Category Archives: Economic development

JLARC Agrees: VA Economy Lags National Growth

by Steve Haner

First published this morning by the Thomas Jefferson Institute for Public Policy.

This makes if official: Even the Joint Legislative Audit and Review Commission (JLARC) has documented and highlighted how poorly Virginia’s economy is performing, how far our state is lagging national growth averages.

Source: JLARC 2021 Report on Virginia State Spending, Slide 7.

The admission comes in the most recent summary on state spending trends, an annual report (detailed version here) which was submitted to and approved by the legislators on the panel last week. It covers the ten-year period of 2012-2021 and does a rolling update on previous years.

Virginia’s average annual change in gross domestic product of 1.2% was just 63% of the national average, our per capita income grew 1.1% annually (58% of the national average) and our labor force grew just 0.6% annually over the period, 60% of the national average. The general correlation of the three deficits just demonstrates their interdependence. Continue reading

Bacon Bits: Bafflement, Confusion… and Hope

What is wrong with this picture? Headline from FFXnow: “Inova temporarily closes urgent care centers in Reston and Tysons due to high patient volume.” On top of an influx of COVID-19 cases fueled by the Delta variant, Virginia hospitals are getting more patients — many of whom had delayed seeking medical care due to the pandemic — with more medically complex conditions. The health system closed the two facilities to “manage an influx of patients without overwhelming exhausted staff.” I get the part about the staff being exhausted. But how does closing the two centers do anything to solve the patient overload? Inova says it is consolidated staff from the shuttered centers “to better accommodate patient volume.” Huh? No explanation of how that works. 

Build a rail line and they will come A newly launched Richmond-to-D.C. passenger rail line is the first project under the Northam administration’s $3.7 billion, 10-year passenger rail program which, due to protests, COVID-19 and culture wars, has warranted almost zero scrutiny. In this piece in Energy News Network, Danny Plaugher, executive director for Virginians for High Speed Rail, says the new line, which will generate a predicted 12,600 passengers annually, show how serious Virginia is in its commitment to high-speed rail. Aside from getting passengers off the highway, rail is touted as a way to reduce CO2 emissions in the all-consuming war on Climate Change. While the Northam administration is spending billions on rail, here’s what’s happening in the real world: Road and highway travel is recovering from the epidemic, while rail traffic is not. The most recent quarterly ridership for the Virginia Railway Express (VRE) commuter rail service in Northern Virginia, for example, is down 85% in 2021 compared to the same period in 2019.

A massive win for Southwest Virginia. A joint venture between Blue Star Manufacturing and American Glove Innovations has committed to invest $714 million to establish the most the world’s most advanced (NBR) manufacturing facility to produce nitrile rubber gloves. The project would repatriate production of an estimated 60 billion gloves annually from Asia to the United States. Based in the Progress Park in Wythe County, the project will employ a predicted 2,500 people within five years. According to the Virginia Department of Economic Development, it represents  “the largest job creation in Southwest Virginia in a generation.” As part of the deal, the state has promised to invest $8.5 million to upgrade water and wastewater capacity at the industrial park. The nitrile glove market is expected to grow 9% annually through 2027.

Virginia Job Growth Trails U.S. Averages

Click for larger view.

by A. Fletcher Mangum

A. Fletcher Mangum

Virginia’s employment growth has been underperforming the national economy for quite some time. As shown in Figure 1, soon after the recovery from the Great Recession began in earnest in 2011 Virginia’s year-over-year growth in total employment uncharacteristically fell behind the national economy and even briefly went negative in 2014.

Then in early 2020, just as in the rest of the country, economic conditions in Virginia changed drastically when the governors’ lockdowns of economic activity were imposed in response to the pandemic. Between March and April of that year nearly 20 million jobs were lost nationally (or approximately one out of every eight jobs in the country), while in Virginia the employment loss was 428,000 jobs (or approximately one out of every nine jobs in the state). Virginia was not as badly hit as the nation as a whole because of its heavy dependence on federal employment and contracting (which were not significantly impacted by the lockdowns) and disproportionate employment in the Professional and Business Services sector (where people were better able to work remotely).

However, history is now repeating itself as Virginia once again falls behind the nation in the recovery and that trend is getting worse. In April of this year, when year-over-year employment growth turned the corner and moved into positive territory nationally, Virginia trailed the pack and continues to do so. In April Virginia ranked 41st among the states in year-over-year total employment growth, gained ground to hit 32nd in May and 30th in June , and then fell back to 39th in July and all the way to 47th in August. Continue reading

The Economics of Flood Control in Virginia

Hampton Roads base flood – 1% annual risk

by James C. Sherlock

We have work to do, and need to do it quickly and well.

  • If we want to get storm defenses built before major storm damage rather than after; and
  • if we want the federal government to pay 65% of the costs.

