Category Archives: Commentary

The Truth Is Out There (To Be Revealed Friday)

So it’s going to be politics, not economics. Perhaps it was inevitable.

On Friday Governor Ralph Northam and Secretary of Finance Aubrey Layne will be presenting to the House and Senate money committees, part of their report looking back (at the completed fiscal year), but the key parts of their message looking forward. Both are expected to put some flesh on the bare-bones announcement made last Friday about how the Governor wants Virginia to respond to the opportunities created by federal tax reform.

The announcement was telegraphed by the left-leaning Commonwealth Institute for Fiscal Analysis, which endorsed converting Virginia’s Earned Income Tax Credit into a fully refundable version, putting cash in people’s pockets, discussed in a previous Bacon’s Rebellion post.  The political angle was described well this morning by the Democrats’ Virginia media strategist Jeff Schapiro, also of the Richmond Times-Dispatch, who tagged the EITC proposal as aimed at the 2019 legislative elections.

Finally you can see the strategy in the Governor’s own guest column today, this from the Roanoke Times.

“The recent federal tax changes have benefited mainly higher earner. These tax policy changes from Washington will result in additional revenues to Virginia. We can use this opportunity to invest in those who need it most— hard working Virginians. We can do this by making Virginia’s existing earned income tax credit refundable, ensuring that 600,000 working Virginians, including thousands of veteran and military families, can get the full tax benefit for which they qualify.”

What the Governor and Secretary Layne know that we don’t yet is, well, everything. The state commissioned a detailed study of the state-level financial impact of the various federal tax rules changes. That was the apparent basis for the Governor’s announcement Friday that about $500 million plus in new state revenue will result, half of which he wants to use to finance the EITC refunds and half of which he wants to keep in the General Fund.

Secretary Layne assured Bacon’s Rebellion after that press conference that the full report from the consultant will be released and available online Friday after the Governor speaks. Until that report is picked apart, anybody who hasn’t read it is just speculating. I won’t join in that yet.

Probably the best analysis of the issues – written without access to the new report on the numbers – was released this week by Jared Walczak of the Tax Foundation. Come Friday it should be clear where that $500 million estimate came from, which tax provisions produced additional revenue and which taxpayers may pay more in the long run.  And it may be clear whether that windfall results from full conformity to the myriad federal changes, no conformity to the federal changes, or from cherry-picking which provisions to accept or reject – meaning a different combination produces a different revenue result.

There has been no mention so far, but expect news on Friday, about the potential state revenue boost from requiring more out-of-state retailers to collect and remit sales tax on goods they ship to Virginia customers.  And until Friday we really won’t know the size of any surplus from fiscal year 2018, or the status of the reserve funds. Those are also key parts of this coming tax debate.

This is the best opportunity in a generation Virginia has seen for some intelligent tax reform, something positioning our economy for this century. And tax reform does not mean cut my taxes and raise somebody else’s. As previously noted the EITC is an effective anti-poverty program, and Virginia’s income tax is arguably regressive, hitting lower income workers harder than it should. But that is just one element of what needs to be a long conversation that ranges over the whole tax code, one that has been stymied for decades because of the various political risks.

Somebody Must Think We’re Stupid

David Poole and his team at VPAP have provided another illustration of how the reporting requirements placed on lobbyists at the state Capitol are intentionally vague and useless.  The chart above deals with the reports on lobbyist compensation.

This is usually the figure at the heart of the occasional stories about the amount spent by an individual company, or the gross amount spent on lobbying by all who file these forms.  But in practice almost nobody reports in full what they are paid, and they of course do things other than lobbying with their time.  So they pro-rate their fee and salary and report only a portion of it.

Who draws the line?  Who picks the formula for pro-rating the time? The lobbyist or the principal do so for themselves and are never asked to report their rationale.  That’s why comparisons are impossible – some report 5 percent and some 100.  Partly there is the natural reluctance everybody has to reveal their income, but there is also a reluctance to stand out as a big spender on charts like those produced by VPAP or in a news story.

