Category Archives: Budgets

Taxaginia Reappears As Special Session Looms

Another try at imposing a Virginia estate tax this month?

By Steve Haner

It must be a reflex. Waken or startle a Democrat and they shout, “raise taxes!” Our friends at the Commonwealth Institute for Fiscal Analysis came out Monday with a new list of (mostly old) tax proposals for the August 18 General Assembly special session. It drew the attention of Virginia’s Public Radio in a report this morning.

Keep in mind, it is still unknown (to us anyway) how much (or little) cash the state accumulated to carry forward into the new budget cycle that stated July 1. And nobody outside of state government has seen the new Fiscal Year 2021 and 2022 revenue forecasts, showing the impact of the economic-shutdown-induced recession. We see those August 18. Why wait for actual data before proposing new tax hikes?

For that matter, nobody can be sure yet just how much money the tax increases already approved by the 2020 regular session will extract from Virginia businesses and individuals. That might also be clearer come August 18. The tobacco and motor fuel tax increases landed hardest on those low income taxpayers the Commonwealth Institute seems most concerned about.  Continue reading

Public Employee Collective Bargaining – Questions for Attorney General Herring

by James C. Sherlock

As a consequence of the successful teacher revolt in Fairfax County, there are major legal questions which must be answered concerning the initiation of public employee collective bargaining in Virginia next spring.

In accordance with Virginia Code § 2.2-505, members of the General Assembly can request official opinions of the Attorney General. Private citizens cannot. I urge General Assembly members of both parties to submit the questions posed below.

Teachers associations in Fairfax County Virginia successfully employed threats not to return to work that resulted in a change to Fairfax County Schools policy.

From the Washington Post, “Teachers in Fairfax revolt against fall plans, refusing to teach in-person,” June 26, 2020:

“A day after one of the nation’s largest school systems announced its proposal for fall learning, teachers within Fairfax County Public Schools rose in revolt and refused to teach in-person, as the (previously announced by the school board) plan demands, until officials revise their strategy.”

Those actions force Virginians to confront the consequences under Virginia law of collective bargaining with public employees that will be legal starting in May of 2021. Some but not all of the possible issues are addressed here.

Continue reading

VEC: 1.5 Million Unemployment Claims In 2020

Virginia and US employment fluctuations since 2004, showing the dip in 2009-10 and plummet in the last four months. Source VEC. Click for larger view.

By Steve Haner

By the end of this amazing year, almost 1.5 million Virginians may have filed claims for unemployment insurance payments, leaving the state’s once-record unemployment trust fund balance of $1.5 billion reduced to $750 million in the red, legislators were told this morning.

That $2.25 billion swing is due to $2.6 billion spent out of the state fund, to cover basic unemployment benefits. To date, the federal government has supplemented that with another $6.3 billion paid to Virginian under special COVID-19 related benefits, which do not come out of the state trust account.  Continue reading

Gerald Smith: Richmond’s New Top Cop

By Peter Galuszka

FYI, here’s a piece I did for Style Weekly about Richmond’s new p0lice chief, the third in about a month, and his interpretation on the problems of law enforcement in this period of defunding.

Conservative Budgeting–Still the Virginia Way

Aubrey Layne, Secretary of Finance

By Dick Hall-Sizemore

Secretary of Finance Aubrey Layne is following in the classic conservative tradition established by his predecessors: under project your revenues and then look good when they come in higher than projected. In his case, he gets to bask, not in a bigger surplus than projected, but in a much lower shortfall than he had projected and much lower than others had expected.

The Richmond Times-Dispatch is reporting that the preliminary data for FY 2020 show a general fund revenue shortfall of $236.5 million, rather than the $1 billion that had earlier been projected due to the effects of the economic shutdown in response to the coronavirus. Although the final numbers will not be available until July 24, it appears that the FY 2020 revenue will be about 1.1% lower than projected. That gap is just above the minimum deficit of 1.0% that legally triggers a re-forecast of 2020-2022 revenues. Continue reading

(Almost) Free Money

By James C. Sherlock

Steve Haner’s superb column on the state budget turned attention to federal aid to state and local governments. It is worthwhile to review where the feds get that money.

James T. Agresti, CEO of Just Facts (chart above), has written recently hat U.S. debt-to-GDP ratio is four times the historical average and climbing:

“The US national debt has just reached 120.5 percent of the nation’s annual economic output, breaking a record set in 1946 for the highest debt level in the history of the United States. The previous extreme of 118.4 percent stemmed from World War II, the deadliest and most widespread conflict in world history.”

