Category Archives: Economic development

Thank God for Medicaid Expansion

By Peter Galuszka

For years after the Affordable Care Act, “Obamacare,” made millions of federal dollars available for states to expand Medicaid health coverage, Virginia Republicans steadfastly blocked Virginia from using the money.

Led by former House Speaker Bill Howell and Sen. Tommy Norment, the GOP claimed that expanding Medicaid to nearly 400,000 people would be too expensive and would blow out state funding.

This skinflint approach was finally put to rest after Democrat Ralph Northam became governor in 2018, foreshadowing a Democratic sweep of the General Assembly in elections last year.

Thank God the Democrats prevailed.

Virginia’s formerly robust economy has been shattered by the COVID 19 pandemic. Last week, some 110,000 Virginians filed for unemployment support. It was 46,277 the week before.

Who covers them is an open question but many would qualify for Medicaid. Expansion has boosted lower-income Virginians so that they may be able to better ride out the pandemic. Continue reading

“We Are All Keynesians Now”

John Maynard Keynes

By Peter Galuszka

John Maynard Keynes, the British economist, advocated government spending and monetary intervention as suitable for modern economies.

When I was a student at a liberal college in New England in the early 1970s, we were taught that Keynes very much had the right idea. As evidence, we had the Great Society programs of Lyndon B. Johnson and, strangely, the Vietnam War. They all relied on vast amounts of deficit public spending.

Since then, free-market types came into favorable light and it all became the magic of the market, little regulation and other panaceas.

According to whom you read, pro-capitalism economist Milton Friedman admitted the necessity of Keynes’ thinking by stating, “We’re all Keynesians now.” President Richard Nixon, a Republican, is also credited with the quote when he took the U.S. off the gold standard.

The phrase is taking on increasing relevance with the COVID-19 pandemic. Virginia is no exception. Continue reading

Photo Project Spotlights Pipeline Impact


By Peter Galuszka

Veteran photographer Karen Kasmauski, who grew up in Norfolk, has a brilliant online project that shows the human and environmental impacts of the Atlantic Coast Pipeline.

She is a senior fellow with the International League of Conservation Photographers, a non-profit group that funded her project that centers mostly in rural Nelson and Buckingham Counties that would be dissected by the natural gas pipeline.

She combines spectacular aerial photos with deep close ups of people.

One of her subjects is Ella Rose, a retiree who lives in a small house in Union Hill. She was living a quiet happy life in her natural setting until she got a letter from Dominion Energy stating that they would be routing the ACP about 150-feet from her house.

Union Hill is a touchpoint for pipeline controversy since it is largely African-American community that ACP officials have selected for a compressor station. It is one of similar localities that seem to be targeted with other loud and disruptive equipment along the pipeline route. Continue reading

Is It the Death Knell For Dominion’s Pipeline?

By Peter Galuszka

For more than a decade, hydraulic fracturing drilling for natural gas and oil has transformed the American energy picture, leading to big revivals in such energy fields such as Marcellus in West Virginia and Pennsylvania and the Bakken field in the Dakotas.

It has prompted Dominion Energy and its utility partners to push forward with an $8 billion or so Atlantic Coast Pipeline that will take Marcellus gas through Virginia all the way to South Carolina. The project, tied up in court fights, has been enormously divisive as property owners have protested the utilities’ strong arm methods of securing rights of way.

But now there’s clear evidence that the fracking boom is over, and that has huge implications for the ACL project. The reason? Oil and gas prices have dropped thanks to a perfect storm of issues. There’s the coronavirus pandemic tanking the U.S. economy, bitter energy wars between Russia and Saudi Arabia, and the fact that fracking gas and oil rigs are enormously expensive and wells can produce for only a short period.

The Hill reported last week: “Oil sank to $23 (a barrel) from a high of $53 in mid-February, far below the break even point that producers need to drill new wells to maintain supply, and with volumes rapidly diminishing at existing wells.”

The newspaper points out that a fracking well can cost more than $10 million while a traditional well is only $2 million. As price pressure mounts, the number of wells nationally has plummeted from 790 to 772 in one week.  At the Bakken field, reports The Washington Post, producers are cutting costs.

The situation has clear implications for the ACL project which was conceived at the height of the Marcellus boom. Dominion claimed that the gas would be badly needed in coming years while others claimed there isn’t enough demand. Continue reading

A Look at Richmond and COVID-19

By Peter Galuszka

Here is a roundup story I wrote for Style Weekly that was published today that explains the effects of COVID-19 on the Richmond area. Hopefully, BR readers will find it of interest.