A Peek Inside the Process

Years ago, one of the best lobbyists I ever worked with, a fine lawyer, instructed me that only the time I spent talking or writing to a legislative or executive branch official about a specific bill or vote was lobbying.  The time I spent researching the issue, drafting legislation or talking points, driving to the meeting, sitting in the anteroom – none of those hours, the bulk of the time, constituted lobbying.  The ten or fifteen minutes in the room, that was the only actual lobbying.

This all flows back to the very narrow definition of lobbying in Virginia law, which does not get into indirect lobbying or grassroots lobbying or lobbying preparation, all things that come up when companies are deciding what is and isn’t lobbying for federal tax compliance purposes.  This situation is too ridiculous to be accident or oversight, and extremely convenient for both the lobbyists and the lobbied.

Compensation is not that relevant.  What matters far more, the real glaring gap in the reports, are the details about what specific subject matters, bills, budget amendments, gubernatorial appointments or procurement decisions are being influenced.   The shameful gaps in the reports include loopholes that allow expensive dinners, gifts or entertainment to be given with no recipients named, or money to shuffle between various entities under the guise of some unregistered coalition.

Also, the full extent of grassroots or indirect efforts needs to be revealed.  More and more issues now spark television, direct mail, phone bank and other campaign style communications efforts, and every dime spent on those should be just as transparent as if they were being spent on a candidate.

One area where compensation should be reported in full is when the client is the government.  Beyond that, we need to focus on those other more important failings in the current non-disclosure disclosure regime, although this contribution by VPAP is useful in demonstrating that somebody out there thinks we’re stupid.

Goodbye and Good Riddance to Goodlatte

Carpetbagger. Bob Goodlatte is the 13-term congressman from Virginia’s 6th Congressional District who has blessedly chosen to retire this year. In my opinion he represents just about everything that is wrong with the GOP. Born in Holyoke, Massachusetts and educated at Bates College in Maine, Goodlatte somehow avoids the “carpetbagger” moniker so quickly put on Terry McAuliffe by Virginia’s Republicans. He won his congressional seat at age 39 and has spent the last 26 years in Congress. Yet he goes uncriticized as a “politician for life” by the conservative Newt Gingrich types who claim to eschew such long running elected officials. He is a polluter’s best friend with apparently no concern for the property rights of those negatively affected by the pollution he justifies and defends. However, he’ll be gone soon and you’d think we’re past the damage done by this phony conservative. Oh no.  Even in his final days in office Goodlatte is actively denying people protection of their property rights despite “property rights” supposedly being a core tenet of conservative Republican dogma. What a farce.

Blowing up the blueprint. The Chesapeake Bay represents not only a national treasure but a working laboratory for the protection of property rights. Certainly right thinking conservatives must believe that allowing a small minority of people and corporations to pollute a public waterway unfairly takes away the property rights of non-polluters. In the case of a waterway that borders multiple states, one would think that sensible and honest conservatives would insist that the federal government protect the property rights of all the states.  Isn’t this both a core tenet of conservatism and a reasonable construct of property rights?  Not according to Bob Goodlatte.

The Chesapeake Bay watershed states have claimed to be working together to clean up the Bay for the past forty years. For 31 of those years the effort failed as various states simply ignored their clean up commitments. Then, in 2009, the EPA was authorized to provide scientific leadership and oversight for a new clean-up plan — the Chesapeake Bay Clean Water Blueprint. Progress has been substantial since that time. Despite Virginia being a major beneficiary of the blueprint, one of our own Congressmen has put forth an amendment to curtail the EPA’s role in this effort.  You guessed it, ole Bob Goodlatte sponsored an amendment to H.R. 6147 forbidding the EPA from spending money to provide firm, science-based accountability over the blueprint. As a press release from the Chesapeake Bay Foundation puts it, “Congressman Goodlatte’s amendment would keep EPA from using any funds to provide this “firm accountability” if a state fails to meet its pollution-reduction goals set under the Blueprint.” So much for preservation of property rights from this so-called conservative.

