IRP Rejection Part of a Pattern of Trouble

The State Corporation Commission’s decision Friday to reject the Dominion Energy Virginia integrated resource plan is just the latest sign the energy package sold by the utility to a compliant General Assembly in early 2018 still has an uncertain future.

Two headline elements of the legislation – the promised massive renewable projects and a rebuild of the grid — are in limbo as the 2019 General Assembly looms.  Another headline element, the ability of the utility to use excess profits it is holding to pay for both and thus eliminate risk of rate cuts or refunds, won’t even be tested in front of the SCC until at the earliest 2021, when the utility might (might) undergo its next rate review. Continue reading

Social Promotions: As High as 40% in Some School Districts?

Virginia school systems keep track of many numbers: enrollment, demographics, graduation rates, student-to-teacher ratios, SOL scores, all manner of fiscal expenditures… The list is endless. Just check out the Virginia Department of Education website’s “Statistics and Reports” page. But you can’t find any numbers on the rate of social promotions. Needless to say, the practice of promoting children from one grade to the next even when they have failed to master the subject matter is not one that educators want to highlight. Continue reading

(Fiscal) Winter Is Coming

Congressional Budget Office projections of federal government annual budget deficits.

Let me set the scene by reviewing a few numbers. The federal deficit is on course to hit $1 trillion annually by Fiscal Year 2020. With retiring Baby Boomers swelling Medicare, Medicaid and Social Security expenditures, deficits will increase inexorably for decades. The U.S. national debt stands at $21.7 trillion. As deficits pile up and interest rates rise, the national debt expressed as a percentage of the GDP, 78% today, will reach 96% by 2028. CBO projects that interest payments on that debt will increase from $263 billion in 2017 to $915 billion by 2028, putting increasing deficits on autopilot that no amount of budget cutting can offset.

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Bacon Bits: Higher-Ed Edition

Modest UVa tuition increase. The University of Virginia’s Board of Visitors has approved a 2.9% increase in-state tuition increase for undergraduate College of Arts & Sciences students next academic year, although other schools in the university may differ. The university’s financial aid program, Access UVa, will keep pace with tuition increases, reports the Daily Progress.

The board’s Finance Committee said it had exhausted other options before considering slight increases to undergraduate tuition but believed 2.9- to 3.5-percent increases in most schools are necessary. The increases represent only a modest premium over the 2.3% increase in the Consumer Price Index between September 2017 and September 2018. The modest price hikes (modest by comparison to past years) coincides with a $2.2 million increase in state support in Fiscal 2020.

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I’m Baaaack!

Announced in the Richmond Times-Dispatch editorial page this morning:

Earlier this month [James A.] Bacon briefly joined the Editorial staff of The Times-Dispatch, hired by Bob Rayner, who is editor of the Editorial Pages. When Rayner announced earlier this week that he is retiring from the newspaper business, Bacon decided to leave the paper as well and devote his energies to maintaining Bacon’s Rebellion as one of Virginia’s sharpest websites devoted to assessing public policy. We’re glad he’s still part of the civic conversation. We hope to be able to publish columns by Bacon on a fairly regular basis in the opinion pages of the The Times-Dispatch.

I had been looking forward to working with Bob, who was an excellent editor and an articulate voice for civil and principled conservatism. With his unexpected retirement, my calculus changed, and I have resolved to redouble my efforts to build Bacon’s Rebellion into a credible conservative/libertarian voice in Virginia journalism.

You’ve Come a Long Way, Baby!

So… My wife was out of town Friday night, and I was doing my wonky thing, poking through the Virginia State Police 2017 Crime Report, when I came across a breakdown of criminal offenses by gender. I’ll ignore the VSP’s retrograde oversight in classifying offenders by only two genders — male and female, as if the criminal population were devoid of transgenders — and I’ll focus on the implications of my findings for a recent ACLU of Virginia study, which found that, although 85% of prisoners are male, Virginia prisons still inflict “widespread and discriminatory suffering” upon women. Continue reading

“Incomplete!” SCC Sends Back Dominion IRP

SCC Offices on Richmond’s Main Street

The State Corporation Commission today rejected the 2018 integrated resource plan (IRP) filed by Dominion Energy Virginia, stamping it “incomplete” and asking the utility for additional information in a supplemental submission.

