by James C. Sherlock
With additional information and thoughts generated by responses to my original posts on this matter, I offer this post as a final proposal before the November 15 release of the Sentara-funded “study” of what I call the Sentara Plan for Eastern Virginia Medical school.
The nation is short of doctors and shorter yet of good doctors. The nation has to produce more of both or the situation projects to worsen.
There is an opportunity here in Virginia to deal with both objectives.
But the Sentara Plan is not it.
This column was published originally in the Thomas Jefferson Institute for Public Policy newsletter. Steve normally re-publishes it on Bacon’s Rebellion himself, but he is volunteering at the polls today, so I am posting for him. — JAB
by Steve Haner
One quarter into the new fiscal year, despite the ongoing COVID-19 recession, Virginia state government is blowing the roof off its revenue estimates. Thank tax increases Governor Ralph Northam has signed.
Secretary of Finance Aubrey Layne recently reviewed the July through September 2020 results with state legislators, offering his standard slide presentation. Compared to the year before – before COVID — the state’s total General Fund revenue was up 9.9%, sales tax revenue was up 7.5%, corporate income tax receipts up 36% and estimated individual tax payments (those not withheld from paychecks) up 59%.
Now more tax increases are being proposed for the 2021 General Assembly. The Transportation and Climate Initiative in particular is a new carbon tax on gasoline and diesel. The proposal to restore a state inheritance tax on large estates is back. Virginia’s leading progressive group is actually hiring a “revenue campaign manager” to lead the 2021 and 2022 fight “to secure expanded progressive revenue options.” The tax changes already in place will see our revenue “progress” quickly. Continue reading
First published this morning (with some slight differences) by the Thomas Jefferson Institute for Public Policy.
By Steve Haner
Now that the Virginia General Assembly’s “Cops and COVID” special session is all but finished, will it be easier or harder for the state’s struggling economy to recover in 2021? It will be harder, probably, except for the utilities.
The initial reason Governor Ralph Northam recalled legislators starting August 18 was to review the state budget for COVID recession-related changes. Then a series of confrontations between police and Black Americans added law enforcement and criminal punishment to the agenda.
But the legislators reached far beyond those issues in the 270 pieces of legislation introduced, of which 56 have now passed (many of them duplicates). The Assembly recessed October 16, but did not adjourn, and that will delay the effective date of the various new laws until perhaps March 1.
What did the legislature do for or to the business climate in Virginia? Continue reading
Photo Credit: Richmond Times-Dispatch
By Dick Hall-Sizemore
The money committees have reported a “conference” budget bill, which the General Assembly will probably adopt either tomorrow or Saturday.
The legislature has backed off the earlier contingency appropriations that drew objections from the Governor.
As with any budget, there are numerous moving parts. The legislature would capture savings in several areas and provide additional spending in others. Here are some of the major spending items:
- $95.3 million for K-12. The source of the money is revenue from licensing of “gray” machines or “games of skill.”
- $60 million for higher education “to maintain affordable access.”
- $11 million for a one-time $500 bonus to state law-enforcement and corrections officers.
- $379.6 million over the biennium to reappropriate some of the $2 billion in new spending earlier unalloted due to revenue shortfalls.
Photo credit: Pilot Online
by James A. Bacon
When last we read news reports about the ongoing budget negotiations between the General Assembly and Governor Ralph Northam, lawmakers said they were making “progress” but had not yet come to a resolution. One outstanding issue is how much money to put into General Fund reserve funds to buffer against revenue shortfalls stemming from the COVID-19 epidemic. Another is how much of the federal CARES Act revenue to spend now on coronavirus relief and how much to hold back for future needs.
I caught up with Secretary of Finance Aubrey Layne over the weekend, and he shared the perspectives that are shaping his advice to Northam, whom he describes as “middle of the road” fiscally and not inclined to accommodate all the spending demands emanating from the House of Delegates. Says Layne: “His instinct is to be cautious.”
Caution is called for, he adds, when there are so many economic and fiscal unknowns arising from the epidemic and the presidential elections.