Hall of shame. Bob Goodlatte’s amendment for the protection of raw sewage in public waters passed the House of Representatives by a vote of 213 to 202.  Seven of Virginia’s Representatives (Wittman, Taylor, Scott, McEachin, Beyer, Comstock and Connolly) repudiated Sideshow Bob and his amendment by voting against it. However, four of our so-called representatives (Garrett, Goodlatte, Brat and Griffith) couldn’t find the mental acuity to understand how a clean Chesapeake Bay might help the Commonwealth of Virginia. While it’s no excuse for their buffoonery Garrett, Goodlatte and Griffith have districts far from the Bay. Brat, by comparison, has a district bordering the city of Richmond. What are the voters in the 7th district thinking? Will “Kepone Dave” get re-elected? Here’s a good article about the cleanliness of the James River in Richmond (warning: true but disgusting content)

Going forward. The congressional seat being vacated by Bob Goodlatte’s retirement will be contested by Ben Cline (R) and Jennifer Lewis (D). Cline is a member of the General Assembly and long time Goodlatte toady. Lewis is a bleeding heart liberal with minimal political experience. So far, Lewis has raised $72,000 to Cline’s $787,000. The Cook Partisan Voter Index for the district is R+13. Sadly, Cline will almost certainly win and continue the anti-conservative, anti-Virginia activities of his predecessor.

— Don Rippert 

Lobbyist Forms Not Mentioned At Council Meeting

A Peek Inside the Process

The state’s Conflicts of Interest and Ethics Advisory Council met Tuesday making no mention of  my column published in July 21’s Richmond Times-Dispatch, pressing for specific bill numbers, budget item numbers and other details on the state’s lobbyist disclosure forms.  I had been told in advance the issue wouldn’t be added to the agenda.

In fact the council’s meeting lasted less than 30 minutes, had no business items, and the only vote was on previous meeting minutes.  Those minutes reveal that the June meeting’s big decision was to approve a staff suggestion to add student loan balances among debts disclosed by public officials.

I don’t want anybody to think I’m making up the complaint that the forms disclose nothing at all, despite a direction to be as specific as possible, so I pulled a few examples at random.  Who owns up to working on which of the 3,722 individual pieces of legislation at the 2018 session?   

As previously noted on July 9 most of the filings lack specifics and the Conflict of Interest and Ethics Advisory Council has sent signals this is acceptable with its published examples.

Loudoun County Chamber of Commerce: “Business Issues.”  Well, that narrows it down to 600 or so bills.

Virginia Chamber of Commerce: “Executive and Legislative Actions and Procurement Transactions.”  I looked at this a few times before I realized it simply repeated back the phrase from the question.    

Mecklenburg County: “Matters involving issues affecting local government.”

Fairfax County Water Authority: “Matters of interest to the Fairfax County Water Authority, including but not limited to, issues arising under the Virginia Water and Waste Authorities Act.”  But not limited to. 

Norfolk Southern Corporation: “All matters affecting Norfolk Southern Corporation.”

City of Norfolk: “Local government.”

Virginia League of Conservation Voters: “Matters related to land conservation, land use, energy issues, and transportation financing.” Continue reading

Updates: Money, Power and Politics (Oh, My)

The following are updates on earlier Bacon’s Rebellion stories of mine.

Clean Virginia Files First Report

Clean Virginia Fund, the political action committee that is trying to buy legislators’ loyalty away from regulated utilities, has filed its first report with the State Board of Elections.  Charlottesville financier and hedge fund magnate Michael D. Bills is the only donor, putting in $50,000.  Two senators and nine delegates, all Democrats, accepted a total of $32,500.  Dominion Energy and Appalachian Power donated a combined $175,000 during the same period so if this is really a bidding war, Clean Virginia has some catching up to do.

Hunton Andrews Kurth, the Richmond law and lobbying firm, is off to a slow start, giving only $23,000 on this report.  The firm drew notice for saying it would not support legislators who refused donations from its utility client.  Its largest check was to the Democratic Commonwealth Victory Fund, which supports both House and Senate candidates in that party.  (Dominion Energy gave to that, too.)

Somehow I don’t think any of the legislators who are refusing corporate or utility dollars will refuse help from that party committee. The check was probably to attend the Democrat’s annual event at the Homestead, where I’m sure all had a nice chin wag over the bar or on the golf course.

Dominion Energy Doubles Down on T1 Rider Taxes

Responding to an adverse recommendation from a State Corporation Commission hearing examiner, Dominion Energy has filed comments asking the full commission to ignore her opinion and make the customers pay too much.