It was a tough piece to report. The impacts of the deadly virus are very complicated and multi-faceted. An especially hard part was trying to keep with the fast-changing news, notably the number of new cases and deaths. We were updating right up until the story closed Monday afternoon. It was hard to talk to people with social-distancing and closings.

The experience shows the delicate balancing act between taking tough measures to stem the contagion and keeping the economy going. My view is that tough measures are needed because without them, it will all be much worse, particularly more illness and death as the experience in Italy has shown.

Incredibly, our utterly incompetent president, Donald Trump, now wants to focus on the economy more than taking necessary containment steps. It’s far too soon for that. Regrettably, a number of Bacon’s Rebellion commenters are sounding the same irresponsible tune in keeping with their big business and anti-regulation laud of free market capitalism. Continue reading

Amazon to Create 1,500 Jobs in Hampton Roads

by James A. Bacon

Amazon has announced the launch of two state-of-the-art operations facilities in Hampton Roads that will create 1,500 jobs. One is a multi-story robotics fulfillment center in Suffolk, creating 1,000 jobs, and the other a 650,000-square-foot processing center in Chesapeake, creating 500 jobs. Both operations are scheduled to open in 2021.

Since 2010, Amazon invested more than $34 billion in Virginia through its local fulfillment centers, cloud infrastructure, and research facilities. The company operations network in Virginia encompasses more than 10 fulfillment centers, sortation centers, and delivery stations across the state, plus 13 Whole Foods Markets and three Prime Now Hubs.

“We celebrate the addition of two new, high-tech facilities in Suffolk and Chesapeake that will positively benefit the entire Hampton Roads region,” said Governor Ralph Northam in a prepared statement.

It’s not clear from the press release if the Amazon facilities will be serving the local market, as many other Virginia facilities are doing, or if they will deliver goods to a broader geographic area. The statement also did not say how much Amazon will be investing in the distribution centers. Typically, state-of-the-art facilities require investments in the multiple tens of millions of dollars, sometimes more. Regardless, any time a company announces the creation of 1,500 jobs, that’s good news for Virginia. Continue reading

Bring the World’s Best Hospitals to Virginia

Mayo Clinic — why not aim for the best?

by James C. Sherlock

Virginia does not host a single one of the world’s best hospitals.[1] But America does. Mayo Clinic and Cleveland Clinic have been ranked at the top of such ratings for as long as I can remember. Neither of them are here in the Commonwealth, I believe Virginia could change that.

Mayo Clinic is top-ranked for quality more often than any other health care organization.It has medical centers in Rochester, Minn., Jacksonville, Fla., and Phoenix, Ariz. In addition, Mayo Clinic partially owns and operates the Mayo Clinic Health System in Minnesota, Iowa, and Wisconsin.

Cleveland Clinic has countless facilities all over Ohio and locations in Abu Dhabi, United Arab Emirates, London, in Charleston WV, Toronto,  Las Vegas and Elko, NV and dozens of locations in Florida.

With the exception of Cleveland Clinic’s Charleston, W.Va., outpost on the periphery of its Ohio core, neither system has a mid-Atlantic presence.

The business case for attracting Mayo Clinic and Cleveland Clinic to locate here must include: Continue reading

How About an Interstate Compact to Phase Out Corporate Incentives?

Michael D. Farren

by  James A. Bacon

The Northam administration is enamored with the idea of joining interstate compacts to combat climate change. The Regional Greenhouse Gas Initiative (RGGI) is likely to be enacted, and the Transportation and Climate Initiative has gotten serious attention. How about an interstate compact to limit the practice of granting subsidies and tax breaks as economic development incentives?

Michael D. Farren, a Mercatus Center scholar at George Mason University, presented the idea recently in testimony to the U.S. House Committee on Revenue and Finance.

Economic-development subsidies represent a net loss for state/local governments, Farren said, citing a vast scholarly literature on the subject. Yet governments continue to resort to subsidies, tax breaks, and other giveaways in order to stay competitive with other states that offer subsidies to win economic-development projects.

In an interstate compact, an idea enshrined in the U.S. Constitution, two or more states could agree to limit the giveaways when competing against one another, Farren suggests. Continue reading

Minimum Wage and Medical Insurance

Question of the Day: If Virginia enacts a minimum wage increase, how many employers will respond by cutting fringe benefits like medical insurance?

Kennon Morris, president of the Virginia Forest Products Association, raises the concern in a Free Lance-Star op-ed today. Here’s his prediction of what would happen in rural Virginia: The minimum wage “would force many businesses to shut down, cut jobs, or hire part-time workers without benefits.”