The IRP is only a planning document, and the one for 2017 was just approved by the Commission a few months ago.  But in response to the 2017 plan and the massive revision to utility laws by the 2018 General Assembly, several specific directives were imposed for this next plan, which is supposed to have a longer shelf life.  The SCC asserts Dominion failed to comply with some of those directives.

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Amazon, Incentives and Alternate Opportunity Cost

Source: Mercatus Center

George Mason University’s Mercatus Center does not like the deals struck by Virginia and New York to split Amazon, Inc.’s $5 billion HQ2 project. In a new commentary, the market-oriented research center raises a valid consideration rarely mentioned by politicians touting favored government expenditures of any type: alternate opportunity cost. Money spent on “A” is money not spent on “B.” Continue reading

Fralin Donates $50 Million for Roanoke Research Center

Heywood Fralin

Heywood Fralin, his wife Cynthia, and the Horace Fralin Charitable Trust have announced a $50 million gift to Virginia Tech to attract top-ranked scientists to the university’s Roanoke medical research center. The gift is twice the size of the university’s previous single largest donation.

“I came up with the size based on what I felt I could do. I wanted to make a maximum gift that was a challenge to me and to the trust because I thought it was important to the community. And I thought it could benefit everyone, and it would have a lasting impact that would help to change the future of the Roanoke Valley and the surrounding area,” Fralin said in a Wednesday interview with the Roanoke Times. Continue reading

Dissent Must Be Crushed

Peter Vlaming. Photo credit: Richmond Times-Dispatch

Social mores in the United States are changing so fast, it’s hard to keep up. If you fail to conform to the latest turn in politically correct thinking, you’re toast. You could lose your job. Not just in California, but here in Virginia.

Peter Vlaming, a high school teacher in West Point, was fired yesterday by the West Point School Board for resisting administrative orders to use male pronouns to refer to a ninth-grade student who had undergone a gender transition, reports the Richmond Times-Dispatch. Here are the details: Continue reading

Amazon Deal Could Create 59,000 Virginia Jobs

Amazon, Inc.’s $2.5 billion investment in major new East Coast headquarters in Arlington/Alexandria will generate $14.2 billion in economic activity over the next 12 years, projects a new study by Richmond-based Chmura Economics & Analytics. While Amazon has committed to hiring 25,000 employees, indirect effects of the investment will create more than 59,000 jobs.

“The entire state of Virginia will benefit from Amazon’s decision to locate part of its second headquarters in Northern Virginia,” said Christine Chmura, the firm’s CEO and chief economist. The Richmond Times-Dispatch has the story here. Continue reading

EITC, TANF and the Benefits Cliff

The “Benefit Cliff” for a mother with two children in Albemarle County. As income rises, SNAP, TANF, Medicaid, housing assistance and other benefits disappear.  This example does not include the Earned Income Tax Credit.  Source: VA DSS

For low income families receiving assistance in Virginia, their cash benefit from the federal Earned Income Tax Credit (EITC) is larger – often substantially larger – than the cash provided by Temporary Assistance for Needy Families (TANF).

A single mother with two small children who has a full-time minimum wage job ($7.25 per hour) qualified for EITC benefits of $436.33, in an example provided by the Virginia Department of Social Services based on 2015 data.  The EITC is paid out as a lump sum but the example broke it into monthly increments.  Doing that underlines its origin as a form of guaranteed minimum income, with the grant adding the equivalent of an additional $2.50 per hour to income.

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Amazon’s New Home in NoVa Will Bolster Private Sector

An Amazon home-delivery drone. Private-sector applications of unmanned systems would fit nicely with Virginia’s economic development priorities.

In the lead-up to Amazon, Inc.’s announcement that it would split its massive HQ2 expansion between Northern Virginia and New York, there was considerable speculation that Northern Virginia had an edge among the 20 finalist regions due to its proximity to the federal government. The company was aggressively vying for federal government business, most visibly in cloud services, and Amazon, like other federal contractors, needed a Washington location in order be close to the world’s biggest customer of IT services.

But Amazon’s decision to locate in Arlington practically next door to the Pentagon is not a federal government play, says Stephen Moret, CEO of the Virginia Economic Development Partnership. Furthermore, Virginia is not shelling out an unprecedented $550 million in job-creation inducements by FY 2035 (plus up to $200 million more in later phases) to magnify Northern Virginia’s dependence upon federal government spending.