Let’s assume we do.

The “Virginia Coastal Resilience Master Planning Framework” appears to be heading in a direction that may miss important pieces of any benefit/cost assessment. And those assessments drive federal interest.

The assumption in Framework going forward appears to be that the value of flood protection is in loss avoidance. Exclusively. 

Indeed, all of the work that I can find in flooding assessments Virginia is put towards the goal of understanding the costs of such losses.

Not sufficient, but fixable. Continue reading

Quote of the Day: Mary Trigiani

Mary Trigiani is a management consultant in Southwest Virginia. One of her interests is rethinking “economic development” in the region. I was struck by this morning’s lead-in to her daily newsletter.

Economic development is, for some, the game of redistributing taxpayer money and sustaining agencies for that purpose – without reporting ROI back to taxpayers or marking real progress. When it’s done right, however, economic development is an intricate process of modeling businesses, vetting partners, and building bridges – so that people can find jobs, prosper, and enjoy life. This shift in definition is a condition of today’s renaissance. And I believe Virginia’s Great Southwest will show the way.

— JAB

Federal Contracting in Northern Virginia Reaches $60 Billion Annually

Northern Virginia

by James C. Sherlock

The Washington Business Journal (WBJ) reported today that annual federal contracting in Northern Virginia has reached $60 billion. That compares to federal contracting there of $33.7 billion in 2000 (2020 dollars).

As a reference points, I consulted St. Louis Fed data for Virginia GDP in those same years and converted the 2000 data to 2020 dollars.

The GDP of Virginia in 2020 was $551.8 billion. In 2000 the GDP of the state was $412.1 billion in 202o dollars.

So, the percentage of Virginia GDP attributable to federal contracting in Northern Virginia increased from 8.1% in 2000 to 10.9% in 2020.

No comment, just observation.

The Goochland Revolution: Making Growth Pay for Itself

Goochland County’s location within the Richmond MSA

by James A. Bacon

Ken Peterson, a leader of Goochland County’s turnaround from fiscal basket case to bearer of a AAA bond rating, thinks he has discovered the holy grail of fast-growth county governance: how to make development pay for itself.

In previous posts I described how Peterson and his fellow fiscal conservatives swept into power in the so-called Goochland Revolution of 2011 and began implementing strict financial discipline. The exurban county west of Richmond, population 23,000, put management systems into place that identified the Level of Service (LoS) desired for schools, utilities, roads, and other public amenities, and then set up a 25-year capital improvement plan that identified how much money would be needed to pay not only for the upgrades but the ongoing maintenance. Goochland would not fall into the deferred-maintenance trap on Peterson’s watch. To the contrary, the county has accumulated large reserves.

Skeptics might say that Peterson and his allies benefited from fortunate timing. The year 2011 coincided with the nation’s recovery from the great real estate crash of 2008. Growth in fast-urbanizing Henrico County had reached the county line and was leap-frogging into Goochland. Tax revenues gushing from the economic revival made it easy to balance budgets and keep the base property tax rate at an incredibly low $0.53 per hundred dollars of assessed value. However, one might argue, if Goochland follows the same path as Virginia’s other fast-growth counties — Fairfax, Loudoun, Prince William, Stafford — it could experience the same fiscal stresses that they have. Continue reading

There’s Gold in Them Thar… Press Releases?

by Jock Yellott

It seems there is a vein of quartz underground in Buckingham County sparkling with gold. The General Assembly almost prohibited mining it, but then backed off. This time.

A string of historic gold mines going back to the 19th Century appear as red dots on the county geological survey map like chigger bites on the skin of the land. Exploratory drilling by a Canadian company, Aston Bay Holdings, found significant new quantities of gold there.

From about the depth of a water well — 150 to 300 feet– Aston Bay’s diamond drills pulled up broken columns of translucent white quartz flecked with yellow metal. They drilled and drilled again for about 200 yards, two dozen holes, rarely drilling without finding more quartz glinting with gold. Continue reading

Loudoun’s Golden Goose Lays Fewer Eggs

Data Center Alley. Photo credit: Loudoun Now

by James A. Bacon

Data centers may not support a lot of jobs, but they sure do pump up the tax base. In Loudoun County, home to the world’s largest cluster of server farms, the facilities were expected to support $11.2 billion in taxable assets. When the actual number came in $1.1 billion shy of forecasts this year, a mere $10.1 billion, the county generated $60 million less in tax revenue than expected, reports Loudoun Now.

Other Virginia localities that have been banking on data centers to bolster their tax base may encounter the same issue. They should consider themselves forewarned. Continue reading

The Mayor of Alexandria Anticipated my Column

by James C. Sherlock

We scribblers at Bacon’s Rebellion pride ourselves on being leaders in the progressive thought process. In acknowledgment of the wisdom in my column that called out the observable inefficiency of government, I give you:

The city of Alexandria, Virginia, is joining a growing number of cities across the U.S. that are sending money to poor residents, no strings attached.

