Category Archives: Finance (government)

Time for Amputation: NoVa Merging with “New D.C.”

D.C. Statehood. There has been a long running chorus of cries for D.C. residents to have full representation in Congress. From “Taxation Without Representation” slogans on D.C. license plates to the Biden Administration’s calls for DC to become the 51st state … this debate has gone on for a while. Most discussion devolves into pure politics. D.C. would bring two more liberal U.S. senators and a liberal U.S. Representative who can vote. People either love or hate that idea. Back in May I wrote a column on this blog about Northern Virginia joining D.C. in the 51st state.  In this column I’d like to put aside the politics and focus on the ethical considerations for making D.C. a state.

Because they’re Americans. The nearly 700,000 residents of Washington,  D.C., pay their full share of federal taxes. Residents of D.C. were subject to be drafted in times of war, fought and died in our country’s battles and are required to obey all laws passed by Congress. In other words, D.C. residents have all the responsibilities of American citizenship. However, they are not represented in the U.S. Congress. They have no senators and their one representative can’t vote. The biggest ethical reason to make D.C. a state is so its citizens have all the rights of being American, including the right to representation in Congress. Continue reading

Richmond Schools’ Flawed Data Threatens Federal Funds


by James C. Sherlock

The massive flows of federal and state funding to local school districts are based largely on data reported by the schools to their districts, the districts to the Virginia Department of Education (VDOE), and VDOE to the U.S. Department of Education.

In Fiscal Year 2018, the U.S. Department of Education sent more than $820 million to Virginia in support of K-12 education. Every dollar was allocated based on data collected and quality assured at the local, state and federal levels. 

The City of Richmond Public Schools (RPS) has massive problems that result in outsized contributions by the federal government. One of those problems — a serious and potentially consequential one — could imperil federal funding.

We will explore a recent event that illustrates that issue. Continue reading

The One-Sided Decision in the Reversion of Martinsville – the Start of a Trend?

by James C. Sherlock

The Martinsville Bulletin, perhaps the best remaining newspaper in the state for local coverage, published a must-read article on the reversion of Martinsville from city to town and joining Henry County.

Overview

Martinsville’s current city logo, above, was perhaps prescient. Martinsville has been hemorrhaging population, losing more than 18% in the past 10 years, and was financially stressed before that loss.

Reversion in Virginia is a one-handed game. The small cities hold all of the cards.

Henry County is vocally opposed but feels helpless to stop it. The Henry County Supervisors voted to skip the legal process to avoid the costs. They called the reversion MOU “the best we could hope for and voted for it to avoid years of court battles”.

They are right  What they avoided was the special court that would have overseen the reversion under Virginia law had they not come to an agreement. The county would have been a defendant in a trial.

The rules for that court specified in that law give the small cities every advantage in a trial. That same special court would have overseen the transition for a decade. Every decision.

The changes reversion portends for city and county residents are massive. Now that his has happened, does anyone think this will be the last reversion? Continue reading

Layne Going to the Dark Side

I do not know if this is good news or bad news for Jim Sherlock’s campaign, but Aubrey Layne, currently the Secretary of Finance, will be joining Sentara on July 1.  (This is about the time during an administration that Cabinet members start jumping ship.)

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

TCI Debate Rages in Comments on Proposed Rule

by Steve Haner

The political wannabes in both parties and the state’s media are continuing to ignore it, but the argument over the proposed motor fuel carbon tax called the Transportation and Climate Initiative rages in comments on the proposal flowing into its advocates.

The Thomas Jefferson Institute has also launched a short video (above), perhaps just the first, to alert the public through more populist means. It features owners of two regional fuel businesses, well known as major local employers and taxpayers. Without doubt, Virginia’s membership in TCI would shrink and perhaps severely damage those businesses.

The video was actually ready to use had the 2021 General Assembly taken up the issue, but Governor Ralph Northam did not ask for legislative permission to join the interstate compact involved. The state remains involved in the planning for the cap and tax and ration scheme, now set for 2023 in the states who agree to the compact.

If put in place, all fuel Virginia wholesalers would need to buy government-issued allowances to sell gasoline or diesel, in effect a carbon tax. The amount of allowances will be frozen to prevent the any growth in fuel sales, and then decline annually to force down consumption, in effect rationing.  Continue reading

May Day Brings Virginia’s Labor Revolution

“Liberty Leading the People,” Eugene Delacroix.

by Steve Haner

Four major changes in Virginia’s labor laws delayed at the beginning of the COVID-19 recession will all take effect May 1. All were approved by the 2020 General Assembly once Democrats controlled both legislative chambers and then delayed at the 2020 Veto Session. May Day 2021 is almost here.

Minimum Wage. The 31% increase in the state’s minimum wage, from $7.25 to $9.50 per hour, will have the broadest impact. House Bill 395 and Senate Bill 7 also raised the hourly minimum wage to $11 eight months later, on January 1, 2022, and to $12 a year later on January 1, 2023.  Continue reading

Virginia Will Mandate and Hold Retirement Savings

Click here for more information on the California state-run retirement fund that inspired the Virginia legislation. Source:  Georgetown Center for Retirement Incentives.

by Steve Haner

Next week’s reconvened General Assembly session will decide whether only full time employees of Virginia’s small businesses will be pushed into a new state-sponsored retirement savings plan, or part-time workers will join them there.  Continue reading

Unthinkable–a Tax Decrease!

