Category Archives: Finance (government)

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

More Money, Same Level of Service

Photo Credit: Richmond Times Dispatch

By Dick Hall-Sizemore

There are often cries of anguish or outrage on this blog and elsewhere over the increases in spending proposed in budget proposals and then authorized by the General Assembly. Some of this criticism of increased spending is justified, but, sometimes, the increase is the result of circumstances beyond an agency’s control. Sometimes, stuff just costs more.

Replacing State Police cruisers is a good example of this quandary. For many years, the State Police used the Ford Crown Victoria Police Interceptor. When Ford stopped production of that model in 2011, the State Police began using the Ford Taurus Police Interceptor.  (It took me a little while to get used to seeing the State Police in those smaller cars.) Next, Ford discontinued production of the Taurus in 2019. After testing Dodge and Chevrolet vehicles as potential replacements, the State Police selected the Ford Police Interceptor Utility. (This is a modified SUV and it explains why I have been seeing local police driving SUVs, which was a little disconcerting.) Continue reading

A Really Sweet Valentine

Photo Credit: WHSV

By Dick Hall-Sizemore

Governor Northam recently gave the budget conferees a $730 million Valentine.

Based on January’s revenue report and year-to-date collections, the Governor has revised the general fund forecast to include an additional $410 million in FY 2021 and $320 million in FY 2022.

The main factor leading to the increase was the unanticipated growth in sales tax revenues. Overall, the General Fund revenues through January grew by 6.0% over the same period a year ago. By comparison, the current budget is based on an estimated annual General Fund revenue growth of 1.2%.  The Governor’s letter to the money committees is here; a Power Point summation of the forecast increase is here; and the detailed January revenue report is here. Continue reading

The Latest Federal COVID Money Pot

Illustration credit: YouTube

By Dick Hall-Sizemore

The federal COVID money keeps rolling into the Commonwealth.

According to the Secretary of Finance, as of January 13, it was estimated that the state would receive $2.4 billion from the stimulus bill passed by Congress in late December (the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSA)).

Unlike the earlier COVID stimulus money (CRF from the CARES Act), the December federal legislation provided less flexibility with this pot of money, directing it to specific agencies and purposes.

K-12 education gets the biggest share. The estimates for Virginia are:

  • Governor’s Emergency Education Relief (GEER) Fund—Flexible—$30.0 million
  • GEER Fund—Private Schools–$46.6 million
  • K-12 Fund–$939.3 million.

Continue reading

How the CARES Funding is Being Allocated

Design credit: Atlantic Cape Community College

By Dick Hall-Sizemore

Upon Jim Bacon’s suggestion, Jim Sherlock and I have taken on the task of looking closer at the federal COVID money that is coming the Commonwealth’s way and trying to discern how it is being spent.  Unfortunately, this is not an analysis one finds in the general news media.

We have taken different approaches, perhaps reflective of our different backgrounds.  Jim has started with the federal programs and their components and requirements, along with the amounts of funding allocated to Virginia. I am looking at how the federal  pot is being split up among state agencies, as reflected in the state budget.  Later, I hope to examine how some of those agencies are spending the money. Continue reading

Senate Taxes Less PPP, House Bill Almost All

by Steve Haner

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

Majorities in both chambers of the Virginia General Assembly agree with Governor Ralph Northam and have voted to tax the federal Payroll Protection Plan grants that saved Virginia jobs in the pandemic. They only remain at odds over how much to tax.

The Virginia Senate has passed a bill 39-0 that allows employers, who used the money to maintain their workforce, to exempt the first $100,000 of their PPP grant from 2020. The rest is taxed. The bipartisan compromise allowed the bill to pass with the emergency clause it needs to go into effect immediately upon approval, in time for this tax filing season.

The average Virginia PPP grant was about $107,000, state officials reported. More than 20,000 employers would still see some taxes on their grants under the Senate bill. This state and its localities have received multiple billions of dollars of direct federal funding during the COVID pandemic, with more on the way, yet Governor Northam also wants to skim 6% off the top of what Virginia employers received.

It is that simple. Continue reading

Federal COVID Funding to Virginia K-12 Schools

by James C. Sherlock

The federal government allocated a great deal of money in each of two different pieces of legislation in 2020 to provide COVID-related relief to K-12 schools.

I will endeavor here to explain briefly what that means to Virginia.

The two pieces of 2020 federal legislation that provide funding to K-12 schools were:

  • Coronavirus Aid, Relief, and Economic Security (CARES) Act signed into law on March 27, 2020; and
  • Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSA) signed into law on December 27, 2020

Two of the major program elements under each of those two bills are :

  • Elementary and Secondary School Emergency Relief (ESSER and ESSER II) funding – Virginia’s allocation is $1.2 billion dollars, 90% of which is to be sub-allocated by formula to school districts.
  • Governor’s Emergency Education Relief (GEERS and GEERS II) funding – $132 million to be allocated to the neediest public schools and non-public schools at the Governor’s discretion.  Money for the Emergency Assistance for Non-Public Schools (EANS) program is part of the Governor’s Emergency Education Relief Fund.  Virginia’s EANS allocation was $46,618,019. For comparison, total Virginia K-12 school spending from all sources was estimated by the NEA at $17.8 billion in 2018-19.

