By Steve Haner
The End of the Electoral College Looms
The legislature’s new ruling Democrats, having celebrated their adoption of the national Equal Rights Amendment, may continue their Constitutional aspirations next week and try to kill the federal Electoral College. Some believe the will of Virginia voters in choosing presidential electors should be overridden by the popular vote total in all fifty states plus the District of Columbia combined.
This idea is known at the National Popular Vote. Objections to the Electoral College process have a long history but were reignited when former Senator Hillary Clinton became the fifth presidential candidate who won the popular vote but lost the Electoral College. As predicted by Bacon’s Rebellion, the proposal to grant Virginia’s votes to the national front runner is back in three bills, with far longer lists of patrons and co-patrons. The two House bills are here and here, and the Senate version here. All now rest with firmly Democratic Privileges and Elections committees. Continue reading
Artist’s rendering of Pamunkey casino in downtown Norfolk.
by James A. Bacon
The population of the Pamunkey Indian tribe, which traces its lineage to Powhatan and Pocahontas, numbers about 200. Most members live on or near their 1,200-acre reservation north of the James River. Among other ways of making a living, they operate a shad hatchery, produce traditional pottery, and cater to visitors in their museum. For the most part, from what I can gather, they enjoy a working/middle-class standard of living. I have come across no evidence of any wealthy Pamunkeys. But if the General Assembly legalizes casino gambling this year, the tribe would strike it rich.
In 2016 the Pamunkeys won federal recognition as an Indian tribe, a status that entitles them to all manner of benefits not available to other Americans. A veritable industry has grown up around these entitlements, the most visible of which is the development and operation of casinos. Running casinos is not a skill set that Pamunkeys have acquired on their reservation. Nevertheless, the tribe is pursuing development of a casino on Norfolk’s waterfront in a project originally pegged at $700 million. Although the project has since been scaled back to $200 million, that still averages out to an investment of $1 million per Pamunkey.
News reports provide few details on how the little tribe proposes to finance the casino. But going to go out on a limb and suggest that the Pamunkeys are not putting up the equity for the project themselves. Just as the Eastern Band of Cherokee are backed by a major developer in their proposal to build a casino near Bristol, so, too, do the Pamunkeys have sugar daddy. According to news reports, that backer is Franklin, Tenn.-based billionaire Jon Yarbrough. Continue reading
The mouse that
by James A. Bacon
As the General Assembly considers a host of issues that could have devastating consequences for Virginia’s business climate — tax increases, $15 minimum wage, repeal of the right-to-work law, a death tax, trial lawyer-friendly anti-discrimination legislation, and the list goes on — the business community has been remarkably quiet.
Once upon a time, when business spoke — like in the old E.F. Hutton commercial — Virginia listened. Now, it seems, business isn’t speaking, and nobody’s listening.
The silence of Virginia’s business community struck me when reading a Roanoke Times op-ed today in which Terry Durkin, vice president of public policy for the Roanoke Regional Chamber of Commerce, expressed muted reservations about the minimum-wage and right-to-work bills. Whoah! Where did he come from? When’s the last time I heard from anyone in the business community who wasn’t bleating about safe, non-controversial topics?
Photo credit: Gambling Herald
By Don Rippert
It’s not called the OLD Dominion for nothing. Virginia has lagged the nation in allowing legalized casino gambling. This is especially noteworthy since the United States doesn’t have a very tolerant attitude toward legalized gambling compared to other countries. In other words, Virginia has been a laggard within a lagging nation. That is changing. As of 1997 only two US states allowed legal casino gambling. Today 43 US states have operating casinos. Virginia is not among those 43 states. Is anybody surprised? However, legislation passed in 2019 will change that. It seems very likely that Virginia will be joining the modern world of legalized gambling in 2020 (and beyond). The biggest barrier to Virginia casinos opening in 2020 is the bureaucracy of our state government. More on that in a moment. First, let’s review a brief history of legalized gambling in the Old Dominion.
