Tag Archives: Stephen D. Haner

Conformity Article Errata, Semi-Mea Culpa

I got enough of importance wrong in yesterday’s post on state income tax policy that a real correction is required, not just a tweak to the existing previous post.  Herewith what I know I got wrong:

  • As Dick Hall-Sizemore pointed out, correcting me in a comment, the 2019 provision creating a new Taxpayer Relief Fund did not include the additional corporate income tax revenue generated by conforming to federal changes. If I understood that back when I last looked at the language, it certainly had flown my memory by the time I sat down to write Thursday evening.  Only excess “windfall” revenue from individual taxpayers was to provide the top line in calculating the new fund balance.
  • And in looking at the bottom line, I made a math error on the fiscal impact of two corporate income tax amendments mentioned on that Senate Finance Committee chart. The four-year impact of the GILTI and net interest deduction provisions is about $85 million over four years, not $210 million.

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Games Still Played with “Conformity Windfall”

Look what they did here! This Senate Finance Committee slide from November shows only “conformity windfall” revenue from individual provisions, but then deducts individual and corporate tax relief against those totals to shrink the size of the Taxpayer Relief Fund, source of future tax reform. That’s not what the General Assembly ordered. How much corporate “conformity windfall” is missing from the top line of this chart?

By Steve Haner

Sometimes you have to start the victory lap, even if you only get halfway around the track. A year ago, on Bacon’s Rebellion and in Thomas Jefferson Institute for Public Policy organs, I was beating the drum for a proposal to double the state’s standard deduction, the amount of family income exempt from income tax.

When the smoke cleared, the legislature had made a start, increasing the standard deduction for a married couple from the ridiculously greedy (on the Tax Man’s part) $6,000 to a slightly less ludicrous $9,000. This at a time when the federal standard deduction was going to $24,000, meaning the state taxes Virginia middle-income families more far heavily than Uncle Sam.

To add insult to injury, the legislature delayed the impact of the change until the 2019 tax year, even though it could easily have made it effective for the 2018 tax year that was settled with last spring’s returns and refunds. But the good new is that the change, now in effect, will save Virginians $360 million this year and $236 million on next year’s taxes. Here is what I wrote about it Thursday for the Jefferson Institute.

The legislature agreed to one other major provision proposed by the Jefferson Institute, creating a Taxpayer Relief Fund to hold in abeyance any and all “windfall” revenue not returned by the changes made in that 2019 bill. Remember that as you read on, it is key. The state may be playing a deceptive game which I just figured out and explain below.

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Two Medicaid Updates: Work Requirement, PBMs

By Steve Haner

Medicaid Work – Training Requirement Dead

Disappointing many, thrilling many, and surprising nobody, the Governor of Virginia has openly broken his 2018 promise to couple expanded Medicaid coverage with a work or job training requirement for able-bodied recipients. Moving people out of poverty is no longer the goal.

Governor Ralph Northam was quoted in posted story by the Richmond Times-Dispatch saying:

“Virginians made clear they want more access to health care, not less. Given the changed makeup of the General Assembly and based on conversations with new leadership, it is unlikely Virginia will move forward with funding a program that could cause tens of thousands of Virginians to lose health care coverage.”

To which outgoing Speaker Kirk Cox responded:

“The Governor and I made personal commitments to each other on this long-term public policy agreement. There wasn’t an asterisk that said, “unless my party wins the next election.” It’s a sad reflection on the value of integrity in modern politics.”

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Ignore the ROE Decision. Dominion Gets It All.

Crying All The Way To The Bank

By Steve Haner

After a long, expensive and contentious legal battle producing a huge case record, the State Corporation Commission left Dominion Energy Virginia’s authorized profit margin unchanged Thursday.  The return on equity figure did not go higher, as the utility demanded, and did not go lower, as just about everybody else involved in case demanded.

The SCC order is here.

You will see report after report in news media now that the authorized return is 9.2%, such as this one. This is wrong. The authorized return, because of Virginia’s uniquely pro-stockholder state law, is really 9.9%. The law allows the utility to keep 100 percent of the first 70 basis points of excess profit above the stated allowed profit.  With the large amounts involved over multiple years, that extra 70 basis points is real money out of your pockets.  Continue reading

Northam Appointee Opposes DEV’s Green Tariff

Virginia City Hybrid Energy Center in St. Paul, which burns both coal and wood biomass. It is the centerpiece of Dominion’s proposed 100% renewable service, infuriating environmental opponents. Dominion photo.

By Steve Haner

Is Governor Ralph Northam now on both sides of the electricity retail choice issue? Having sent a strong signal weeks ago that he would oppose 2020 legislation creating competition for all customers, his administration has now intervened in a regulatory dispute asking to protect competitive choice for 100% renewable electricity. You are only free to choose if you choose green?