Bolstered by nearly $60 million in federal pandemic relief money, the independent jurisdiction in Northern Virginia plans to begin sending $500 debit cards to 150 families each month for two years, starting sometime this fall. The initiative was inspired partly by feedback city leaders solicited from residents about how the cash infusion should be used, says Alexandria Mayor Justin Wilson.

The national conversation about cash assistance has been changing, Wilson says. Last year, former Stockton mayor Michael D. Tubbs launched a national network of city leaders called Mayors for a Guaranteed Income. The coalition has grown to include mayors from almost 60 cities, from Los Angeles to Jackson, Mississippi. Mayors in the coalition are part of a generation of leaders who are thinking more about how to get immediate assistance to people in need, rather than forcing them into complex government programs that ration public assistance through layers of bureaucracy, Wilson says.

Continue reading

Got $26,000 To Replace All Your Gas Appliances?

States in blue have seen localities restrict or ban natural gas in homes and businesses, and those in red have preempted the push by banning such bans. From S&P Global Intelligence story linked below.

by Steve Haner

Maybe not today or tomorrow, but soon the War on Fossil Fuels will be fought in the equipment room or garage of your house. A push to prohibit new natural gas connections and remove existing home gas services is inevitable if Virginia’s current leaders are serious about zero carbon within 20 to 30 years.

Refitting a home with natural gas appliances to all-electric, the dream of some utilities who need not be named, is likely to cost well over $20,000. That figure has been helpfully compiled in a state-by-state analysis by the Consumer Energy Alliance (CEA), with a fact sheet specifically on Virginia. Continue reading

If No Better Ideas Emerge, Go With These

By Steve Haner

First published Tuesday by the Thomas Jefferson Institute for Public Policy.

In 1972, a Virginia taxpayer needed a taxable income of $12,000 before the state’s maximum income tax rate kicked in. Adjusted for inflation, that threshold should be $78,000 today.

There has been one adjustment since, to $17,000 in income before the maximum rate is now applied. Adjusting that for inflation since 1987, when last amended, that should now be $40,000. In Virginia today, even a lower middle-income couple can be paying the same maximum tax rate as the richest Virginians on parts of their income.  Continue reading

A Deeper Dive into CNBC’s Rankings

by Chris Saxman

In doing a deeper dive on the CNBC Top States for Business rankings, two quotes keep running through my unsettled mind.

Why unsettled? Well, last year I posed this question to Virginia FREE’s Board of Directors:

If Virginia was a stock, would you Buy, Sell, or Hold?

Not one said Buy. They all said Hold. Thankfully, no one said Sell.

So, the first quote comes from New York Yankee Hall of Fame catcher Yogi Berra who is now more famous for his Yogiisms than his playing. This one was an answer to a question about a famous New York City restaurant — was it still as good as it used to be?

To which Berra replied:

No one goes there anymore, it’s too crowded. Continue reading

Virginia Next-to-Last in Motley Fool Ranking

Crescent Dunes solar project near Tonopah, NV. Photo:  Wikipedia

by Steve Haner

If you need another reason to break into peals of laughter over the recent CNBC “Top States for Business” ranking, consider this.

In the story about the infrastructure rankings, while praising the state of Nevada, the illustration provided was the aerial shot of the Tonopah Solar Energy facility. The failed, now-in-bankruptcy (also here) Tonopah Solar Facility. Shades of Virginia’s clean energy future to come? But I digress.  Continue reading

Eating the Bait


by Joe Fitzgerald

Eating The Bait is the improbable story of Harrisonburg’s Golf Course, and how it came to be, told in a decidedly non-linear fashion by a non-objective observer. The whole sick, sad, silly, sorry, sordid story of the destructive, polarizing, maddeningly frustrating and ultimately hilarious battle over whether a city in the Shenandoah Valley — where little happens, nor should it — should build a golf course. Caution: the story is carefully doctored by a key player to make it more exciting and occasionally uses 4-, 11-, 12, and 7-letter words to express frustration and drama.

In April 1999 the City of Harrisonburg decided to build a golf course. “City” is capitalized here because the phrase refers to the government of the city, in all its majesty and error. The course was touted as raising the quality of life in the city, increasing city revenues, and helping make Harrisonburg a first-class city.

The only real catch, as the City Council voted 5-0 to launch the project and the city staff began making plans and spending money, was that the city didn’t want a golf course. And by “city”, non-capitalized, I mean the people who lived in the city, paid the taxes and owned the government that the council and staff only held in trust. Two polls and an election bore out the fact that a landslide of city voters and an overwhelming majority of its citizenry did not want the golf course.

The City didn’t care. The City knew better. And the city still bears the scars. Continue reading