By Don Rippert
Cannabis certitude. The seemingly inexorable march toward legalized marijuana in the United States continues unabated. A poll of 9,900 American adults conducted by the Pew Research Center from September 3 – 15, 2019 found that 67% of the respondents thought cannabis should be legalized. That’s five percentage points higher than Pew’s last poll on the subject conducted in 2018. Many state legislatures are acting on behalf of their constituents. Legal weed sales began last Sunday in Michigan and will commence on New Year’s Day in Illinois. At the federal level the House Judiciary Committee approved a bill legalizing marijuana at the federal level. As of today 33 states have legalized medical marijuana and 11 states have approved the sale of recreational marijuana to adults. Six more states seem very likely to make decisions on legalizing recreational marijuana in 2020 – Arizona, Arkansas, Florida, Missouri, New Jersey and South Dakota. As legal marijuana becomes big business pundits are predicting the future of legal weed. Arcview Market Research and BDS Analytics believe that medical marijuana will be legalized in every state by 2024 and recreational marijuana will be legal in 20 states by that date. Virginia is not among the 20.
Weed in the
Old Ancient Pre-historic Dominion. Virginia is one of 15 states where marijuana is fully illegal. (Note: I do not count CBD oil sales as partial legalization). The first step on the long road to legalization is usually decriminalization. In 2018 Virginia’s General Assembly considered a bill to decriminalize possession of small amounts of marijuana. It was killed along a purely party line vote in the Senate Courts of Justice Committee. In 2019 another decriminalization bill was considered. Virginia’s Republican leadership in the General Assembly couldn’t muster the minimal courage to take the 2019 bill to the full committee and killed it in sub-committee. Later that year the Republicans got their heads handed to them in the General Assembly election. What a surprise. Now Democrats hold a trifecta in Virginia with control of the House, Senate and Governorship. Once again, Sen. Adam Ebbin (D-Alexandria) is the patron for proposed legislation to decriminalize possession of small amounts of marijuana. However, this year unlike the past, Ebbin’s party is in control.
By DJ Rippert
Chow time. Agriculture is Virginia’s largest private industry. No other private industry is even close. The Virginia Department of Agriculture and Consumer Services (VDACS) claims that agriculture has an economic impact of $70 billion annually and provides more than 334,000 jobs in the Commonwealth. Virginia’s top agricultural products and their cash receipts are:
- Broilers (chicken) – $935M
- Cattle and calves – $413M
- Greenhouse / nursery – $306M
- Dairy products, milk – $306
- Turkeys – $236M
Of Virginia’s five top agricultural products four are under possible attack from a revolution in food technology – meatless meat. McKinsey & Company just issued the latest version of The Next Normal: Perspectives on the future of industries journal. The title? The future of food: Meatless. Some of the commentary in that journal ought to have Virginians wondering about the future of the state’s largest private industry.
By Don Rippert
Ear flick. Given the emotions of the recent election I thought a little levity might be in order. Harpers Ferry Brewing of Hillsboro, Va., is introducing a new IPA. It will be called “Sell the Team” in a relatively transparent shot at Redskins’ owner Dan Snyder. The beer went on sale yesterday and is described as “bitter and slightly disappointing, like a day at FedEx Field.” Given its alcohol content of 9.5% (yikes), it should only take about a six-pack to be able to get through another Sunday of Redskins football. Maybe I’ll send some to the mayor of Richmond so he can momentarily forget that fabulous deal he cut with the guy who should sell the team over the training camp. Jim Bacon had this to say … “The first year of training camp was a modest success, creating a $10.5 million economic impact to the Richmond region. A daily average of 10,800 people attended the practices that year. The number over the same span last year fell to 7,500, and then to 4,500 this year. As the Richmond Times-Dispatch wryly observed, the Richmond Squirrels AA-league baseball club has been drawing larger crowds.”
Next summer, I wonder how many people will flock to Richmond to see last year’s 2-14 (or thereabouts) team prepare for the 2020 season.
Hat tip: Charlie Mayer
VCU President Michael Rao
by Peter Galuszka
There’s long been the “Virginia Way” of ruling oligarchs making decisions in backrooms while leaving the public out of the picture. But then there’s also the “Richmond Way,” which is the same thing on steroids.
The key focus today is the so-called Navy Hill District Corporation, a group headed by Dominion Energy chieftain Tom Farrell that wants to replace the aging Richmond Coliseum and build a $1.4 billion mixed-use project on 10 blocks just north of Broad Street downtown.
