Category Archives: Business and Economy

With Defeat in Connecticut, Will Virginia Drop TCI?

By Steve Haner

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

Why do Virginia’s leaders run away from the Transportation and Climate Initiative? Could it be because the first state legislature to consider it, in reliably Democratic Connecticut, just adjourned without even taking a vote on the proposed carbon tax compact, despite strong support from Democratic Governor Ned Lamont?

The Virginia Department of Environmental Quality has called a June 24 public meeting to discuss efforts to ramp down carbon dioxide emissions from transportation sources, but it made no mention of the pending TCI interstate compact. Instead it focused on the General Assembly’s approved 2045 goal of “net zero” emissions in all sectors of the economy, including transportation. Continue reading

Businesses Taxed For Somebody Else’s Layoffs?

Labor Force Participation Rates, March 2021. Source: VEC  Click for larger view. It represents the percentage of population of working age employed or seeking a job.

by Steve Haner

So many Virginia employers faltered or failed during 2020, the remaining companies may be charged a special tax of $95 on each of their own employees in 2022. It will cover the unemployment benefits paid to workers somebody else laid off, the highest so called “pool tax” ever imposed, more than double the amount collected following the previous recession in 2012.

The total unemployment insurance tax (average) may reach $360 per employee in 2022: A base tax of $249, the pool tax of $95 and a special “fund builder” tax of $16. That is more than 50% higher than the previous peak tax in 2012.

The figures emerged this morning as the Virginia Unemployment Commission staff briefed a legislative oversight panel on the financial health of the state’s beleaguered Unemployment Insurance program, swamped by a record number of claims in the COVID-19 recession and hampered by administrative failures in dealing with claims that needed extra attention.

For details, here is the UI Status Report presented today, following the usual format. VEC also provided more information on Virginia’s employment history over time, by region, industry, and locality.  Continue reading

VA Employers Stuck in COVID Time Warp

By Steve Haner

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

Despite the stunning and rapid success of the vaccines in arresting the spread of COVID-19, if you enter a Virginia workplace you go back in time to the pre-vaccine era of doubt and fear.

Virginia acted in haste in adopting permanent workplace rules related to COVID 19. Now that the Centers for Disease Control has relaxed many of its requirements and conceded that others were not backed up by evidence, the state’s employers are in limbo. The workplace regulations are now badly out of step.

There was no allowance for vaccinations in the regulations, which became permanent in January just as the population was starting to get shots.

Governor Ralph Northam was warned this would happen if the temporary COVID-19 rules were made permanent but barreled ahead to the applause of organized labor. The regulations carry the weight of law and can be enforced with severe sanctions, whether or not they are in direct conflict with the latest CDC guidance. Continue reading

Sentara, Cone Health Call Off Merger

From Virginia Business:

“Sentara Healthcare and Greensboro, North Carolina-based Cone Health mutually called off a merger Wednesday, according to a statement by the Norfolk-based health care system.”

The Sentara Healthcare Board of Directors and the Cone Health Board of Trustees came to the mutual agreement to end affiliation plans late last week, according to the announcement.

In Wednesday’s statement, Sentara officials said, “As this work progressed, we realized that each of our communities and key stakeholders require support and commitments from our respective organizations that are better served by remaining independent. The decision was a difficult one, but both organizations remain dedicated to advancing our common goal of providing outstanding care for our respective communities.”

The outcome was right, whatever the reason. It will be interesting to see where Sentara trains its gaze next.

— J.S.

School Closings Negatively Affect Female Employment

Image by Free-Photos from Pixabay

by D.J. Rippert

Mom at home. An article from The Center Square summarizes a number of studies relating COVID-19, school policies during the pandemic, and the number of women in the workforce. A study by the journal “Gender & Society” characterized the matter as a “tidal wave of women” leaving the workforce in 2020. Center Square notes that, “Researchers found that women primarily left the workforce (in addition to layoffs and job closures) to help educate their children when schools reverted to virtual learning and children were no longer physically at school.” Statistics indicate that the employment gap between mothers and fathers was less in states where the schools stayed open for in-person instruction, either full-time or part-time. As the article states, “But the gap grew by an average of 5% in states where only virtual learning was offered, such as in California, Delaware and Virginia.” Continue reading