By way of comparison, the federal government sent $1 billion to Virginia for K-12 schools in 2019, including big money from the Department of Agriculture for the National School Lunch program ($247 million) and other non-educational programs, so the 2020 COVID supplementals already exceed the original annual federal appropriations for Virginia. Continue reading

In Memory of Stuart Connock

Stuart Connock (left)
Photo Credit: Joe Mahoney, Richmond Times-Dispatch

by Dick Hall-Sizemore

A legend in Virginia government passed away this past Sunday.  Stuart Connock  dominated state government finance in the 1970s and 1980s.  Before that, he was the one that Governor Mills Godwin tapped to implement the new sales tax. His influence was felt long even long after he retired.

Stuart (everyone who worked with him felt they could call him by his first name) was quiet and self-effacing. He was not well-known to the general public, but he once was viewed as more influential than the governor. He was liked, respected, and trusted by all legislators, whatever the party.

Stuart’s influence and power came about in the old-fashioned way — his knowledge of the budget and state government in general and taxation and revenues in particular. His understanding of the budget was unmatched. This gave him a leg up on those, to use Jeff Shapiro’s phrase, “part-time legislators often incurious about budget arcana.”

Above all, Stuart was a nice person.  He always took time to listen to others and to patiently explain complex budget issues to neophytes, as I can personally attest.

To some on this blog, Stuart may be regarded as part of the “plantation elite.” He was courteous, knowledgeable, nonpartisan, cared about good government, and cared about Virginia. The Commonwealth could do a lot worse if it had more Stuart Connocks around.

Jeff Shapiro’s column on Stuart Connock’s legacy is here.

Stewart Gets Last-Minute Gift From Trump

Corey Stewart

Peter Galuszka

Corey A. Stewart, a conservative firebrand from Prince William County, is getting a last-minute going-away present from President Donald Trump.

As Trump’s administration comes to an end, Trump has created a position on trade at the U.S. Commerce Department that is just for him. In 2016, Stewart headed Trump’s Virginia election campaign before being fired. Stewart said that he was Trump before Trump was Trump.

Stewart is an international trade lawyer and is expected to strong arm Trump’s tough and confusing trade policies.

A special target is China, which Trump has castigated, with some justification, for cheating on business deals, fiddling with its currency exchange rates, growing its armed forces and trampling on human rights.

Stewart will toughen enforcement of Trump’s hostile trade relations, according to news reports.

Some trade experts wonder what the Stewart story is all about. According to Reuters, William Reinsch, a former Commerce undersecretary, said he viewed hiring as “peculiar” since he is filling a position that does not exist. Continue reading

Is DMV Hiding 26% of Virginia’s Fuel Tax?

DMV Table.  Missing is the additional 7.6 cents per gallon collected in every county and city as a “wholesale tax” but still passed on to consumers. Oversight?

By Steve Haner

The Division of Motor Vehicles website is not honestly reporting fuel taxes in Virginia on that table above. This cannot be an oversight.  Continue reading

$300 Million Bond Refinancing Won’t “Save” Higher Ed from Long-Term Challenges

If higher-ed institutions don’t address fundamental challenges, their long-term debt may not be worth much more than these Confederate bearer bonds.

by James A. Bacon

Governor Ralph Northam has unveiled a higher-education refinancing plan that will allow Virginia’s public colleges and universities to reschedule more than $300 million in debt over the next two years.

The Commonwealth of Virginia would refinance bonds issued by the Treasury Board of Virginia and the Virginia College Building Authority. Under the Governor’s plan, which requires General Assembly cooperation, institutions would make no principal payments on their VCBA bonds through fiscal year 2023; the restructuring would extend institutions’ payment plans for two years beyond their current schedule for both types of bonds.

“The COVID-19 pandemic continues to have tremendous impacts on higher education, including the fiscal health of our colleges and universities,” said Governor Northam in a press release. “Families all over the country are taking advantage of record low interest rates to refinance their home mortgages, and we want our public institutions to benefit as well. Refinancing will free up millions of dollars in savings allowing our colleges and universities to make critical investments, meet the needs of Virginia students, and continue offering a world-class education.”

The headline of the Governor’s press release indicated that Virginia institutions would “save” more than $300 million over the next two years. That nomenclature was repeated in leads and/or headlines appearing in the Richmond Times-Dispatch, Roanoke Times, and Washington Post. The initiative will do no such thing. The vast majority of “savings” would come from deferring payments on $300 million, which still will would have to be repaid. Continue reading