Category Archives: Business and Economy

Next Virginia Tax Reform: Index for Inflation

by Barbara Hollingsworth

Most Virginians are painfully aware ­­­­that it’s becoming much more difficult to make ends meet. Prices for fo­­­­od, housing, gasoline and other necessities have soared. Inflation hit a 40-year high of 9.1 percent in June, the largest yearly increase since January 1982. And a recent study from the University of Iowa found that a typical American had to pay $669 more for basic living expenses than they did just two years ago.

All while the Commonwealth of Virginia was pocketing $2 billion in “surplus” revenue that was not anticipated and therefore not included in the two-year $165 billion state budget the General Assembly passed earlier this year. Most of that windfall was the result of the Federal Reserve’s monetary inflation, which made the prices of consumer staples soar because there were suddenly a lot more dollars chasing the same amount of goods and services.

But inflation had another unwelcome effect. It also pushed Virginia taxpayers into higher tax brackets despite the fact that their actual living standards went down, not up.

Governor Glenn Youngkin wants to set aside $400 million for tax relief in his revised budget, which he will present to the state legislature in December. But that’s less than a quarter of the total surplus. The budget signed by Youngkin also includes $450 million to pay for potential cost overruns on the commonwealth’s capital projects due to … you guessed it …. inflation. Continue reading

Sorry, Lefties, But Racists Don’t Invest In Black Enterprise


by James A. Bacon

The broadsides against Bert Ellis are going national. Inside Higher Education, the higher-ed trade publication, has published an article highlighting the growing controversy over Ellis’ appointment to the University of Virginia Board of Visitors. The article quotes Eva Surovell, editor-in-chief of The Cavalier Daily, whose articles sparked the furor, as saying that developments at UVa reflect the larger campus culture wars across the country.

That observation is true enough. Unfortunately, Surovell goes on to say this: “We’re just not unique in that really conservative voices are nostalgic for a time when women, when Black people and when other people of color were either banned or much less of a population here at UVA.”

Translation: Ellis and his alumni allies are reactionary racists and sexists.

I’ve got news for Ms. Surovell: Bert Ellis is CEO of Johnson Energy Storage, a developer of solid-state energy storage solutions founded by African American inventor Lonnie Johnson. Racists don’t invest in minority-owned enterprises. Racists don’t serve as CEOs of companies founded by minority entrepreneurs. Continue reading

Consequences of the Zero Carbon Fantasy

By Steve Haner

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

Virginians may finally be waking up to the consequences of the headlong rush to adopt utopian energy policies under our previous governor. The issues are getting more attention than ever before, and now people need to realize that all the issues are really just one issue.

  • A California regulatory board’s decision to ban new gasoline vehicle sales by 2035 is finally being widely reported as binding on Virginia. This has angered many but was actually old news. Under a 2021 Virginia law, our Air Pollution Control Board had already imposed the future sales restrictions, and it was some new amendments that sparked the news coverage. Various political leaders have now promised to stop it but a bill to reverse it died in the 2022 General Assembly when Democrats rallied to save the mandate.
  • Our dominant electric utility has finally acknowledged that its planned $10 billion offshore wind facility is a gigantic financial risk and is now refusing to build it unless the State Corporation Commission (SCC) places 100 percent of the construction and performance risk on its customers. Dominion Energy Virginia knows many things about this proposal it has not told us.
  • Governor Glenn Youngkin (R) is trying to remove Virginia from an interstate compact that mandates a carbon tax on electricity, imposed under former Governor Ralph Northam (D). Advocates for the tax are pushing back and will fight, delay and likely sue to preserve the tax, which costs Virginians $300 million per year at current levels and will continue to rise. Without explanation, the Governor did not keep his initial promise to promulgate an emergency regulation that could remove it quickly, so the tax lingers.
  • Governor Youngkin has opened the process for developing a revised statewide energy plan document, a political process to produce what in the past has been merely a political document. The public comment portal has already become an ideological fistfight. Northam’s 2018 plan had no engineering or economic detail.  It simply praised the legislative efforts to erase fossil fuels which had been adopted to that point and outlined the next steps his administration would take (couched as recommendations.)

Continue reading

Secret Wind Case Documents Are Key to Appeal

Snippet from UVA video showing how winds can destroy a large wind turbine.

by Steve Haner

Now comes applicant Dominion Energy Virginia, petitioning the Virginia State Corporation Commission to reverse its recent decision to impose actual financial risk on the company and its stockholders. If a hurricane blows down its planned offshore wind farm in a few years, the related costs should be imposed 100% on its captive ratepayers, Dominion demands.