Its first and most important argument is that the commission doesn’t have the authority to exercise discretion over the future transmission charges under rate adjustment clause T1.  It points to language in the 2007 statute that created this RAC and the whole system of RACs.  In the case of transmission costs under T1 the language says that any bill from regional transmission entity PJM is presumed to be reasonable and prudent.

This isn’t about the taxes, it’s about that language.  That “reasonable and prudent” presumption is even more frequent in the statute now, thanks to the 2018 legislation.  This is once again proof that Dominion inserts that phrase (and it writes these bills, no legislator does) to override the judgement of the SCC.  Those of us who worked on that 2007 statute never contemplated that Dominion would take advantage of that presumption to self-calculate its charge based on false information – in this case an erroneous tax rate.

If the SCC stands with its hearing examiner, expect the utility to take the battle back to the Virginia Supreme Court or back to its friendly legislators.  Once again, as it has been for more than a decade, the only real issue is will the legislature listen to the SCC or let the utility make it own laws and rules.

The AG Giveth, the AG Taketh Away

Attorney General Mark Herring has notably been a bit less predictable than many previous AG’s on the question of who his client is, if the state law or regulatory position he would normally defend was highly unpopular with various interest groups.

He earned praise in many circles recently for deciding to have his staff defend certain abortion-related regulations, but now has decided to not let his staff join in the appeal of a recent decision on legislative districts and the Voting Rights Act.  The Republican legislators seeking a delay on drawing a new map pending that appeal will need to fund their own legal efforts.

Continue reading

Saul Trumpinsky – Donald Trump and Saul Alinsky

Yes Virginia, there is a United States. Most posts published on this blog are dedicated to Virginia-specific issues. This post is an exception. It is an attempt to understand the unexpected popularity of Donald Trump. While all states are impacted by the federal government and national politics, Virginia is perhaps the most affected state. The proximity of Northern Virginia to the nation’s capital as well as the military influence over Hampton Roads’ economy make the federal government particularly important to Virginia. So it behooves us to understand the president and how the heck he got elected.

Saul who? Saul Alinsky was a Chicago-born community organizer and writer. He was best known for his book Rules for Radicals published in 1971. Even before his famous (or infamous) book Alinsky was on the political radar. In 1966 William F. Buckley wrote an article in his “On the Right” column calling Alinsky an iconoclast and “close to being an organizational genius.” However, as would be the case with many critics on the left and right, Buckley ultimately found Alinsky’s approach ineffective. Famously, Hillary Clinton’s undergraduate thesis was a 92-page critique of Mr. Alinsky and his methods. Back in 1969, 22-year-old Clinton was sympathetic to Alinsky’s concerns but ultimately found his approach ineffective. Even Hoover’s FBI kept a close eye on Alinsky during the late 1960s. But the 1960s came and went and Saul Alinsky’s Rules for Radicals was written and discussed, and then faded from view. There were momentary flare-ups around Hillary Clinton becoming First Lady and Barack Obama becoming president. However, Alinsky was largely relegated to those creaky crevices of the cultural cranium as a curious cartoon-like character. Or … was he?

Donald Trump and the resurrection of Saul Alinsky. As far back as early 2016 the right wing-media outlet Newsmax began to see parallels between Donald Trump’s approach as a candidate and Alinsky’s Rules for Radicals. After being elected some of President Trump’s conservative critics continued to associate Trump’s actions with the Alinsky brand. Could it be? Could this odd collection of #neverTrumpers have unraveled the secret to Donald Trump’s inexplicable election success? Is he simply following Saul Alinsky’s Rules for Radicals? Repeated searches of Trumpian philosophy found no fond commentary by The Donald for The Saul. However, there are many points of commonality between Trump and Alinsky.