The good news, says Layne, is that Virginia escaped the fiscal battering experienced by other states. He attributes our good fortune to two factors. One, which is widely acknowledged, is the large contribution of the federal government to Virginia’s economy. Federal employment was barely affected by the virus. Less widely appreciated is the fact that the commonwealth’s major private-sector employers also provide a stable employment base. Continue reading
The Virginia Senate in its spread formation
by Dick Hall-Sizemore
It is time to check in on the progress of the endless session of the General Assembly. It is apparent that it was a mistake for the House to meet virtually. If the Delegates had been required to stay in Richmond the whole time, rather than being able to “attend” committee meetings and floor sessions from the comfort of their homes, they would have finished much quicker. But, maybe it is not endless; leaders of both houses are predicting they will be able to finish up by the end of next week.
Budget. The legislature has not gone through the formal process of getting the budget bill into conference and appointing conferees. Nevertheless, the chairs of the two money committees, Del. Luke Torian, D-Prince William, and Sen. Janet Howell, D-Fairfax, report they are close to a final budget deal, according to today’s Richmond Times-Dispatch.
But, Governor Northam is not happy with the approaches the two houses have taken and is threatening to throw cold water on any deal and veto it. He does not like the contingency spending that was in both the House and Senate versions of the budget bill, because those provisions commit funding that he wanted to keep in reserve due to uncertainty over the fiscal effects of the pandemic. He also does not like the legislature designating how most of the federal CARES money should be spent on COVID issues, thereby decreasing his flexibility over that $1 billion pot of money. (For a more detailed discussion of these issues, see my previous post here.)
Secretary of Finance Aubrey Layne repeated his earlier position, “We do not need a new budget for financial purposes.” That remark leads to the obvious question: “Then why did the governor call the special session?” Continue reading
by James A. Bacon
State spending has increased rapidly in Virginia over the past decade — by 2.6 % annually — even when adjusted for inflation and a growing population, according to a recently published Joint Legislative Audit and Review Commission report, “State Spending: 2020 Update.” In Fiscal Year 2020, the budget reached $62.6 billion. Continue reading
by James A. Bacon
Governor Ralph Northam is one of seven governors earning an “F” grade for fiscal policy by the Cato Institute in its 2020 “Fiscal Policy Report Card on America’s Governors” report. With that score, he enjoys the company of such gubernatorial luminaries as Governors Phil Murphy of New Jersey, Andrew Cuomo of New York, and J.B. Pritzker of Illinois.
Cato, a libertarian think tank, grades the governors on the basis of seven metrics reflecting taxes and spending during their tenures. Here is Cato’s commentary on Northam: Continue reading
This time you get touched.
By Steve Haner
Dominion Energy Virginia loves the General Assembly’s most recent proposal on how to deal with mounting unpaid utility bills in the COVID-19 recession. You might not.
The state’s dominant utility has activated its network of grassroots lobbyists (including company retirees and stockholders) to express their personal support to their hometown delegate and senator, in an email that a recipient shared:
Last week the Senate Finance and House Appropriation committees passed budget bills that included assistance to those utility customers who have experienced economic hardship due to the ongoing COVID-19 pandemic. All utilities have been impacted and the legislation recognizes that relief to those citizens most at risk will be different from one region and utility to the next. The direction adopted by both Chambers have been consistently supported by Dominion Energy…
As predicted more than once, the unpaid bills ultimately come to all utility consumers. The approach outlined in the new budget language is a variation on earlier themes, but the bottom line is unchanged. Continue reading
By Steve Haner
Virginia’s House of Delegates has proposed spending $120 million from federal COVID-19 relief funds to help at least some Virginia families catch up on their utility bills and wants to pump $210 million from the same source into the state’s unemployment insurance program.
Both ideas surfaced when the House Appropriations Committee approved a set of budget amendments September 25 (more details here). Neither idea is matched in the Senate Finance and Appropriations Committee amendments, also revealed Friday and summarized here. That $330 million in COVID assistance for individuals is a serious difference of opinion to be resolved in the coming conference process.
The General Assembly so far is following Governor Ralph Northam’s advice to show restraint on state spending in the midst of the COVID-19 recession. Neither the House nor the Senate are proposing to raid state reserves to restore spending priorities frozen during the emergency. Neither is looking to increase any tax rates.
However, both have plenty of ideas for spending the $1.3 billion in unallocated federal COVID funds provided to Virginia. And both combed through the budget looking for places to cut or unnoticed revenues, creating available money to be spent on their own priorities. Continue reading
By Dick Hall-Sizemore
After more than a month into a special session called primarily to deal with revenue shortfalls resulting from the pandemic-induced economic slowdown, the House and Senate finally have produced their versions of a revised budget.