The Federal Reserve

The Fed’s dual mandate from Congress is to maximize employment and stabilize prices. The Fed floods the economy with money in times like this and is supposed to sop it up with higher rates when the economy appears to overheat and prices rise too fast. Continue reading

Housing Grants Just a COVID Relief Rounding Error

By Steve Haner

Will $50 million be enough? Will that get all the Virginians who have fallen behind due to COVID-19 square on their rent or mortgage payments? Or is that amount, in a relief program now fleshed out by the Northam Administration, merely a start?

There is a hint on the program’s web page, now available. “Financial assistance is a one-time payment with opportunity for renewal based on availability of funding and the household’s need for additional assistance and continued eligibility.” A Senate committee was told last week that Governor Ralph Northam is considering spending hundreds of millions more for the same purpose.

This first $50 million is just the latest way that the billions of federal dollars flowing into Virginia as COVID-19 relief will be used. Within that operation, it is a  rounding error. On June 23, primary day, the Senate Finance and Appropriations Committee met virtually to be briefed, among other things, on how the four waves of federal assistance have been or will be spent.

The usual suspects of the Capitol Hill press corps may not have been there (or to be exact, may not have been monitoring the Zoom conference.) The primary results and the Phase 3 announcement held their attention. A week later the unreported reports are still worth reviewing and links to them follow below.

Secretary of Finance Aubrey Layne, in his presentation, estimated that Virginia has received more than $28 billion in direct aid – $6.5 billion direct to the state and local governments, $14.4 billion to state businesses in the Payroll Protection Program and $7.3 billion pledged to municipal liquidity facility loans to cover revenue losses.  Continue reading

The Revenue Picture is Bad, But Not as Bad as Expected

By Dick Hall-Sizemore

The state’s May revenue report has been released today.   As one would have expected, the May 2020 general fund (GF) revenues were down significantly from May 2019 and the year-to-date GF revenues are running behind the annual forecast.

However, on the somewhat bright side, the administration is now saying that it expects the decline in GF revenue for the fiscal year to be less than previously predicted.  In last month’s report, Secretary of Finance Aubrey Layne predicted that the shortfall in FY 2020 GF revenue would be $1 billion.  Now, he anticipates that “fiscal year 2020 revenue collections will be less than $ 1 billion below the official forecast.”   Layne told the Richmond Times-Dispatch that total GF revenues for the year were down about $800 million and he expected that the state would make some of that up in June.  He summarized by saying, “We’re going to end the fiscal year in a better position than being $1 billion down. I don’t know how much it’s going to be, but the good news is what we have projected and told people — we’re going to be well within that.” Continue reading

Gunning Up Virginia’s Cops

By Peter Galuszka

 In 2014, the Sheriff’s Department of York County and Poquoson got their very own tank-like vehicle, called a “Mine Resistant Ambush Protected (MRAP).”

Fully armored and tan in color with steep sides, it looks like something out television footage of the war in Iraq where U.S. troops needed to get through mine-infested streets and terrain safely.

But why do such generally sleepy communities such as these need a high-powered armored car? Sheriff J.D. “Danny” Digs told The Virginian-Pilot and Daily Press that it isn’t meant to “intimidate people” but can be useful during adverse weather when trees are down. Really? Wouldn’t a pickup truck work?

The newspaper story is important since it combs through what Virginia law enforcement got after the “1033”Defense Department program started to sell surplus military gear to local law enforcement in 1997.

It notes that military surplus sales in Virginia went from $216,000 in 1999 to $853,824 in 2019, according to Defense Logistics Agency statistics. The latter number included the cost of another MRAP so Virginia Beach could get its very own armored truck. Over time, the City of Portsmouth got 87 M-16 assault rifles. Other goodies include night vision glasses. Continue reading

Remember Petersburg!

Robert Bobb, of the Robert Bobb Group, functioned as Petersburg’s de facto CFO for a year or more. He was tough, but he got the city’s books straightened out.

by James A. Bacon

Two weeks ago, the U.S. House of Representatives passed a $3 trillion coronavirus-relief bill that would direct nearly $1 trillion to state, local and tribal governments. This massive bail-out would come on top of massive assistance to states and localities in previous legislation: $150 for a Coronavirus Relief Fund, $30 billion for an Education Stabilization Fund, $45 billion for the disaster Relief Fund, $25 billion for public transit systems, an increase in the federal government share of Medicaid spending, and billions more for miscellaneous programs. Also the Federal Reserve Bank has set up a $500 billion program to facilitate short-term state and local borrowing.