Foes of the minimum-wage hike have focused mainly on the impact on jobs. But employers may choose other ways to control costs. One possibility is scrapping company-subsidized health plans — encouraging employees enroll in Medicaid or buy Obamacare. I would love to see an analysis of how many workers potentially would be affected and what the fiscal impact on state and federal government would be if thousands suddenly became medical wards of the state.

— JAB

Bacon Bits: From Feel-Good to Feel-Bad

Feel-good story of the day. Musical superstar Pharrell Williams, a Virginia Beach native, is collaborating with the city’s Convention & Visitors Bureau to create two 60-second commercials, featuring his soon-to-be-released song “Virginia,” promoting Virginia Beach as a city open to tourists. Pharrell contacted city officials after the mass-shooting last year, asking how he could help his home town. One of the commercials, reports the Virginian-Pilot, will show the work that takes place in early-morning hours to prepare for visitors: a man cleaning kayaks to rent, a chef chopping vegetables, city workers grooming sand on the beach, hotel staff fluffing pillows. Williams composed the hit song, “Happy,” which went wildly viral as hundreds of groups shot videos of themselves lip syncing to the song.

Good news from Petersburg. After digging itself out of the worst fiscal meltown in modern Virginia history, the City of Petersburg is reporting its first positive fund balance in four years. The city’s “unassigned fund balance,” not earmarked for a specific portion of the General Fund, came in at $2.8 million in Fiscal 2018, reports the Progress-Index. The city has set a goal of increasing the unassigned balance to $7.6 million. Petersburg was no more reckless than any number of other cities across the United States, but Virginia is less forgiving of fiscal incompetence. As a consequence, the poor, largely African-American municipality was forced to make hard choices and enact brutal spending cuts. Now it is emerging more financially disciplined than before. If Petersburg can straighten itself out, so can other deadbeat states and municipalities. If Virginians demanded that Petersburg make sacrifices, we should expect the same of others, too. Puerto Rico, I’m talking to you! Chicago, I’m talking to you!

When “multicultural” means “nonwhite-cultural”… Last week video surfaced of a black female student delivering a “public service announcement” at UVa’s new “Multicultural Student Center.” Apparently, the “multi” part did not include white culture. There were “just too many white people,” the young woman informed the unwelcome visitors. The center, she said, was “a space for people of color.” To its credit, the University administration issued a statement affirming that the center is “open to all members of the University community.” But it appears that a lot of students (including many white students) agree with the young woman. In interviews published on The College Fix, many students agreed with the proposition that minorities need a “safe space” free from whites.

Non-Union Construction Workers Need Not Apply

Photo credit: Joint Base Langley-Eustis

by Ben Brubeck

Democratic leadership in control of the General Assembly for the first time since 1993 is close to sending legislation to Gov. Ralph Northam’s desk that would raise the cost of construction and maintenance of schools, affordable housing, roads, transportation and other infrastructure projects critical to keeping Virginia economically competitive. Taxpayers should take note of the financial impact of these measures on infrastructure and development in their communities—and its anti-competitive effect on opportunity for Virginia’s construction industry.

Bills sponsored by Senate Majority Leader Richard L. Saslaw (SB 182) and Del. Alfonso Lopez (HB 358) has already been passed by their respective chambers following last week’s General Assembly crossover deadline. These bills would rescind a 2012 statute requiring state agencies to use a fair and open competitive bidding process to procure contracts for the construction of public works projects. The existing statute will be replaced with a controversial policy permitting government-mandated project labor agreements, or PLAs, on state and local construction projects. Continue reading

Bacon Bits: Antifa Hoax, Goose Sauce, Selling Nova Bike Trails

Hate crime hoaxes not just for minorities anymore. According to Willfred Reilly, the expert on hate crime hoaxes, the fastest-rising category of hoaxes is perpetrated by whites, as white groups take a lesson from the Left’s grievance-and-victimhood playbook. The latest instance involves a Civil War reenactor by the name of Gerald Leonard Drake, reports the Washington Post. Two years ago an undetonated pipe bomb was discovered at the annual reenactment of the Battle at Cedar Creek, in which Drake, a 61-year-old Virginia man, participated. A series of threatening letters issued under the name of Antifa followed, and the 2018 event was canceled. “We will make Charlottesville look like a Sunday picnic!” said one letter. Now the FBI has issued a search warrant revealing investigators’ belief that Drake wrote the letters. Drake has not been charged with a crime.