Patrick Duhaney,City Manager, Virginia Beach

By Dick Hall-Sizemore

According to a report in the Virginian –Pilot, the city manager of Virginia Beach will be recommending that city council reduce the city’s real estate tax rate. He is also recommending that the city delay a previously approved storm-water fee increase.

Last year, the city cut $67 million out of its operating budget in anticipation of COVID-19’s impact on the economy. The impact was not as bad as anticipated and revenues have stabilized. Even with the proposed cut in the real estate tax rate and the delay in the storm-water fee, resulting in a loss of about $9.3 million, the manager projected enough revenue in the budget to recommend 3% salary increases for city employees and the approval of 54 new positions, primarily firefighters and emergency responders.

The fiscal condition of the city of Virginia Beach is not typical of that of other Virginia local governments and there are probably few, if any, others who could afford to take these steps. However, the city is an example for most of the contributors and commenters of Bacon’s Rebellion that governments are not always trying to get as much out of the taxpayers as they can.

The Business and Politics of Senior Care in Virginia

by James C. Sherlock

We write here often about senior care, the companies that provide it and the politics around that business.

It is useful to understand the continuum of care to make sure we also understand the different financial situations which companies in different parts of that industry find themselves and the way they are overseen and paid in Virginia.

The larger corporations that offer these services often offer both facility and in-home care.

The basic descriptions below are offered for considering the business interests and therefore the lobbying efforts of the companies that provide the services. They are not meant for personal counseling. Continue reading

Virginians’ Money and Our Tax-Exempt “Public Charity” Healthcare Monopolies

The Business of Healthcare

by James C. Sherlock

A generally accepted rule of thumb for the minimum profitability required for a hospital to maintain operations and fund its future is 3%.

Virginia’s community hospitals as a group in 2019 had an operating margin of 10%. Most of them are filed with federal and state governments as not-for-profit public charities and are untaxed at any level of government.

I yesterday wrote a  column that disclosed 34% increases in the 2019 profitability of Virginia hospitals that were generated by taxpayer funds sent directly to the hospitals through Medicaid expansion and increases in Medicaid payments passed by the General Assembly in 2018.

There were several good reasons for Medicaid expansion. Better access for the poor. Financial stability for rural hospitals. I was for Medicaid expansion myself, and Republican votes put it over the top. Continue reading

Podcast: How the General Assembly Has Changed

By Peter Galuszka

I haven’t contributed much to BR lately since I am slammed with non-Virginia work. I did manage to help out on a Podcast about how the General Assembly has changed the state over the last two years as Democrats have gained power.

This Podcast is produced by WTJU, the University of Virginia radio station. I do a weekly talk show on state politics and economics and, on occasion, work on Podcasts.

Joining me is Sally Hudson, a delegate from the Charlottesville area. She is Assistant Professor of Public Policy, Education and Economics. Sally studied at the Massachusetts Institute of Technology and Stanford and is one of the youngest members of the General Assembly.

I hope you enjoy it.

Analysis of State Use of Federal COVID Funds

Design credit: Atlantic Cape Community College

By Dick Hall-Sizemore

(Note:  All of the data presented in this post is based on the author’s analysis of raw expenditure data from the state’s accounting system (CARDINAL) for FY 2020 and FY 2021 through 2/22/2021.)

As of February 22, state agencies had spent or disbursed $11.9 billion in federal COVID funds.

Two major categories of expenditures accounted for about 86 percent of that total.  The Virginia Employment Commission had paid out $8.8 billion in unemployment claims.  Secondly, in accordance with federal law, the state had transferred $1.4 billion to local governments.  The remaining $1.7 billion was spent directly by state agencies or disbursed by them as grants to local or regional government agencies or to private entities. Continue reading

You Thought Payday Lenders Were Bad? Welcome to Internet Lending.

by James A. Bacon

A new law that went into effect this year is designed to protect Virginians against “predatory” short-term loans by limiting what lenders can charge. And in honor of National Consumer Protection Week, Attorney General Mark R. Herring is encouraging Virginians to familiarize themselves with the risks associated with smaller-dollar loans.

I’m all in favor of educating consumers, and I’m glad to see that the AG’s office is vigilant against fraudulent lending. But I can’t escape the worry that the political class’s do-gooder instinct to “help” poor people by regulating one of the few industry sectors willing to lend them money may do them more harm than good. Regulating payday lenders pushes poor people into the arms of online lenders.

In a press release today, the AG’s Office reported some interesting numbers regarding the scope of payday lending. Citing data from the 2019 Annual Report of the Bureau of Financial Institutions, the press release notes that 83,107 Virginians took out 268,097 payday loans totaling nearly $110 million with an average annual percentage rate of 253%. Continue reading

Help for Small Businesses–One State Use of CARES Funding

By Dick Hall-Sizemore

I owe the Dept. of Small Business and Supply Diversity (DSBSD) an apology. In an earlier post, I questioned whether the agency would be able to quickly distribute $120 million in grant funds. It turns out that its first checks went out in mid-August and it had to stop accepting applications on Dec. 9 because the amount of money designated for the program had been exhausted.

The program is called Rebuild VA. Approved applicants received awards of three times their average monthly recurring eligible operating expenses plus COVID-related expenses, up to a maximum grant of $100,000. To be eligible for an award, an applicant could be a corporation, pass-through entity, nonprofit organization, recognized tribe, sole proprietor, or individual contractor who met the following criteria:

  • Principal place of business in Virginia
  • 250 or fewer full-time employees
  • Operating prior to 3/12/2020
  • Currently in good standing with State Corporation Commission (if applicable), and
  • Engaged in legal activity.

Continue reading