The ball is now in the U.S. Senate’s court. What, if anything, will the Senate propose in the way of a second wave of fiscal assistance? Judging from their press releases, Virginia Senators Mark Warner and Tim Kaine have so far refrained from committing themselves to a Pelosi-style bail-out of the states. Their statements have focused on narrow-bore initiatives for water improvement projects, National Guard benefits, and a restaurant meals program for Americans struggling with food security.

Sooner or later, however, they may be called upon to either support or oppose a second-wave bailout. They will receive intense pressure from their Democratic Party colleagues representing the states — Illinois, New Jersey, New York, Connecticut — in most desperate need of fiscal rescue. When they do so, I hope that that the two former governors will remember the hard choices they made to keep Virginia’s fiscal house in order, and, similarly, how the McAuliffe administration forced the City of Petersburg, when faced with fiscal collapse, to make hard, hard choices to put its finances in order. Continue reading

Construction: Virginia’s Quiet, Strong Man

Scene from Micron’s $3 billion construction project in Manassas. Photo credit: Inside NoVa

By Peter Galuszka

For all the complaints about the COVID-19 pandemic in Virginia – the shut-down restaurants and (temporarily) closed beaches – one industry has been working steadily and quietly all along – the state’s construction sector.

Builders haven’t missed much of a beat since the “state at home” orders started going out a couple of months ago.

In Pentagon City, works still progresses on the two, 22-story towers for Amazon’s new eastern headquarters. In suburban Chesterfield County near Richmond, workers toil adding new drain pipes and four-laning once- rural roads. Four-story apartments overlooking Swift Creek Reservoir are taking shape for the over-55 crowd.

At a loud and garish protest next to the State Capitol against Gov. Ralph Norham’s work-stoppage plans last month, Mark Carter, a contractor from Hanover County, made his views known. “We‘re still working,” he told me. “I’m not for Trump and I’m not a Democrat. People need to work.”

In Virginia, some are. After all, New York state and Boston stopped construction work due to the pandemic. Continue reading

Juggling the Revenue

By Dick Hall-Sizemore

Jim Bacon mentioned in an earlier post that the state’s revenues for April were $700 million less than in April of last year.  I was surprised that there were no cries of outrage from readers and dire warnings of the state running a budget deficit. I was also surprised that I did not detect any signs of panic on the part of the administration.

After I dug into the details and thought about them for a while, I realized that, for reasons to be set out later, the state is in position to finish this fiscal year in the black. It is next year that has the administration worried.

Total general fund revenues for April 2020 were 26% lower than those for April 2019, leading to the $700 million decrease. Although total General Fund (GF) revenue year-to-date was higher (1.4%) than the comparable period in FY 2019, 3.1% growth for the year is needed to meet the forecast. In summary, the state revenue growth rate through April was less than half what was needed to meet the forecast. Continue reading

WTJU Podcast: COVID-19 and the Economy

By Peter Galuszka

Here’s is the twice-monthly podcast produced by WTJU, the official radio station of the University of Virginia. With me on this podcast  are Nathan Moore, the station general manager, and Sarah Vogelsong, who covers, labor, energy and environmental issues across the state for the Virginia Mercury, a fairly new and highly regarded non-profit news outlet. Our topic is how Virginia is handling the economic fallout from the COVID-19 pandemic.

State Spending Hike Also Postponed, Not Canceled

By Steve Haner

 Originally published in the May 3 Fredericksburg Free Lance-Star and then distributed by the Thomas Jefferson Institute for Public Policy. 

Just as COVID-19 was starting its destruction of the world’s economy in early March, the Virginia General Assembly took final action on an exuberant two-year state budget within shouting distance of $140 billion. Six weeks later at the Reconvened Session, with the economic damage obvious but not yet measured, the Assembly reaffirmed the same spending plan.  Continue reading

Screwing Workers On Safety and Liability

A GRTC bus driver in better times

By Peter Galuszka

At 4:30 a.m. on April 27, about 100 workers of the Greater Richmond Transit Company — half of the total – failed to show up for work.

Worried about the health of its membership, Local 1220 of the International Amalgamated Transit Union demanded additional safety measures such as full personal protection equipment, time and a half hazardous pay, limits on the numbers of passenger and testing.

GRTC management threatened to fire workers who stayed away from work but agreed to talk. A resolution may come at a May 19 board meeting.

Indeed, stories are showing up throughout Virginia and across the country as workers most likely to be exposed to COVID-19 often have the least protection and no guarantees their employers will provide testing, hospitalization and sick pay.

In Timberville near Harrisonburg, workers at a Pilgrim’s Pride poultry plant worry that they are required to work at less than six feet –- considered safe distancing –- from each other. In Norfolk, non-union workers at a General Dynamics ship facility were required to do electrical work until they refused, citing exposure threats and a death. Continue reading