I wonder if Governor Ralph Northam is regretting having even called this special session. Neither house limited its budget amendments to provisions related to revenue shortfalls, COVID-19 response, or the fiscal impact of other legislation being considered by the special session (criminal justice reform). For example, the Senate has an amendment related to the development of a “linear park” in the Shenandoah Valley. In effect, both houses have proposed major re-writes of the budget. Continue reading
by James A. Bacon
The Virginia Retirement System earned 1.4% on its $82 billion investment portfolio in fiscal year 2020, far below the long-term average of 6.75% the VRS Board of Trustees assumes that it will earn over the next 30 years, reports the Richmond Times-Dispatch.
VRS investments have returned 5.2% over the past three years, and 4.8% over the past five years, but the 10-year record looks better at 8.1%.
One year’s poor results are not a cause for concern. Markets go up and down, and so do investment returns. The long-term picture is worrisome, however. The ten-year VRS record reflects investment results during one of the great bull markets in both stocks and bonds in U.S. history. Many analysts expect returns in future years to be lower as the Federal Reserve Bank pursues a near-zero interest rate policy to goose the U.S. economy through the COVID-19 crisis and aftermath. There is no chance that investment performance over the next 10 years will replicate that of the past 10 years. To the contrary, if inflation picks up, as the Fed is aiming for, that could depress stock market multiples and stock prices. Continue reading
Senate of Virginia, in session in Science Museum Photo credit: Virginian Pilot
By Dick Hall-Sizemore
Although there is not an official “cross-over” deadline for legislation in the special session, each house of the General Assembly seems to have largely completed consideration of its own bills. Thus, this is a good time to review their progress on enacting the Democrats’ agenda on criminal justice reform and revising the budget.
Criminal justice system reform
I have prepared a table (available here) listing all the major bills and the actions of each house. As is usually the case in legislative sessions, there were multiple bills introduced on some subjects. The usual procedure is to pass only one bill and “incorporate other bills into it, giving credit to the incorporated bills in the header. Accordingly, when there were multiple bills on an issue, I have listed only the bill that was selected to go forward.
In order to be somewhat consistent, I have used the same format that I used previously in summarizing the announced criminal justice reform agendas. I have also included several issues that surfaced during the session that were not on that agenda.
Some summary take-aways: Continue reading
This building remains boarded up, and legislators are not there (except the House Speaker and Clerk, pantomiming a real session on Zoom.)
By Steve Haner
With the Virginia General Assembly’s “Cops and COVID” special session moving into its third week, it seems likely to impede rather than assist the state’s economic recovery from the pandemic. It may also greatly expand COVID-19’s financial burdens in the years to come.
The highly publicized issues of unpaid rents and utility bills, threatening tens of thousands with choices between eviction, disconnection, or years of additional debt, are clearly related to un- and under-employment from the COVID-19 recession. But getting people back to work does not seem the top priority for legislators.
The original stated purposes for the session starting August 18 were to amend the state budget in response to the recession, and make other adjustments responding to the viral disease. Deadly confrontations between police and Black suspects in several American cities, and the violent response, added police and judicial reform issues to the agenda. Continue reading
by DJ Rippert
Saving America’s bacon. In 2010 Jim Bacon, blogrunner of this site, wrote a book titled Boomergeddon. The sub-title of the book is, “How Runaway Deficits and the Age Wave Will Bankrupt the Federal Government and Devastate Retirement for Baby Boomers Unless We Act Now.” The book is well written and contains considerable supporting detail but that sub-title pretty much sums things up. At the time of publication Bacon’s book amplified the conventional wisdom of the day — deficits are bad and, as our president might say, big deficits are bad bigly. That traditional belief has come under scrutiny lately. One leading critic of the theories espoused by Boomergeddon is Stephanie Kelton, an economics professor at Stony Brook University and former advisor to the Sanders campaign. Her new book, published in 2020, is titled, The Deficit Myth. One paragraph from the description of Kellon’s book on Amazon.Com sums up her thesis vis-a-vis Boomergeddon. “Kelton busts through the myths that prevent us from taking action: that the federal government should budget like a household, that deficits will harm the next generation, crowd out private investment, and undermine long-term growth, and that entitlements are propelling us toward a grave fiscal crisis.” Kelton believes the United States has considerably more room to incur debt without causing economic harm and we should get about the business of incurring more debt. Paying homage to her Democratic-Socialist roots, Kellon sub-titled her book, “Modern Monetary Theory and the Birth of the People’s Economy.”