Category Archives: General Assembly

New Northam Financial Directive Late, Clueless

By Steve Haner

When I’m wrong, I should rush to admit it. The concerns expressed by others on this blog that the Northam Administration was failing to recognize the financial aspects to the COVID-19 pandemic were valid. The person exhibiting wishful thinking was me, with my assumption they were already acting.

That’s because they just acted, with an executive order to state agencies to freeze hiring, tighten spending and otherwise batten down the fiscal hatches for a storm. “We can expect to enter a recession soon,” Chief of Staff Clark Mercer writes in a four-page memo quoted by the Richmond Times-Dispatch.   

Wrong. The economy has been in recession for a month. A month. The concern now is a depression.

Mercer said the state expects “significantly less revenue” than the most pessimistic forecast Northam’s economic and revenue advisory councils considered last fall and reduced cash balances at the end of this fiscal year that will carry into the next two-year budget and require cuts in spending.

“Our intention is not to cut the budget in the short term, but decisions will depend on how much revenue comes in,” he said.

Wrong again. The state will be slashing the budget as never before, and the Governor should have started the process weeks ago. One can only hope, and it may be a forlorn one, that agency financial managers saw the clouds and acted on their own. If the Governor’s people are only now getting serious about the amendments to the budget due in seven days, shame.  Continue reading

Is Aubrey Layne Serious about a $2B “Hit” to Virginia’s Biennial General Fund from COVID-19?

By DJ Rippert

Penny Layne. Aubrey Layne is Virginia’s Secretary of Finance under the Northam Administration. Previously, Layne served as Secretary of Transportation under the McAuliffe regime. Prior to his time in government Layne held a number of executive positions in private enterprise including the presidency of Great Atlantic Properties. Layne is listed by Wikipedia as being a Republican. If true, he must have shown considerable competence and talent to be appointed to senior positions in two consecutive Democratic administrations.

Five days ago, during a Q&A with Richmond Times-Dispatch Magazine Layne effectively made an astonishing prediction. He was asked about the economic fallout from the COVID-19 epidemic in Virginia. The interviewer noted that COVID-19 would trim $2 billion from the state’s $48 billion General Fund budget within the $135 billion biennial budget. Here’s the question, “When the state budget was passed earlier this month, it was based on a full-throttled economy. Now the state is forecasted to lose potentially $2 billion in the upcoming two-year budget because of the coronavirus pandemic. How will the Northam administration address the drastic change facing the approved $135 billion budget?” Layne went on to answer that question and others without ever calling the $2 billion estimate into question.

Is it possible that the economic hit to Virginia from COVID-19 (even after federal bailout money) will only be $2 billion from the General Fund over two years? That’s just over 4% of the General Fund and just under 1.5% of the total budget.

Continue reading

“We Are All Keynesians Now”

John Maynard Keynes

By Peter Galuszka

John Maynard Keynes, the British economist, advocated government spending and monetary intervention as suitable for modern economies.

When I was a student at a liberal college in New England in the early 1970s, we were taught that Keynes very much had the right idea. As evidence, we had the Great Society programs of Lyndon B. Johnson and, strangely, the Vietnam War. They all relied on vast amounts of deficit public spending.

Since then, free-market types came into favorable light and it all became the magic of the market, little regulation and other panaceas.

According to whom you read, pro-capitalism economist Milton Friedman admitted the necessity of Keynes’ thinking by stating, “We’re all Keynesians now.” President Richard Nixon, a Republican, is also credited with the quote when he took the U.S. off the gold standard.

The phrase is taking on increasing relevance with the COVID-19 pandemic. Virginia is no exception. Continue reading

A Capital Idea

By Dick Hall-Sizemore

As a diversion from the coronavirus story, as well as an effort to give you a little more variety, the following is my previously promised summary of the General Assembly’s changes to the capital budget.  (It was only a little over two weeks ago that the legislature adjourned, but it seems much longer.)

The actions of the General Assembly were both surprising and not surprising. The surprise was that, for the first time in many years, maybe ever, the legislature ended up authorizing fewer capital projects and less debt than the Governor had recommended. The non-surprise was the winners and losers. Continue reading

This is the Green New Deal Economy. Enjoy.

Source: Energy Information Agency.  Click for larger view. LCOE, LACE and Value-Cost Ratio explained below.

By Steve Haner

If all else fails in achieving your green energy dreams, you can always hope for a depression.