In order to stop other companies from selling so-called 100% renewable electricity in the Dominion Energy Virginia territory, the utility needs its own version of this shell game approved by the State Corporation Commission. The next hurdle in that long road is a hearing at the SCC Thursday.

When we visited this saga in August, Dominion’s application for what it calls Rider TRG had been filed but few of the likely opponents had responded. A long list of complaints about the idea is now part of the case record, including objections from the Northam Administration filed Friday in the name of the Department of Mines, Minerals and Energy.

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Will VA Now Help Kill the Electoral College?

Where the National Popular Vote Compact stands: Passed in 16 states, passed one chamber in seven more.  Source: National Popular Vote

By Steve Haner

Add this to the pile of really bad ideas that now have a chance to pass in New Blue Virginia: Allowing California and New York to decide how to cast Virginia’s electoral votes.

Since millions who slept through government class were stunned to learn in 2016 that the popular vote doesn’t pick a president, efforts have been growing to bypass the Electoral College process. According to the folks at National Popular Vote, sixteen states with 196 electoral votes have voted to dis-enfranchise their people, and in several others at least one legislative chamber has agreed.

The Virginia General Assembly simply ignored House Bill 2422 during the 2019 Session. Its three sponsors, Northern Virginia Democrats Mark Levine, Kay Kory and Marcus Simon, will surely be back with a longer list of sponsors for 2020, and a House Privileges and Elections Committee with a Democratic majority.  Continue reading

This Says It All: In Just Four Years

This says it all – from J. Miles Coleman, at Larry Sabato’s Crystal Ball. I saw it this morning on The Bull Elephant, which focuses on Loudoun. Would Virginia Beach and Henrico look the same? If you have any doubts the Trump era has produced a true realignment, dispel them. SDH

There Was No Republican Message. None.

From Blue Virginia at the end. Without dispute, he is best Democratic turnout generator in history.

By Steve Haner

You know Virginia has changed when being labeled a socialist by your opponent is less damaging than being labeled a Republican.

That’s the opening line for my short essay on what happened November 5, which as far as I can tell has already been analyzed 345 other times in various publications, including several times here on Bacon’s Rebellion. Most of the authors have never written or executed a campaign plan. But I said I’d share my thoughts.

The bottom line is Democrats had a message about what their election would mean for Virginia. Republicans then ran against that message, amplifying it substantially, and thereby assured a huge turnout of the most liberal Democrats. At the same time, Republicans offered no message to turn out their own less-motivated supporters or excite their potential donors, state or national. They certainly offered no vision to woo swing voters.  Continue reading

What Will Clean Virginia Be Asking For?

By Steve Haner

“Do you actively support efforts to reduce corruption in government?”   

Of course, any candidate presented with that question will reply yes. What do you expect?  “No, I’m quite passive about corruption in government. Live and let live.”

That was one of the softball questions on the Clean Virginia candidate survey form, which will be taking on added significance given the number of Clean Virginia-funded and endorsed candidates who were successful  Tuesday. You can read the full questionnaire here, and potential 2021 candidates are advised to print it out and start a file on coming roll call votes.  Continue reading

Orsted Drops Projected OSW Capacity Factors

Orsted’s Hornsea 1 wind farm off the coast of England. Source: Orsted

By Steve Haner

The company that will partner with Dominion Energy Virginia to build a massive offshore wind farm off our coast has just cut the energy production forecasts for its own facilities, sufficient to lower its profit margins and drop its stock values.

“Our models weren’t sophisticated enough,” Orsted’s chief financial officer is quoted in one energy industry outletBloomberg’s article, one of many based on the company’s open discussion of the issue yesterday, described the problem this way:

The tests show that the company’s current production forecasts underestimate the negative impact from the so-called blockage effect, which arises when the wind slows down as it approaches turbines. It also underestimated the negative effect of the so-called wake effect, in which wind speeds drop between wind parks, it said.

The change will drop what’s called the lifetime load factor to 48%, down from a range of 48%-50%. That figure represents an estimate of how much electricity the machines produce divided by the potential capacity of the turbines. Since the wind doesn’t always blow strongly enough to turn the wind turbine blades, the load factor is always lower than capacity.

The number seems small, but for a giant windfarm like Orsted’s Hornsea One off the east coast of England, a change could shift income by 10s of millions of dollars every year, according to an analysis by BloombergNEF.

“2% is a big deal,” said Tom Edwards, an analyst at Cornwall Insight. “Over the lifetime that’s a lot of energy.”

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The Radioactive Donors In 2019? Healthcare

Money (And Hypocrisy) In Politics

By Steve Haner

The following is one of my “revise and extend” follow-up posts, this one adding detail to an exploration of the raging attacks on Republican efforts to offer alternative health insurance plans.  You can read the original post on the Jefferson Policy Journal.    

Not many months ago, it was a safe bet that by late October the campaign attack ads would focus on utility contributions. There is still time for that to appear. Dominion Energy clearly expected that, as evidenced by a full page, very defensive advertisement in Wednesday’s Richmond Times-Dispatch. Then there is its most cloying television ad yet.