A baker’s dozen.  Alinsky outlines 13 specific rules in his book. Donald Trump is following 12 of them. To wit (along with the Trump translation or Trumplation):

  1. “Power is not only what you have but what the enemy thinks you have.” (Trumplation: constant exaggeration.)
  2. “Never go outside the expertise of your people.” (Trumplation: Make America Great Again. A simple, understandable motto.)
  3. “Whenever possible go outside the expertise of the enemy.” (Trumplation: Canada’s 243% tariff on U.S. dairy products … who knew?)
  4. “Make the enemy live up to its own book of rules.” (Trumplation: Slam Hillary Clinton for taking millions for giving speeches to banks.)
  5. “Ridicule is man’s most potent weapon.” (Trumplation: Crooked Hillary, Corrupt Kaine.)
  6. “A good tactic is one your people enjoy.” (Trumplation: campaign speeches that look like revival meetings, “deplorables” as a badge of honor.”)
  7. “A tactic that drags on too long becomes a drag.” Trumplation: (Whatever happened to the NFL kneeling “controversy”?)
  8. “Keep the pressure on.” (Trumplation: From North Korea to the EU to London to Helsinki backed by an unending chorus of tweets.)
  9. “The threat is usually more terrifying than the thing itself.”  (Trumplation: Nominate me or I’ll go third party.)
  10. “The major premise for tactics is the development of operations that will maintain a constant pressure upon the opposition.”  (Trumplation: One Donald Trump tweeting, many Democrats attempting to rebut.)
  11. “If you push a negative hard and deep enough it will break through into its counterside” (Trumplation: Forget my business deals, look at Crooked Hillary, Crooked Hillary, Crooked Hillary …)
  12. “The price of a successful attack is a constructive alternative.”  (Trumplation: The only rule he seems to have missed although GDP growth through corporate tax cuts might be an example.)
  13. “Pick the target, freeze it, personalize it, and polarize it.”  (Trumplation: target individuals not institutions – Carmen Yulin Cruz, Stephen Colbert, Megyn Kelly.)

Advise to President Trump. Read Hillary’s thesis. She did get an “A”. Alinsky’s tactics work well at first but fail to create a lasting unity among their adherents. They generate notoriety at a rapid rate but the momentum doesn’t last. Charles “the Hammer” Martel may have defeated the Moors at Tours but it was his grandson King Charles (aka Charlemagne or “Charles the Great”) who forged an empire. Hammers are forgotten while greatness is not. Hammer time is over. What’s next Mr. President? You’ve taken the rules for radicals as far as they will go. It’s time to start writing “lessons for leaders.”

— Don Rippert

Eat My (Coal) Dust!

Possum Point coal ash ponds

In a possible early-warning sign of what may be in store for Virginia electricity consumers, North Carolina regulators have decided that Duke Energy could charge their Tarheel rate payers the first $778 million chunk of an estimated $5 billion in coal-ash cleanup costs. The sum does not include $100 million in two mismanagement penalties for practices that “resulted in cost increases greater than those necessary to adequately maintain and operate its facilities,” reports the Associated Press.

Dominion Energy Virginia will likely incur coal-ash disposals costs in the $1 billion to $4 billion range, although no firm figure will be available until the state issues solid-waste permits for a disposal plan. Dominion says that de-watering the coal ash, consolidating the material in a single pit at each power plant, and covering it with a synthetic liner will protect the public at a fraction of the cost of the alternative, favored by activist groups, of hauling the ash to landfills with greater environmental protections.

North Carolina’s Attorney General said he would go to court to stop Duke from passing along its disposal costs to rate payers. “This case will ultimately be decided by the North Carolina Supreme Court,” he said.

The coal-ash disputes in North Carolina could prefigure in part what happens in Virginia. State regulators must approve disposal plans for millions of tons of coal ash that accumulated legally over the decades at Dominion’s Bremo, Possum Point, Chesterfield, and Chesapeake power plants. Presumably, Dominion will file with the State Corporation Commission (SCC) to pass along as much of that cost as possible to ratepayers.

What makes Dominion’s situation different from Duke’s is that Dominion’s base electric rates were frozen between 2015 and 2018, and Dominion has already written off a portion of disposal costs incurred during that period. Also, under terms of recently enacted grid-modernization legislation, Dominion now will plow surplus earnings into renewable-energy, energy-efficiency and grid-upgrade projects. The public has not yet been informed how multi-billion charges for coal ash-disposal costs would be treated from an accounting viewpoint, what impact they would have on Dominion profits, or how the costs would ripple through to grid modernization.

I cannot foresee any circumstances in which the SCC would dun Dominion for mismanagement penalties. The company has complied with state and federal laws and regulations as well as judicial rulings throughout the process.