Sauce for the goose… The Virginia Education Association has been fighting for the right to engage in collective bargaining for its members, and many members of the General Assembly think that’s a dandy idea. The VEA is, after all, a staunch supporter of the Democrats who now run the legislature. But writing in his blog Union Report, Mike Antonucci recounts a little history. The VEA does not have the most harmonious of relationships with its own employees. Employees of the union formed a picket line outside VEA headquarters in 2012, and management-employee relations have been simmering ever since. Employees have filed a lawsuit, petitioned the parent union, and in 2018 even filed an unfair labor practice complaint. Schools are chaotic enough. Do we need to add collective bargaining to the list of woes? (Hat tip: Chris Braunlich.)

Enticing creative-class Millennials. The labor market in Northern Virginia is exceedingly tight, and that’s before Amazon has ramped up its hiring of 25,000 employees. Economic developers are shifting some of their attention from recruiting corporate investment to… recruiting talent to fill jobs that are going begging. The Northern Virginia Economic Development Alliance and the Northern Virginia Chamber of Commerce are making it their top priority to lure bright young minds to the region, reports the Washington Post. Northern Virginia has a tough sell on a couple of quality-of-life indicators: traffic congestion and the cost of housing. The target audience, says Victor Hoskins with Fairfax County economic development, is “looking for a food culture, brew and distillery culture, bike paths, walking trails. How can we package this so they can easily navigate it and relate it to a job opportunity, too?”

Right-to-Work Repeal Would Cost “Thousands” of Jobs, Says VEDP

Governor Ralph Northam at a recent announcement that an investment by Mack Trucks would create 250 new jobs in Salem, Va. Would Mack have committed to Virginia without a right-to-work law?

by James A. Bacon

The repeal of Virginia’s Right-to-Work law would result in the loss of dozens of economic development projects, “thousands” of manufacturing and supply-chain jobs, and $9 million to $25 million per year in annual General Fund revenue just from the state’s current project prospect pipeline, reports the Virginia Economic Development Partnership (VEDP) in a fiscal impact statement for HB 153.

The bill, introduced by Del. Lee Carter, D-Manassas, with six co-patrons, would repeal the Right-to-Work law, which prohibits making union membership a prerequisite for employment. Virginia is the northernmost Right-to-Work state on the East Coast, and the law has been a pillar of the state’s economic competitiveness. Scrapping the law would have a particularly devastating impact on rural areas and small metros where manufacturing and supply-chain operations comprise a large part of the economic base.

As the fiscal impact statement explains, a state’s Right-to-Work status is a primary factor considered by company executives and site-selection consultants scoping out sites for corporate expansions. A 2019 survey by Area Development found that more than 70% of corporate executives and 78% of site-selection consultants indicated that it is “important” or “very important” for a state to have a Right-to-Work law. Site selection consultants have told VEDP that a change in the policy would impact Virginia’s competitiveness for economic-development projects, especially in the manufacturing and supply-chain sectors. Continue reading

Private Nonprofit Colleges Need to Adapt or Die

Virginia private nonprofit institutions with enrollment of 500 or more.

by James A. Bacon

With the college-age population expected to drop 15% between 2025 and 2029, Virginia’s 28 private liberal arts colleges are facing hard times ahead. And Governor Ralph Northam’s proposal to make community college free for lower-income students won’t help. The tuition gulf between private colleges and publicly supported colleges will get only wider.

Writing in the Richmond Times-Dispatch, Phyllis W. Jordan, editorial director of the Washington, D.C.,-based FutureEd think tank, raises the alarm. The private colleges, many of which are located in small towns and rural areas, are economic anchors of their communities. If they fail, they knock out an economic underpinning of communities with few alternative sources of business activity and employment.

So, what’s the solution? Unfortunately, Jordan’s proposal — to match bigger state subsidies of public colleges with bigger subsidies for private colleges — is just plain awful. Subsidies replace one set of problems with a different set of problems. Continue reading

Legislative Updates: Minimum Wage

by Hans Bader

On January 28, a subcommittee in Virginia’s House of Delegates apparently voted 5-to-3 to raise the state’s minimum wage to $15, and to eliminate some longstanding exemptions to the minimum wage. The vote was along party lines.

The House’s bill is harsher on employers than the companion bill in the state Senate. On Jan. 27, the Senate’s Commerce and Labor Committee voted to gradually raise Virginia’s minimum wage from $7.25 to $15, or to $11.75 for employers that provide health insurance. Continue reading