You’ve seen it, of course – the lovely young lady whose Daddy is a deployed Dominion employee. Instead of wearing a U.S. Army or Blue Star cap, she sleeps and poses for school pictures in his Dominion Energy hat. Now, how could a company engendering that kind of love and loyalty be misbehaving?

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Northam Opposes Coming Retail Choice Bill?

By Steve Haner

Governor Ralph Northam is quoted in a Standard and Poor’s Market Intelligence news article Friday as opposing any efforts to change Virginia’s electricity regulations, which presumably would include the 2020 retail choice proposal gathering steam in the background.

Reporter Michael Copley wrote about Friday’s state solar and wind power purchase agreements and added this near the bottom, under the heading “No changes seen to Va. utility regulation”:

To advance its clean energy initiatives, the Northam administration is partnering with a utility company (Dominion Energy Virginia) that is facing a backlash over perceptions that it uses political donations to wield outsized influence in Virginia. In August, Virginia utility regulators said Dominion Energy Virginia earned $277.3 million above its authorized return on equity in 2018.

Some lawmakers in the Southeast U.S. have called for breaking up monopoly utility businesses such as Dominion’s, arguing that customers would benefit from more competition.

Northam said he does not plan to overhaul utility regulation in Virginia. “I think right now as we move forward, we’re going to work with the system that we have,” he told S&P Global Market Intelligence. “That doesn’t mean it’s a perfect system, but it is a system that we can work with.”

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JLARC: Medicaid Jumps 19% In Expansion Year

Source: JLARC October 7 report on state spending over time, in this case a decade of sustained economic growth with no recession.

By Steve Haner

Every year, the Joint Legislative Audit and Review Commission issues a report looking at ten years of state spending, sliced and diced various ways. In recent years, the headline results have largely been surprisingly consistent and the 2019 report issued Monday fit the pattern. As seen before:

  • Medicaid program costs lead the charge, exploding almost 19% in one year due to the expansion that started January 1, 2019, even though the fiscal year was one-half over by then. It went from $10 billion to $11.9 billion. The average annual growth over the decade has exceeded 7% and $600 million.
  • Keeping up with Medicaid, and exceeding it in some categories, are the various forms of transportation spending. In the decade since the base year of the report, fiscal year 2010, Virginia has passed both statewide and regional transportation tax increases, and various toll projects have been completed – all flowing through the state’s books.
  • The third budget element that has seen major growth is higher education, with the vast majority of the new money coming from tuition, fees and auxiliary operations at the state schools, not state tax dollars. When all the schools are lumped together, their spending growth is right in line with the other two mega programs, and the higher education totals push past the growth in state funds transferred for local public schools. Local public schools don’t charge tuition and fees they can raise at will.
  • Virginia’s general economic performance lagged the national average for the entire decade, with average annual gross domestic product growth of 1.4% (versus 2.2% nationally), per capita income growth of 2.8% (versus 3.4% nationally) and labor force growth of 0.9% (versus 1.5% nationally.)  The GDP is adjusted for inflation.

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Dems & Dom, RGGI Grows, Medicaid & Work

By Steve Haner

What Was Lost Is Found Again.  Couldn’t they wait at least another few weeks?  Anybody foolish enough to believe that Dominion Energy Virginia and the Virginia Democratic Party establishment have really parted ways (as Jim Bacon seemed to think a while back), take note of this from today’s Richmond Times-Dispatch:   Governor Ralph Northam’s new communications director, Grant Neely, is totally plugged into the Dominion Energy/Richmond’s Navy Hill/Mark Warner and Bob Blue nexus.  You can fool some of the people some of the time, but certain Democrats just about any time you want.

Source: Philadelphia Inquirer

The P in PJM Now Joining RGGI.  Pennsylvania Governor Tom Wolf, a Democrat, has signed an executive order that his state should be the next to join the Regional Greenhouse Gas Initiative.  According to this from The Philadelphia Inquirer, the executive order route comes after being rebuffed by the legislature.  It is a strong first step but not a done deal, with litigation one possible route for opponents.  Virginia’s on-hold membership will likely be determined by the General Assembly elected next month.

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Will These Insurance Ads Also Sway VA Voters?

“You Only Pay For What You Need”

By Steve Haner

As the state campaign debate rages about health insurance plan which are short term or less comprehensive than the Affordable Care Act, two  on-going national ad campaigns may cross-pollinate the debate.  They are bolstering the Republican position nicely.

The first are the spots with people saying they are worried about the various Medicare for All proposals. They express concerns about a more expensive one-size-fits-all approach. Well, isn’t that exactly what Democrats like Senate candidate Debra Rodman and other others are demanding in Virginia? One size fits all? In several districts they are attacking Republicans who voted to allow lower cost alternatives that didn’t offer all ACA features.  Continue reading