A Capital Idea

By Dick Hall-Sizemore

As a diversion from the coronavirus story, as well as an effort to give you a little more variety, the following is my previously promised summary of the General Assembly’s changes to the capital budget.  (It was only a little over two weeks ago that the legislature adjourned, but it seems much longer.)

The actions of the General Assembly were both surprising and not surprising. The surprise was that, for the first time in many years, maybe ever, the legislature ended up authorizing fewer capital projects and less debt than the Governor had recommended. The non-surprise was the winners and losers.

Final actions

The General Assembly authorized the issuance of an additional $2.16 billion in tax-supported debt. This amount was $500 million, about 18.5%, less than the $2.7 billion proposed by Governor Ralph Northam. (For a discussion of the Governor’s proposed capital budget, go here and here.) Nevertheless, it is still the second-highest amount ever authorized. (If one includes the $77 million in general fund appropriations in the place of debt, the total capital package tops $2.2 billion.)

It would be tempting to think that such a large capital outlay package would be a shot in the arm for a state economy that will be struggling to recover from the effects of the coronavirus crisis. However, it will be at least two years before more than a few of these projects will have finished the planning stage and gone to bid, thereby pumping money into the economy. It will be the estimated $4.9 billion in debt for projects that has been authorized, but not yet issued, that will be the boost, as actual construction of those projects gets underway over the next couple of years.

The Richmond Times-Dispatch reported, when the two money committees reported out their preliminary versions of the budget in February, that the legislature was taking “a hard look at the amount of tax-supported debt the state can bear” and cited the 57% increase in debt service since 2012. Even Secretary of Finance Aubrey Layne was “warning lawmakers about the total debt on the state’s balance sheet for capital projects, including regional transportation and other initiatives….” One of those other initiatives was the proposed authorization to issue $2 billion in bonds for rail and other transportation projects contained in the Governor’s omnibus transportation legislation.

Layne’s warnings are a little puzzling. After all, it was his boss, the Governor, who proposed a record $2.7 billion capital bond package and the sale of $2 billion in transportation bonds. One wonders whether he lost out to the Governor’s policy staff in the budget development process and was, therefore, cheering the General Assembly on to take a “hard look”.

As it turned out, the legislature hardly blinked at the proposed transportation debt and passed a capital budget that was the next-to-highest it had ever passed. Not too hard a look.

Winners and losers

It is instructive to look at the largest losers first (amount of reduction shown in parenthesis) :

  • Local water projects, ($242 million)—The Governor included an unprecedented $367 million for local stormwater management projects, nutrient removal grants, and Alexandria’s combined sewer overflow project. The legislature reduced the total authorization to $125 million. That included reducing the amount for the Alexandria project from $65 million to $25 million. The legislature did include language in the budget bill indicating it was funding just the second phase of the project and that it was the “intent of the General Assembly” to provide the remainder in the next biennium.
  • Department of Conservation and Recreation, ($91.9 million)—The Governor proposed $133.1 million for various projects, an unusually large amount. The legislature slashed this amount to $41.2 million.
  • Central State Hospital, ($51.1 million)—The Governor had included this funding to increase the capacity of the previously authorized replacement of the state mental hospital in Petersburg by 48 beds. The General Assembly stripped this funding out. This action was somewhat surprising in light of the concerns expressed just last summer over the lack of capacity in state mental hospitals and the worry that the state would run out of available beds over the Fourth of July holiday. (See discussion on this blog here.) One wonders how the situation has changed.
  • Children’s Hospital of the King’s Daughters, ($33.4 million)—The Governor had included this amount as the state’s share of the cost of the construction of a children’s mental health hospital by a private nonprofit company. (See the discussion on this blog of this project’s possible constitutional problem here.)

As usual, the winners were the higher education institutions. They won by not losing. The only higher-ed projects that were cut were two of the five projects proposed for the community colleges and a small project proposed for the Virginia Institute of Marine Science. None of the projects for the major colleges and universities were deleted. (Politically, it is much easier to cut local water environmental projects than to have to make choices among the colleges and universities.) Furthermore, the General Assembly did not cut any of the non-tax-supported bond projects for higher ed, e.g.  dormitories, convocation centers, and academic centers, most of which will be supported, at least in part, with student fees.

The Tunnel

Undoubtedly the most important project for the General Assembly is also the one about which it has been the least transparent.

In its 2014 session, the legislature authorized the issuance of $300 million in bonds for the following project: “Capitol Complex infrastructure and Security.”  To someone in the general public, this was probably a vague and innocuous sounding project. However, all associated with the General Assembly, DPB, the Department of General Services, and others in state government knew it was the replacement of the General Assembly Building.