In Italy, the COVID-19 depression has already dropped electricity demand by about 18-21%, as reported recently by Utility Dive. The regional transmission organizations around the United States are seeing declines, as well, and I’ve been told (no data, but a reliable source) that PJM’s load is approaching a 10% drop.  Past recessions have included electricity usage declines.  Continue reading

Northam: Take the Bricks Off the Life Rafts

My first post in two weeks. What the heck, I should join the parade and give a bunch of advice to our beleaguered Governor which he is likely to ignore.  This first appeared today in the Fredericksburg Free Lance-Star. It has one of those annoying “take a survey” paywalls, but in this case asks a question we should all answer. Try it.    

By Steve Haner

The assumptions underlying the most contentious debates of the 2020 General Assembly session are gone. Sixty days ago, activists were arguing that this was a rising economy and state government should mandate raising workers to a higher level.

This is a now sinking economy, and the General Assembly’s actions have piled bricks on the life rafts that workers in the commonwealth will need to survive.

The priority now is containing the spread of this respiratory virus, but soon it becomes reviving an economy that has come to a near stop. Nobody knows when or where unemployment will peak, but this is starting to look more like 1929 than 2009.

Gov. Ralph Northam’s lasting legacy will not be his response to the virus, but the speed of the following recovery.  Continue reading

Act Now to Bring State Budget in Line with Reality

by James A. Bacon

About 18 months ago Secretary of Finance Aubrey Layne conducted an analysis of state government finances to see how they would hold up under the stress of another recession of the magnitude of the Great Recession. Hardly anyone thought that a downturn was in the cards; the economy was chugging along just fine. But you never know, and Layne wanted to know how vulnerable the commonwealth was in case the unexpected occurred.

Virginia’s General Fund budget, he concluded, would experience three years of “fairly significant” declines in revenues:

Year 1 — $2.6 billion
Year 2 — $3.7 billion
Year 3 — $3 billion

A cumulative decline of $9.3 billion over three years would be devastating. That’s why Layne became the most forceful advocate in the Northam administration of building up the state’s Revenue Stabilization Fund and financial reserves. Last fall, when the administration began working on its biennial budgets for the 2020 and 2021 budgets, Governor Ralph Northam was forecasting that the commonwealth would build up its reserves to $1.6 billion. “We start out this budget cycle in a good place,” he told the General Assembly money committees last August.

Then came an event that no one predicted, a true black swan: the COVID-19 epidemic. Continue reading

Northam Declares State of Emergency

Photo credit: Patch (McLean)

by DJ Rippert

Danger! Danger! Yesterday, Governor Ralph Northam declared that the Old Dominion was in a state of emergency due to the Coronavirus. Northam exercised these emergency powers five days after the first Coronavirus case was confirmed in the state. The online Patch newspaper from McLean reports that “a statement from the governor says the declaration gives the state flexibility to east [SIC] regulatory requirements and procurement rules, continue federal and multi-state coordination and continue access to critical services.” Northam also announced plans for state employees to work from home.

Northam’s declaration of emergency was considerably slower than in many other states. In Maryland, for example, Republican Governor Larry Hogan declared a state of emergency on the same day that the first cases of Coronavirus were confirmed. Yesterday, Maryland detected the first case of Coronavirus caused by community spread. Continue reading

And This is How They Will Spend the Money

By Dick Hall-Sizemore

Although the General Assembly, as usual, left most of the Governor’s budget bill untouched, it did leave its mark on it. Its top priority clearly was increasing compensation for state employees and teachers. It also toned down some of the Governor’s initiatives.

The revised budget bill for the 2020-2022 biennium reflects an additional $330.6 million in total revenue over the Governor’s introduced bill.  This increase is made up of $187.6 million in additional nongeneral fund (NGF) revenue and an additional $142.9 million for the general fund (GF). The bulk of the additional NGF comes from increases in transportation revenue provided for in the Governor’s omnibus transportation bill and from additional federal Medicaid matching funds.

This report will focus on the changes in GF appropriations agreed on by the legislature. The revision in the revenue projections accounts for most of the additional GF, with the remaining resulting from policy actions enacted by the G.A. Continue reading

More Bad News on Coronavirus

All I need is the air that I breathe. Recent research indicates that the coronavirus can live in air for 3 hours post aerosolization. The Hill reports that, “A study awaiting peer review from scientists at Princeton University, the University of California-Los Angeles and the National Institutes of Health (NIH) posted online Wednesday indicated that the COVID-19 virus could remain viable in the air up to 3 hours post aerosolization, while remaining alive on plastic and other surfaces for up to three days.” Previous media reports maintained that the Coronavirus required direct human contact in order to be transmitted. To be clear, this research has not been peer reviewed. However, public policy decisions would seem to be impacted if the Coronavirus can survive for hours suspended in air.

