be more to the story than appears, very briefly, at the bottom of Greg Edwards’ article in the Richmond Times-Dispatch today. If so, I would like to know what it is.

You can view the bill here.

Those who follow the MainStream Media in the northern part of Virginia know that the list of unethical practices and potential crimes at Fannie Mae over the past 10 years is growing and the topic of editorial and news analysis outrage.

MainStream Media has not yet noted that the real crime at Fannie Mae (and Freddy Mac) is that these federal agencies have catalyzed, leveraged and exacerbated the creation of the wrong size houses in the wrong locations. They are major contributors to the Shelter Crisis. See our column “Solutions to the Shelter Crisis,” 24 July 2005.

The actions of Fannie Mae have generated profits for financial institutions, land speculators and the raw land development industry. They have created inflated home prices and paper profits for house speculators. The modest increase in home ownership – a good thing for some – is off set by the drastic, long-term economic impact of dysfunctional settlement patterns – a very bad thing for everyone.

EMR

There’s a big debate brewing between the state Senate and the House of Delegates over what to do with sexual predators after they’ve served their jail time: Should they remain confined, in a process called civil commitment, or should some of them be returned to the community under heavy supervision including satellite tracking?

The House wants a 300-bed facility; the Senate wants 100 beds. Cost is a major factor. According to Newport News Daily News reporter Hugh Lessig: “The two sides are roughly $40 million apart in construction and operating costs for a civil commitment facility – the Senate around $36 million and the House around $76 million.”

I would lean toward’s the House position on this one, which errs on the side of public safety. But I don’t see it as a black-and-white issue. Cost is unavoidably a consideration — that $40 million could be used many other ways to improve public safety. So is the fact that sexual predators, having paid for their crime, do have rights.

Looks like Larry Sabato and the University of Virginia Center for Politics will be moving from their cramped quarters on the university grounds to the Birdwood estate near the Boar’s Head Inn and the Farmington Country Club — if $10 million can be found for renovations of the dilapidated old manor house, according to the Charlottesville Daily Progress.

Said Sabato: “It’s a gorgeous location and it looks back on an unspoiled view of the mountains Jefferson saw.”

Last year, Sabato gave $1 million to endow the Center’s programs.

Bad news from VDOT… The road-building agency spent $40 million more on maintenance in the first seven months of fiscal 2006 than it had planned. Now it’s trying to make up the deficit by cutting back on maintenance work and equipment purchases. Details at the Road to Ruin blog.

Here are the “Principles of Community” that will be enforced by the “SafeWatch” program in Virginia Tech (see previous post, “The Thought Police Have Arrived):

• We affirm the inherent dignity and value of every person and strive to maintain a climate for work and learning based on mutual respect and understanding.
• We affirm the right of each person to express thoughts and opinions freely. We encourage open expression within a climate of civility, sensitivity and mutual respect.
• We affirm the value of human diversity because it enriches our lives and the university. We acknowledge and respect our differences while affirming our common humanity.
• We reject all forms of prejudice and discrimination, including those based on age, color, disability, gender, national origin, political affiliation, race, religion, sexual orientation, and veteran status. We take individual and collective responsibility for helping to eliminate bias and discrimination and to increase our own understanding of these issues through education, training and interaction with others.
• We pledge our collective commitment to these principles in the spirit of the Virginia Tech motto of Ut Prosim (That I May Serve).

Most Virginians would share most of these sentiments. The problem isn’t the principles themselves, but how they are enforced, and who enforces them. A couple of red flags:

First: Everyone has the right to express themselves freely, but only “within a climate of civility, sensitivity and mutual respect.” Who defines what behavior falls within the acceptable parameters of “civility” and “sensitivity”? Who has the burden of proof when someone is offended by something someone else says — the person who took offense? Or the person who made the remark?

Second: “We take individual and collective responsibility for helping to eliminate bias and discrimination and to increase our own understanding of these issues through education, training and interaction with others.” Who’s in charge of the educating and training here? What form does that “education and training” take? And how much “diversity” of points of view is permitted?

Nervous yet? Now check the online “Incident Report Form.” If the political/philosophical orientation of this initiative doesn’t smack you over the head, here is all you need to know: People are asked to fill out “general information” about themselves. Under the “gender” category, there four (count ’em four!) choices: male, female, transgender, and questioning. Why not “neuter,” while we’re at it? We wouldn’t want to discriminate against castrati, would we?

Hmmm. I’m wondering… Could that last remark be construed as “insensitive”? Could I already be a candidate for “re-education”?

The Feb. 27, 2006, edition of Bacon’s Rebellion has been published. Columns include:

Seek the Intersection
Innovation can be managed, says Frans Johansson, author of “The Medici Effect.” And what individuals and enterprises can do, so can entire communities.
by James A. Bacon

What’s the Big Idea?
The people at Play don’t just talk creativity — they live it. When they advise clients to tear down “walls” and “boundaries,” they apply the nostrum to themselves — quite literally.
by James A. Bacon

The Special Session Is Now
The outline of a compromise on transportation funding is coming dimly into view: Some new funds now, a full-fledged plan later (maybe).
by Doug Koelemay

Legislation by Extortion
The state Senate is enacting spending programs predicated on taxes that haven’t been passed yet. Will Chichester & Co. get their way again by threatening another government shut-down?
by Patrick McSweeney

Standing up for Property Rights
The House of Delegates has passed legislation that will protect property owners from unjust takings. Unfortunately, the Senate’s version of the bill could do more harm than good.
by Patrick McSweeney

Goldman Silenced? I Doubt It
Paul Goldman hasn’t revealed his plans since resigning as Doug Wilder’s senior policy advisor. But you can count on one thing from the master political tactician: He’ll be back!
by Steven Sisson

$650 Million in Hiding
There is a lot more new money for transportation projects than commonly realized — if lawmakers would only count it!
by Michael Thompson

Red State Blues
Obsessed with raising taxes, Republican leaders in the state Senate risk transforming Virginia into a blue state — and losing their majority status in the bargain.
by Philip Rodokanakis

Stop Me Before I Tax Again
Not content with imposing a record tax increase in 2004, Virginia’s Imperial Senate proposes outdoing its meager effort with another, even bigger round.
by Jim Bowden

Little Boy Blue
Like the fabled farm boy who fell asleep while the farm animals ran wild, Virginia voters appear oblivious to out-of-control state spending — potentially 36 percent in just four years.
by Peter Ferrara

Nice & Curious Questions:
Branded Restrooms: What’s Next for Virginia’s Rest Stops?
by Edwin S. Clay III and Patricia Bangs