The Amazon expansion is driven mainly by private-sector initiatives, says Moret, and Virginia’s incentives package is “right in the bulls eye” of Virginia’s strategic goals of diversifying the economy away from the federal government and bolstering the region’s high-tech industry. “For us, this is principally a private-sector diversification opportunity,” he tells Bacon’s Rebellion. “In terms of the jobs we incentivize, no more than 10% can be associated with federal government contracts.”

That’s why the Amazon-Virginia Memorandum of Understanding requires “a certification as to whether more than 10% of the New Jobs at the Facility during the prior calendar year were primarily engaged in supporting Federal Government contracts, and, if so, the percentage of New Jobs so engaged.” If new jobs tied to federal work exceeds 10% in the new facility, they would not be eligible for state employment incentives.

The percentage of federal-related jobs was not a significant issue in negotiations between Amazon and Virginia, Moret says. VEDP included the language as a “safeguard” to advance Virginia’s diversification goal. “We just wanted to make sure that the opportunity we saw would be ensured by the incentive structure.”

Last June Amazon announced a decision to expand the presence of Amazon Web Services (AWS) in Virginia with a new East Coast campus in Herndon. The deal was expected to create 1,500 new jobs in the cloud computing field. The press release from the Governor’s Office described the business this way: “AWS offers over 90 fully featured services for compute, storage, networking, database, analytics, application services, deployment, management, developer, mobile, Internet of Things (IoT), Artificial Intelligence (AI), security, hybrid, and enterprise applications, from 42 Availability Zones (AZs) across 16 geographic regions in the U.S., Australia, Brazil, Canada, China, Germany, India, Ireland, Japan, Korea, Singapore, and the UK. ”

While AWS was pitching cloud services to Uncle Sam, the list of add-on software applications clearly was aimed at an audience beyond the federal government.

Known primarily as an e-commerce giant and, more recently, as a provider of cloud services, Amazon is expanding into many exciting fields, Moret says. In vying for HQ2, an even bigger investment, VEDP scrutinized the public job postings for Amazon’s Seattle headquarters and found the company was recruiting talent for fields from health care to big data analytics.

Amazon Business, launched in 2012, provides an Amazon.com shopping experience for business supplies. Amazon is expanding its array of consumer electronics products beyond the Kindle e-readers and Echo smart speaker into smartphones TV set-top devices and credit-card readers. The company is pushing into digital streaming of music and games, and with its Whole Foods acquisition is experimenting with the home delivery of groceries. Amazon wants to rationalize the logistics of the health care industry, peddle event tickets online, sell educational toys on a subscription basis, and penetrate the home Internet-of-Things market. (See a list of Amazon products and services here.)

Moret expects new private-sector initiatives will take root in Northern Virginia, enlarging the region’s innovation ecosystem, generating new Amazon business lines, and creating new opportunities for non-Amazon entrepreneurs. Ideally, the new ventures will play to Virginia’s strengths in areas such as unmanned systems, cloud computing, Artificial Intelligence and cyber-security.

Says Moret: “We saw these as big growth opportunities for Virginia.”

Washington City Council Puts Virginia Taxpayers, Metro Riders at Risk

Well, Washington City Council has gone and done it — decriminalized Metro fare evasion. America now will be treated to an interesting social experiment. If it doesn’t go well, Virginia taxpayers will wind up picking up part of the tab.

The financially strapped Metro, which operates the mass transit bus and rail system for the Washington metropolitan area, is already losing $25 million a year from turnstyle jumping and other forms of non-payment. Metro officials worry that decriminalization could mean even bigger losses.

City council members counter that criminal enforcement, along with criminal penalties and jail terms, disproportionately impacts African-Americans. Ninety-one percent of citations and summonses were issued to blacks. “That is a problem,” Council member Robert C. White Jr. said, referring to the 91 percent figure. “I’m sad that’s Metro’s losing money, but I’m more sad about what’s happening to black people.”

The interesting question is whether fare evasion and lost revenue will increase. Evasion arrests, citations and warnings have surged in recent years, from 4,000 in 2013 to 15,000 by 2017, reports the Washington Post. Eighty percent of those losses occur in the District of Columbia.

“We have a big problem with fare evasion at Metro,” said D.C. Council member Jack Evans, who also serves as Metro board chairman. “And when it is understood that you will just get a civil citation that is largely unenforceable, you have a higher incidence.”