The just concluded session authorized an additional $25 million in bond funding for this project  The budget language explained that this additional money was for “additional scope and security improvements.” It was up to the Richmond Times-Dispatch to reveal the actual purpose of the additional funding: “the construction of a tunnel to connect the Virginia Capitol and the new General Assembly Building.”

In addition to the construction of the new building to house the General Assembly, the original project included the construction of a parking deck and offices across Ninth St. from the new building. The construction of a tunnel under Ninth St. to connect those two buildings has long been in the plans.

Early in the planning stages of the original project, there were reports that some legislators were pushing to connect the new General Assembly building and the Capitol with a tunnel  Those entreaties were rejected, until now.

There is no doubt who wanted the tunnel. According to the Times-Dispatch, “The budget provision would fulfill a long-standing  desire of the Senate that has become more acute because of concerns about security and safety in the Capitol complex in downtown Richmond.” (Personal note: I worked in the Capitol complex in downtown Richmond for more than 40 years, often walking to my car several blocks away after dark, and I did not have concerns for my safety. Furthermore, it is safer now than it was 40 years ago and the legislators would be moving between the Capitol and the General Assembly building in broad daylight with lots of Capitol Police around.)

The House members have not even tried to justify the tunnel. “All I can say is that the Senate really, really wanted it  It was one of the last items to close the deal,” said Del. Mark Sickles, vice-chairman of the House Appropriations Committee. It is likely that this tunnel was a key component in the compromise over the freeze on college tuition that was finally reached. (See discussion of that issue on this blog here.)

Senators have tried to put a more positive spin on the tunnel  The Capitol Police Chief pointed out that the tunnel would allow people to move freely throughout the complex after entering through a single security screening point. Sen. George Barker of Fairfax explained, “By and large, it’s a security screening issue.”

Coincidentally, it will also enable senators (and delegates) to avoid the rain and sleet that often hits Richmond in January and February, to say nothing about those bothersome demonstrators.

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29 responses to “A Capital Idea

  1. It’s a hundred, maybe two hundred yards from the steps of the old General Assembly Building to the side door into the Capitol off the traffic circle, and on to the ground floor rooms where they caucused. In my gumshoe lobbying days (SAS. Wouldn’t be caught dead in Gucci’s.) I’d make that walk back and forth up to six times before session with some legislator getting my pitch or being wheedling into a vote commitment. They want the tunnel to escape from the lobbyists and the general public. You watch, only legislators and state staff will be allowed…..

    • I had thought about it being used to avoid lobbyists. The comments of the Capitol Police chief and Barker imply that the public would be allowed–you know, to allow free movement without constant security checks. After all, members and staff are not subject to security checks now. But, I would not be surprised if it is restricted to members and staff only.

  2. What did we do before Internet search engines…

  3. Many have wondered and worried about how hard news would fare if the newspapers die and here we have in Dick’s articles an answer. I doubt seriously there is any newspaper in the Old Dominion that provides this level of detail about Va Government and legislation and I can only hope he will continue. Others like Steve with a different but also informative perspective.
    Thank you.

    In my ignorance, I do not know what percent of the total budget the Capital budget is nor what is recommended and perhaps what criteria underlies how much of the budget should be capital.

    One could argue, perhaps wrongly, that in times of financial calamity, that capital projects be put off to respond to lowered revenue projections, that’s what Spotsylvania did, but on the other hand, during the 2008 recession, TARP was all about stimulus spending a lot on capital projects and we’ve heard since then, arguments that “infrastructure” spending is a good thing to keep the economy humming – so once again, there is probably ying and yang political philosophies on the pros and cons.

    I think the tunnel is a good thing… especially if it is used to shed those shoo-fly lobby types! 😉

    The very first thing – the local water projects, at 125 million is surprising. Fredericksburg and Spotsylvania have to close an older wastewater plant and renovate and expand an existing one and the price tag if not mistaken is 65 million. I would have thought CSO projects would be ungodly expensive and not only does Alexandria have one but so does Richmond who is on DEQs “do something” list.

    Thanks again, BR and Virginia benefit greatly by having folks who actually do or did work in government “explain” the actual facts of it to us folks who like to opine about it fact-free! 😉

    • Unlike counties, the state finances most of its capital budget with tax-supported debt. Therefore, it does not make much sense to look at the percentage of the total budget that is devoted to capital. Debt service is financed through the general fund and it is fair to ask what percentage of the budget is used for debt service. The Commonwealth has chosen to limit the issuance of tax-supported debt for capital projects so that debt service is no more than 5 percent of the general fund revenue, calculated as an average over a ten-year period.