Protect Taxpaying Virginians From Coming Inflation

Time for a refresher course on the Weimar Republic?

by Steve Haner

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

One of big financial winners with the May 1 Virginia minimum wage increase is the state itself, because the entire raise is subject to a 5% state income tax. With its low standard deduction and personal exemption amounts, Virginia squeezes income tax out of even its lowest wage workers. Continue reading

Vertically Integrated Health Providers/Insurers – Weak State Oversight But New Federal Authority

by James C. Sherlock

In the contest between Virginia’s disorganized attempts to oversee vertically integrated health care and health insurance businesses, Sentara being the most prominent example, and Virginia’s regional monopolies’ defenses against effective regulation and legislation, the monopolies have won.  

This piece discusses Virginia’s failed legislative and regulatory oversight structures. I will recommend structural changes to both to deal with the issues that fall between the cracks.

There is, however, very recent good news.

A new federal antitrust law gives federal courts full authority over integrated healthcare/health insurance business structures operated in restraint of trade. I will briefly describe the potential effects of that change. Continue reading

Should Northern Virginia Join D.C. in the 51st State?

State flag of New Columbia (including NoVa)?

By Don Rippert

Taxation without representation. The Democratic Party’s control of Congress and the White House has reopened the question of statehood for Washington, DC. This is not a new issue. The question of statehood for D.C. has been actively debated since 1980. Since the 98th Congress, more than a dozen statehood bills have been introduced. Two made it out of committee. The closest any bill came to success was a 1993 effort that was defeated 277 to 193 in the US House of Representatives. Support for D.C. statehood lies almost entirely along party lines with Democrats favoring statehood since it would yield two U.S. Senators and one Representative — all of whom would almost certainly be liberal Democrats. Republican opposition has been insurmountable over the years. Maybe a major repackaging of the idea of statehood for D.C. could break the logjam. Continue reading

Who Hit the Brakes on NoVa Growth?

Hamilton Lombard. Photo credit: UVA Today

by James A. Bacon

Northern Virginia’s population is growing, but not nearly as fast as before. According to a new study by University of Virginia demographer Hamilton Lombard, Northern Virginia accounted for 66.5% of the state’s population growth between 2010 and 2019, but slipped to 33.7% in the last year.

“While Northern Virginia is still growing in population, its recent slowdown is remarkable given how long so much of Virginia’s population growth has been concentrated in Northern Virginia,” Lombard said in an interview with UVA Today. “Since 1980, Northern Virginia has contributed to over half of the commonwealth’s entire population growth. Earlier in the 2010s, over two-thirds of Virginia’s population growth occurred in Northern Virginia.”

“Yet, since the mid-2010s, population growth in Northern Virginia has slowed considerably as more residents have left the region, often moving to other Southern states,” Lombard said. “Some of the initial out-migration may have been driven by the federal budget sequestration and shutdowns, which slowed growth in the region’s economy.”

Northern Virginia has driven demographic, political and economic change in Virginia over the past three or four decades. The region now dominates the state in much the same way that Chicago overshadows the rest of Illinois and New York City runs the Empire State. A marked slowdown in the region’s growth could have momentous consequences for Virginia’s economic prosperity and political economy. Here’s the big question: Was 2020 a transitory blip or does it portend longer-lasting changes? Continue reading

State Tax Harvest Under Northam Expands Again

by Steve Haner

With the release today of the April 2021 Virginia state revenue report, a correction in an earlier post becomes necessary. Overall general fund state tax collections are not up 26% so far compared to four years ago, they are up almost 30 percent. Corporate income tax collections are not up 68%, but 86% over the same period four years ago.

Your correspondent regrets the error and admits jumping the gun after the March report knowing things would become more dramatic soon. Since the essence of good communication is repetition, expect another update in a month. And as has been the case for a while now, expect Governor Ralph Northam to seek to distract the voters from what is really going on. Continue reading

This One Easy Trick Makes Gas Lines Grow Expontentially

Photo credit: Richmond Times-Dispatch

by James A. Bacon

As panic buying sends Virginians to the gas pumps to top off their tanks, Attorney General Mark Herring is encouraging citizens to report instances of price gouging.