Overstaying your welcome. Researchers have evidence that people infected with the Coronavirus will remain infectious longer than previously believed. The Hill reports on a study by The Lancet, a British medical journal, indicating that people suffering from COVID-19 may be able to spread the disease for up to 37 days. If true, this finding calls into question the previously held expert opinion that recommended an isolation period of 14 days after infection.

Cancel culture. Cancellations of anything and almost everything continue to pile up. Examples include Ireland closing its schools and colleges, the NCAA Men’s National Basketball Tournament being held without fans in the audience, Italy closing almost all shops (other than grocery stores and pharmacies) and the NBA suspending its season starting today.

Implications for Virginia. Virginia’s response to the COVID-19 breakout remains sporadic at best. Continue reading

Sweet 16 (Tax Bills) Will Cost Virginians Billions

By Steve Haner

What will this year’s General Assembly cost you in taxes? Here are at least 16 bills approved by the 2020 General Assembly that create or raise taxes on Virginians or authorize a local government to do so. No one told Virginians at the start of session that major tax increases were coming, and there is little recognition of what has now happened. It is time to tally the bill.

If anybody would or could run the fiscal projections on these 16 tax bills, they might combine into a major tax hike comparable to those in 2004 and 2013. Over several years this will cost families or businesses billions of dollars, but most will be collected by wholesalers (cigarettes and fuel) or too deeply buried on receipts to see.  Assessments on business eventually get passed down to the customer: you.  Continue reading

Electric Yellow School Buses? Pure Green Grease

By Steve Haner

Having voted to give Dominion Energy Virginia a blank check to spend billions of your money on offshore wind turbines, the Virginia House of Delegates will vote today to provide hundreds of millions more from your pockets for electric school buses.

Last week the House defeated a similar bill, twice. It received only 35 votes the first time and 44 votes the second. The response from the utility and the Senate patron was to introduce a new bill “Thursday,” after she received unanimous consent from her fellow senators.  Continue reading

How Hospitals Exercise Political Clout

by James C. Sherlock

Virginia’s hospitals and health systems have for decades gotten everything they have sought from the state government, both the constitutional officers and the General Assembly. Readers of this space have been provided the details of some of their successes that are counter to the public good. But what is the source of all that political power?

Money. Political contributions matter. These data are all from vpap.org.

  • In the 2018-19 campaign cycle, hospitals and health systems gave $2,368,406 in donations to candidates for the General Assembly.
  • In the 2017 election cycle, they gave $392,187 to Governor Northam, $117,500 of it after his victory. And he is term limited.
  • Attorney General Herring received from the hospitals and health systems $52,000 for his first campaign, $62,725 for his second and $23,000 since then. He is charged with enforcing the antitrust laws against those donors. He has not enforced them.
  • Even those who think it fair for hospitals and health systems to help elect these officials can’t be happy with the post-election donations.

I took the time to assess the key votes that supported the wishes of the hospitals in the General Assembly. I looked up the recorded votes on three bills: Continue reading

Incredible Bills in Conference List Remains

The Virginia House and Senate convene at noon today, and today is actually today finally.  The General Assembly recognizes this as March 7, having had a two-day March 5.  March 6 will never exist in the records.  Stopping the clock for an entire 24 hours allowed legislators to continue to put disputed bills into conference, and they did so until right before “Thursday” adjournment at 5:45 p.m. Friday.

Being March 7, the Assembly is scheduled to adjourn.  Some of the more contentious issues remain on this unresolved bill list.  Some do have conference reports voted on by one chamber or the other, or printed ready for action.  Many have no agreement.  Either the session goes into overtime or some of these just fail.  A budget vote sometime next week also seems inevitable, unless they want to vote first and read it later.

The list:

Continue reading

Energy Updates: Signs of Resistance After All

The Main Clean Energy Bill. Both General Assembly chambers have now approved a single substitute version of the omnibus clean energy bill, on largely (but not totally) party line votes. In a further compromise on their plan to save the world, proponents decided not to force closure of a Southwest Virginia coal-burning plant and were rewarded with the votes of one Southwest Virginia Republican: Del. Terry Kilgore. (Correction: The initial post incorrectly reported Sen. Ben Chafin as having voted aye. It was Republican Sen. Jill Vogel.)

Kilgore’s vote mattered as the House had only 51 aye’s. The House roll calls are not posted yet, just the vote totals.  Senate Bill 851  is now on its way to Governor Ralph Northam. Odds are further changes will be coming and another vote will be taken at the Reconvened Session on April 22. The House version was heading for a conference committee which is now not needed.  Continue reading