With Richmond Mayor Levar Stoney complicit, the group which involves some of the city’s biggest movers and shakers has worked mostly in secret and has gone to great lengths to keep the public as far away from planning as possible.
Richmond has had its share of flops when it gets into top-down, centralized economic planning somewhat reminiscent of Moscow, where I used to live and work. One was the 6th Street market, a failed project not far from Navy Hill. The city, which has a poverty rate of about 25%, is paying millions to the Washington Redskins, one of the richest firms in the National Football League, to train at a city facility for three weeks every summer.
Navy Hill also had an inauspicious start. When the city sent out requests for proposals for replacing the Coliseum a few years ago, it got exactly one proposal – from Farrell’s group. Continue reading
by Peter Galuszka
It’s been a very long goodbye. Faced with billions of dollars in health-related lawsuits and huge public relations problems in 2008, cigarette giant Philip Morris split itself in two very different companies.
It reminds me of the scene in Stanley Kubrick’s brilliantly sarcastic war move, “Full Metal Jacket.” A colonel stops Private Joker and demands to know why he has born-to-kill and peace symbols on his helmet at the same time. “What does it MEAN?” growls the Colonel. “I dunno, Sir,” replies Private Joker, “I guess it’s the Jungian thing, you know, the duality of man.”
Duality of cigarette making is more like it. Back in 2008, Philip Morris split itself into a Swiss-based international firm while Richmond got Philip Morris USA and its holding company, The Altria Group. The latter is still a potent force with 3,750 local workers and a big honey pot of largess.
Philip Morris International boosted sales by creating such nicotine laden smokes as “Marlboro Wides” and Marlboro Max 9,” which sold in Third World countries that didn’t have the bucks or the court systems to challenge cancer causing products. Continue reading
by Peter Galuszka
Virginia farmers are paying a big price for President Donald Trump’s chaotic trade war with China. If anything, it’s likely to get worse as Trump vows even bigger tariffs, drops the idea and then comes back to it.
There’s no question that Trump’s peculiar negotiating behavior and questionable logic are having their effect.
China had been Virginia agriculture’s number one export destination with soybeans leading the list, along with apples, livestock and other products.
In 2017, China bought $671 million worth of farm goods from state farmers. Then, Trump became president and quickly imposed a series of tariffs against China about a year and a half ago. Exports to China dropped precipitously to $235 million. Canada is now Virginia’s biggest export partner for agriculture. Continue reading
by James A. Bacon
Thanks in part to a $797 million surplus in last year’s budget, Virginia will build up its budget reserves to $1.6 billion by the end of the 2020 fiscal year, and Governor Ralph Northam is promising to take a “cautious and strategic” approach to the next biennial budget.
“During the next budget cycle we will continue laying a strong foundation for Virginia — preparing for a rainy day while investing responsibility in our long-term growth,” the governor said in an address to General Assembly budget committees.
Northam highlighted the $20 billion in economic development announcements made since he has taken office, more than any previous administration in a full four-year term. But looking ahead, he took note of increasing economic uncertainty heightened by the trade war with China. Speaking personally, he described how retaliatory tariffs could keep the soy beans grown on his family farm in the Eastern Shore “in the fields if we can’t sell them.” Continue reading
Free falling. As coal production declines, the economy of far Southwest Virginia is in free fall, with potentially dire fiscal consequences for local governments. “A sharp decline in coal production jeopardizes the fiscal health of local governments, degrading their capabilities to provide adequate public services and issue and serve debt,” finds a report by Columbia University’s Center on Global Energy Policy and the Brookings Institution. Between 2007 and 2017, Virginia coal production fell by 50% from 24.9 million short tons to 12.8 million. The study identifies Dickenson and Buchanan counties as the fifth and sixth most mining-dependent localities in the nation, with 17% and 16% respectively of the labor force engaged in the industry in 2015. The Virginia Mercury has the story here.
Tarnished silver. Phase One of the Washington Metro’s Silver Line to Tysons ran $220 million over budget and was completed six months later. Now Phase Two of the $5.8 billion project funded largely by commuters on the Dulles Toll Road, reports the Washington Post, is running late. The project, expected to be wrapped up next month, may not be completed until next spring or summer. The construction project has been plagued by cracks in concrete structures, defective rail ties, and faulty dimensions for a rail-yard platform. It is not clear yet if the problems will exceed the project’s $550 million contingency fund.