“This ransomewear (sic) attack on the Colonial Pipeline could create disruptions in the gasoline supply across the Commonwealth, and unfortunately, bad actors could take advantage of this just to line their own pockets,” said Attorney General Mark Herring in a press release. “Virginians should not have to worry about paying exorbitant prices for gas and other necessary goods during this time.”

Herring encouraged Virginians to file complaints with the Department of Agriculture and Consumer Services.

This is the absolute worst possible thing the state can do. Economics 101: During times like this, prices should rise. Continue reading

Gas Shortages: Deja Vu All Over Again

Photo credit: New York Post

by Kerry Dougherty

It’s like old times. 1979 to be exact.

Just 3 1/2 months into the Biden administration and we’ve gone from energy independence to gas lines.

What’s next, 18% percent mortgages? Or will Joe borrow Jimmy Carter’s old cardigan and urge us all to turn down the thermostats?

Yep, everywhere I went yesterday it looked a lot like it did 32 years ago. Long lines of cars snaking around gas stations. Exasperated drivers pounding their steering wheels.

I remember 1979 well because I was living in Northern Virginia and the odd/even gas rationing was chaotic. I became so desperate for fuel for my diesel VW Rabbit that I actually siphoned gallons out of the heating oil tank at my house one day.

I can still taste it.

Yes, I know that’s illegal. I believe the statute has run on that crime. Continue reading

Our Deranged Economic Policy

by James A. Bacon

Back during the Great Depression, critics of President Roosevelt’s economic policies equated them with paying unemployed workers to dig holes and fill them back up. As loony as that sounds, it’s better than what government does today. At least the idea of paying people to dig holes honored the age-old connection between work and reward. Now the government just hands out money willy nilly, no effort required.

I felt a full-scale rant coming on when I read this article in the Martinsville Bulletin his morning, which describes how businesses in Martinsville and Henry County in Southside Virginia cannot find find enough workers — this in a community which has long had one of the highest unemployment rates in the state.

Will and Tammy Pearson, owners of two restaurants and a bowling alley, say they are so short-staffed that everyone who does have a job is working overtime. No one is responding to job advertisements. “With the unemployment and stimulus benefits,” says Will, “people don’t want to work.”

The Pearsons’ experience is common across the area. Continue reading

Has COVID-19 Killed the Urban Renaissance?

Image credit: “Has the Pandemic Changed Cities Forever?”

by James A. Bacon

If you’re looking for a good Sunday read, consider an article by Tim Sablik, “Has the Pandemic Changed Cities Forever?“, in the Richmond Federal Reserve Bank’s Econ Focus. Sablik does a fine job of sketching out the big issues identified by the nation’s leading urbanologists as they ponder the impact of the COVID-19 epidemic on urban development.

In a nutshell, Sablik argues that (a) the epidemic has clobbered the urban cores of American metros as knowledge workers have drastically changed their work habits and personal preferences, (b) that the pendulum will swing back partially as the epidemic subsides, but that (c) things will not go back to the way they were. There are profound implications for cities and counties in Virginia as they plot their futures. Reading Sablik essay is a good place to start any re-evaluation. Continue reading

The Ballad Merger II: Cuts and Consolidations

by Carol J. Bova

Upon the merger of Mountain States Health Alliance and Wellmont Health System in 2018, the first order of business for the newly created Ballad Health was shoring up its finances. If Ballad wasn’t successful at this, it would not have the resources to invest in the new services, facilities, programs, and equipment to improve community health it had promised as a condition of the merger.

Not all of Ballad’s actions were well-received. Some changes triggered community protests and county objections in its Tennessee and Virginia service territories. But the company did achieve its aim of bolstering cash flow. Here’s how Ballad went about it.

Job cuts. Financial conditions were adverse from the beginning. In an April 16, 2018 letter to the Tennessee Commissioner of Health, ten weeks into the merger, Ballad wrote that “due to the increased cost of labor, pharmaceuticals and supplies, and the continued shift to the outpatient setting from inpatient, operating income of the combined systems has declined by 123% since the same time in the prior year.” Continue reading