    • Let’s be honest, Messrs. Hall-Sizemore and Haner along with the Virginia Mercury completely and totally dominated the General Assembly’s news cycle in 2020. The RTD is an absolute joke compared to them. And there really isn’t any other newspaper making a serious attempt to cover the General Assembly. This is the end of the newspaper. If Coronavirus lasts through the middle of May, I suspect we will see at least 15 newspapers (a mix of weekly, alternative, and daily) fold.

  4. During session Secretary Layne and the committees actively reviewed projects to move them from debt to cash. That was then, this is now. Watch that reverse in the amendments.

    • There was not much moving from debt to cash. The biggest was $65 million in maintenance reserve in the first year. Like you, I expect that GF appropriation to be converted to debt. That is there for the picking.

      Another interesting use of GF cash was $10 million for a road project in Virginia Beach to improve the evacuation route for Sandbridge residents. I wondered why transportation funds were not earmarked for that. I expect that the GF will be switched out for transportation money now.

  5. I can see legislators and state staffers wanting to avoid despicable lobbyists.

  6. If legislators want to confirm every Virginian’s worst suspicions about the political class, then there are few better ways than to spend $25 million to build what amounts to a private tunnel that allows them to avoid those pesky citizens and demonstrators.

    • Isn’t that how Congress controls access also?

      Sorry, I just do not think we live in a world any longer where any citizen can just walk up to any legislator and engage them.

      I’m sure some will disagree.

    • 30 years ago, sure, I’d agree with you.

      But in the age of constant activism from the right and left, I couldn’t care less that they wish to avoid it. If I were a legislator, I would as well. I think legislators of both parties have come to realize that there are about 500 people who can “mobilize” at the drop of a hat on any controversial issue.

      Decades ago before the internet, that wasn’t the case. When someone showed up in Richmond, legislators from both parties were willing to sit down because “Jim from Roanoke” or “Barbara from Martinsville” drove all the way out here to Richmond. But in the age of the professional internet-mobilized demonstrator, they understand that the “citizens” out there are simply organized activists.

      It’s a shame, b/c the legislators really should hear from their constituents. But, as I stated, I can’t blame them for wanting to avoid the same 500 people who show up on X issue year after year and portray themselves as completely representative of a state of over 8 million people.

      • re: ” I can’t blame them for wanting to avoid the same 500 people who show up on X issue year after year and portray themselves as completely representative of a state of over 8 million people.”

        Yep.

        There is a difference between “meeting” with your representative to share your view as an individual and showing up as a crowd to intimidate and harass.

        I’m not happy with the way that citizens do not have access to the same information that lobby folks and other insiders have – in part, because they have paid staff professionals to go through the legislation to understand it and then participate. Citizens are on the outside looking in and the legislative process itself is such that citizens do not even know the votes being taken and who until after the fact… and we are told the reason is that there is “not enough staff” to do it – however, those companies and interest groups who have paid staff, do have “enough” to track legislation AND participate in it.

        something is not right about that process and if newspapers are going to go away, we better find a way to compensate or else government is going to be even further removed from citizens.

  7. I would love to see a list of higher-ed projects in the capital outlay list and what justification the institutions offer for them. I’d love to see a side-by-side analysis of (a) the impact on ongoing facilities maintenance, and (b) institution-wide space utilization rates. Too bad no journalistic entity has the resources to devote the time.

    • I’m not sure what the answer is to your complaint. Should we have EVER relied on journalists to be a substitute for citizens understanding these issues especially now that many simply believe that a lot of news is biased?

      Some have opined that they’re glad that newspapers are going away and that they can get their “news” from those they “trust”.

      Not sure what the answer is or is not, but clearly with Dick and Steve on board, they have confirmed some of our worst fears and how the Generally Assembly and Govt “really”… “work”! 😉

  8. Forty-five years ago, I worked for the Minnesota Department of Natural Resources tracking legislation. I was ahead on my B.A. degree and was taking a night course and writing a major paper so I could work fulltime. One of my tasks was to go to the Capitol and other state agencies to get information on legislation. Until spring finally came, I walked through the tunnel system that connected the Capitol and all the other major state office buildings.

  9. I suspect that there will be a way for lobbyists to get access to the tunnel, just as they have for years been able to avoid the long public lines into buildings. The tunnel seems to be a lot of cost for what we get and it’s only a certain group that will be allowed to use it – for security reasons. There are too many ways that certain entities have access to decision makers and too few for the rest of us.

  10. It’s a safe bet this tunnel will end up costing at least twice what the G.A. claims it will cost.

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