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.