Why do today what you can put off until tomorrow? Bacon’s Rebellion has made much of Virginia’s $5.8 billion in unfunded pension liabilities. Now a new study, “The Sustainability of State and Local Government Pensions: A Public Finance Approach,” says there’s no reason for Virginia or any other state to panic. After “reverse engineering” future benefit cash flows of the pension plans, the authors find that pension benefit payments in the U.S., as a share of the economy, are currently at their peak level and will remain there for the next two decades. Thereafter, the reforms instituted by many plans will gradually cause benefit cash flows to decline significantly.” Continue reading
2018 labor force participation rates. Source: VEC. Click for larger view.
Laissez les bon temps roulez. Virginia’s strong employment climate is adding a financial spare tire to Virginia’s unemployment trust fund, now above 83 percent solvency by one actuarial measure and exceeding a federal recommended minimum balance on another measure.
The annual unemployment fund status update for a legislative oversight commission Wednesday lasted about 30 minutes, with the chairman, Del. Lee Ware, R-Powhatan, noting it was far shorter and less dramatic than some previous meetings in tight times, adding “it’s a good drama not to have.” The presentation is here.
The projected $1.45 billion fund balance for next December 31 will be another record, said Virginia Employment Commissioner Ellen Marie Hess. The figures used are not adjusted for inflation, however, and the state has been at higher solvency levels in previous periods of prosperity. The funds are just sitting there earning interest and awaiting the next recession, which history deems inevitable. Continue reading
Unfriendly skies. Washington Dulles International Airport is the most expensive airport in the United States to fly from. In a survey of the 45 largest airports, Travel Pulse found that the average ticket cost $427.37. On the other hand, travelers do get a bit more for their money, such as free carry-ons and seat selection.
Question: Why is Dulles so expensive? Pricy airports tend to be hubs for traditional airlines like United and American, the survey author said. So, are the airlines the problem? Or has Dulles squandered money on ill-conceived capital projects — expanding to accommodate growth that never occurred? Our friend Reed Fawell might have something to say on that topic.
Danville’s revival. If you haven’t visited the City of Danville in the last 20 years, perhaps you should. My wife and I drove through downtown a few months ago and she was blown away by how vibrant it was. It turns out that James Fallows, a senior writer for The Atlantic, was similarly impressed. In a recent article he explains that the city maintained a viable economy into the 1970s and 1980s based on textiles and tobacco, did not experience the same hollowing out of its industrial infastructure, and saw no need to tear them down, as was the fashion in many other cities in the era of “urban renewal.” The textiles-and-tobacco economy collapsed in the 1990s, but the brick manufacturing structures were preserved.
Today, Danville has more “antique architecture” than downtown Charlotte or downtown Atlanta, even though those cities are vastly larger. The revival of former tobacco and textile buildings in Danville’s “River District” has created a unique environment of walkable urbanism that may seed the city’s renewable.
Update. In the first installment of this two installment post I described the metropolitan juggernaut that is modern day Nashville. I also provided some historical perspective on how Nashville became the sixth fastest growing US city (measured along several axes) between 2011 and 2016. As a side note, the 35 fastest growing cities documented in the prior link included no cities in Virginia. I have family in Nashville. For three of the last four years I have visited my family, run in a wildly popular race and witnessed the remarkable growth of Music City. My 2019 trip is complete and this article is the promised update.
First, a step back. Admiring the rapid growth of Nashville requires a fundamental belief. One has to believe that rapid growth in urban areas is a good thing. This is not a universally held belief, in Virginia or in Tennessee. Thomas Jefferson, for example, was quoted as saying, “When we get piled upon one another in large cities, as in Europe, we shall become as corrupt as Europe.” While I understand the bucolic allure of country living I believe that the economic future of the United States and Virginia will largely be in the cities. I think Virginia should be striving to create an environment conducive to fast growing, safe, livable cities. To that end much can be learned from Nashville as well as Charlotte, Austin, Raleigh, etc. Continue reading