Imagine that: expecting a monopoly with a guaranteed right to earn in excess of 10% profit on a $10 billion project forced to face actual risk. What is the world coming to? Continue reading

A Chance for Petersburg

Credit: Urban News Weekly

by James C. Sherlock

The Youngkin administration is doing an unalloyed good thing the exact right way. In partnership with two Democrats.

The Governor, in an extraordinary joint presentation with his cabinet secretaries and Democratic Mayor Samuel Parham, laid out a plan for broad state help to Petersburg.

Standing on the stage with Democratic State Senator Joe Morrissey.

Parham, speaking to reporters, said

Governor Youngkin is the first to step down here and say that he is going to put all of his resources in a city to move the dial to create prosperity here in the city of Petersburg. Democrats and Republicans working together — that’s what makes Virginia special.

Occasionally. Continue reading

Wall Street Journal: Wind Approved “Under Duress”

by Steve Haner

With an editorial published yesterday, The Wall Street Journal has now given its readers more insight into the risks inherent in Dominion Energy Virginia’s coming wind project than any Virginia newspaper or broadcast outlet has. It is not the kind of national spotlight Virginia should crave.

It noted that the recent approval of the project by the State Corporation Commission was “under obvious duress” and then went on to cite many of the dangers and potential cost consequences outlined  in the SCC’s own order. This is nothing new to readers here at Bacon’s Rebellion who read this about the decision already, or this earlier column on the reasons why the project should be rejected.

The WSJ does focus on one detail not available when those were written, comments by Dominion CEO Bob Blue on the firm’s most recent investor conference call. From the editorial:

Dominion could appeal. “We are extremely disappointed in the commission’s requirement of a performance guarantee,” CEO Robert Blue said on an earnings call. He griped that it would effectively require the company “to financially guarantee the weather, among other factors beyond its control, for the life of the project.” Exactly. Since no one can control mother nature, who should bear the risks? Dominion’s answer is not Dominion.

Continue reading

What Surplus? Virginia Doesn’t Allow Surpluses!

Secretary of Finance Stephen Cumming’s slide showing most of the final surge of unexpected revenue before June 30 came from payments from business owners and investors. Click for larger view.

by Steve Haner

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

Does last week’s glowing report on Virginia’s state tax collections presage additional tax relief for struggling families? The first question is, was the news really glowing? Continue reading

Pixilated Public Policy

by Jim McCarthy

The citizenry relies upon its government agencies to deliver cogent services and determinations consistent with the welfare of the commonwealth. It’s not always an easy task and, sometimes, the outcomes of those representative institutions are, well, confusing, or pixilated.

On August 3, 2022, the State Corporation Commission (SCC) issued a Final Order denying the Virginia Credit Union (VACU) authority to expand its field-of-membership (FOM) to include members of the Medical Society of Virginia (MSV). The denial followed an initial approval three years earlier by the SCC’s Bureau of Financial Institutions. That action was challenged for formal agency review by a group of seven independent community banks represented by the Virginia Bankers Association (VBA).

The petition for review was a proxy battle in a larger national political effort to curtail the growth of credit unions. The national campaign alleged that credit unions were “overreaching” in expanding into new FOM areas, leveraging their income-tax-free status as not-for-profits to conduct business in geographical areas the community banks believed to be unique to their charters and purposes under state and federal laws. Continue reading

Salvation for the Mountain Valley Pipeline?

MVP route map. Click for larger view. Source: MVP

by Steve Haner

And now, from our “I’ll believe it when I see it” department, comes the expectation that passage of President Joe Biden’s new corporate tax hike and green energy incentives package will be followed by a smooth path to completion for the Mountain Valley Pipeline (MVP) for natural gas.

The topic is everywhere today because Senator Joe Manchin, D-W.Va., included it as a deal point on a summary of what he sees as agreed outcomes from his decision to support the package. But the massive bill does not (and could not) include blanket approval of the pipeline among its provisions. Continue reading

Bad News for Governor Youngkin

Glenn Youngkin addressing the Nebraska Republican Party convention. Photo credit: Nebraska Republican Party by way of the Nebraska Examiner.

by James C. Sherlock

The New York Post has a story by Dana Kennedy that has put Governor Youngkin in a tough spot.