Advocates of decriminalization have likened the nonpayment of fares to the nonpayment of parking tickets, which is a misdemeanor. If parking-ticket scofflaws don’t face criminal charges, why should turnstyle jumpers?

Advocates of criminal penalties and enforcement invoke the “broken windows” theory of policing, which contends that failure to punish small offenses emboldens criminal behavior and leads to worse offenses. Conversely, enforcing minor criminal offenses suppresses worse crimes.

Metro posits that increased enforcement against fare evasion has led to a reduction in more serious offenses, owing to the police presence and the proportion of fare evasion stops leading police to more severe offenders.

For example, the board argued, while 8 percent of fare evasion stops lead to arrests according to current figures, most of those arrests resulted not from the initial fare evasion charge but rather from existing warrants for other offenses — a further crime such as assault on a police officer, or failure to produce identification.

Bacon’s bottom line. The D.C. councilpersons raise a fair point: Why should fare skippers (mostly black) be treated so much worse than parking scofflaws (of undetermined racial composition)? Isn’t there a double standard at work? Here’s how I would respond.

First, nonpayment of parking citations doesn’t create an environment that leads to other crimes. Failure to crack down on turnstyle jumping, by contrast, contributes to a sense of lawlessness in the D.C. subway system that encourages other forms of criminal behavior.

Second, revenue lost from turnstyle jumpers is only part of the fiscal equation. If lawlessness increases — more pickpocketing, more robbery, more assaults — many law-abiding Metro passengers will stop riding the rails. A small increase in lawlessness could spark a large change in behavior, especially among risk-averse riders such as women and the elderly. Thus a doubling of fare evasion, should it occur, could quadruple or quintiple the revenue losses if we account for lost ridership. Remember, ridership has been declining in recent years due to safety, scheduling and riding-experience concerns. Lawlessness could accelerate the trend.

Of course, this is all speculation. We won’t know the result until the new policy is implemented.

Here’s the rub. While Washington City Council conducts its social experiment, Washington shares the fiscal pain of lost revenue with Virginia and Maryland. Should revenues decline, Metro will be faced with a choice of cutting back operations, deferring maintenance, or going to the state and local governments whose population it serves and asking for more money. Washington City Council has put Virginia taxpayers and Metro riders at risk.

Crazy Time in Virginia

David Toscano

Del. David Toscano, D-Charlottesville, is an old-school, moderate liberal Democrat. He consistently earns low ratings from conservative groups (only 7% from the American Conservative Unions) and high ratings from core Democratic constituencies (100% by the Virginia Sierra Club and 100% from the Virginia Education Association.” But, like many old-school Democrats, he’s fairly pro-business. The Virginia Foundation for Research and Economic Education (Virginia FREE) gives him a lifetime rating of 72%, and even the fiercely small-government National Federation of Independent Business (NFIB) gives him 50%.

Sally Hudson

And that, it seems, is just too darn conservative for some Charlottesville-area Democrats. Sally Hudson, an assistant professor of public policy, education and economics at the University of Virginia, announced Tuesday that she intends to run against the House Minority Leader in the Democratic Party primary next year, reports the Daily Progress.

Hudson’s campaign said it’s time for the area to send someone with “more progressive values” to Richmond.

“I think Charlottesville is ready for new leadership, and Charlottesville is ready to lead,” Hudson said in a press release. “We’re one of the strongest Democratic districts in Virginia. We should be setting the agenda. We should be setting the bar.”

Bacon’s bottom line: With the mauling of Corey Stewart in his bid for Sen. Tim Kaine’s U.S. Senate seat and what many think is the inevitable transfer of power from Republicans to Democrats, the Republican Party of Virginia is in severe disarray. The GOP doesn’t know if it’s the populist party of Donald Trump or the party of traditional conservative principles. Republican morale is in the basement.

Meanwhile, with electoral and funding strongholds in Northern Virginia and Charlottesville, the Left in Virginia is stronger than it has ever been. And the Tom Periello wing of Virginia’s Democratic Party doesn’t have much more patience with old-school liberals like Toscano (or Ralph Northam) than it does with Republicans. If there’s anything that can reinvigorate Virginia’s GOP, it’s a Leftist purge of old-school Democratic Party politicians such as Toscano, and the elevation of candidates who make Republicans look tame and moderate by comparison.

Stay tuned. The 2019 House and Senate elections will get more interesting than you think.