It recounts nasty business transactions by Carlyle Group Co-Founder and Co-Executive Chairman David Rubenstein.

The story links Mr. Rubenstein to the trashing of two founding fathers by tour guides at Monticello and Montpelier, the Virginia homes of presidents Thomas Jefferson and James Madison.

The Governor’s service at Carlyle was not mentioned in the article, but that won’t help.

It is a story linked to Virginia monuments that will need to be dealt with. Continue reading

Wojick on Whales III: The Noisy Driving of Piles

Tethys, wife of Oceanus and mother of the river gods.

by David Wojick

The Virginia wind-versus-whales story has taken a turn for the worse. Worse for the severely endangered Right Whales that is. My research has found what may be some really bad news.

Meet Tethys. Not the real Tethys, the mythical Greek Titan of the sea, but the U.S. Department of Energy’s center for reporting research on the environmental impact of energy technology on sea life, including whales. This is the science side of DOE (where I used to work), not the Ocean Energy development side. Continue reading

Regulations and the Costs of Doing Business in Virginia

Courtesy of Mercatus Center George Mason University

by James C. Sherlock

About the only category I found interesting in the “Top States for Business” rankings by CNBC, other than the progressive metrics that are featured in many of the categories, is “Cost of Doing Business.”

Virginia’s worst score among the six categories of metrics is that one. The methodology used for costs of doing business is defined, but vaguely:

As inflation ravages company balance sheets, we measure the strength of each state’s business tax climate. We also measure wage and utility costs, as well as the cost of office and industrial space. And we consider incentives and tax breaks that states offer to reduce business costs, with special emphasis on incentives targeted toward development in disadvantaged communities.

So, in this category, CNBC is grading government-imposed taxes and incentives as well as market-driven costs.

On the government side, the rating favors lower taxes and higher incentives. The “special emphasis” item may skew the results, but we do not know how much.

Lower taxes are conservative priorities. Government incentives which skew market forces and reward both politically trendy operations and big donors are not. Continue reading

What About That Price of Gas?!!

Gas station on Arthur Ashe Boulevard, Richmond, 7/7/2022

by Dick Hall-Sizemore

There was much wailing — on this blog, in Virginia, and in the nation — as gas prices approached and then exceeded $5 per gallon recently. Governor Youngkin and President Biden used those price levels to call for suspension of gas taxes.

And what was the reaction of the general populace to those high prices, except complaining? Did folks decide to drive less? Nope. AAA projected that road travel this summer would approach the levels of 2019, when gas was much cheaper. Are they driving slower? After all, gas mileage decreases rapidly at speeds over 50 mph. Anyone who tries to travel on I-95 between Richmond and Northern Virginia driving about 65 mph, as I did a couple of weeks ago, knows the answer to that question.

But wait! As shown in the photo above, gas can be readily found in the Richmond area for $4.39, or less, per gallon. That’s 60 cents per gallon less than it was the last time I filled the tank on my car. That includes the inflation-adjusted increase in the gas tax that Steve Haner recently warned us about. That price decrease and price level are better than they would have been under Governor Youngkin’s proposal at the time he put it forward.

Funny, but I haven’t seen anything on these pages about this decrease. Of course, it is more fun to complain about price increases than celebrate their decreases.

This Year the VRS “Diet COLA” Will Really Hurt

by Steve Haner

The most recent year-over-year inflation measure approached 9%, with many key food or energy items growing in cost even faster. The official inflation estimate just used to increase the state’s gasoline taxes as of July 1 was 7%. So what inflation factor will be used to adjust state and local employee pensions this summer? Those will go up less than 4%.  Continue reading

Dropping? Nope, Gas Tax Now Rises July 1

by Steve Haner

Virginia’s gasoline and diesel taxes will rise 7% on July 1, about three more cents per gallon when all the elements of the tax are combined.  This is the inflation-driven cost of living adjustment which Governor Glenn Youngkin (R) and most legislative Republicans tried to short circuit, but which was preserved by a vote in the Virginia Senate last week.

The new gasoline tax will be 28 cents retail, 8.2 cents wholesale plus another 0.6 cents per gallon to fund a program for removing old underground tanks safely.  That’s a combined tax of 36.8 cents per gallon. The taxes on diesel will be 28.9 cents retail, 8.3 cents wholesale plus the same tank fee, a total of 37.8 cents per gallon.  Continue reading