Updates: PPP, PIPP, Dominion’s School Buses

by Steve Haner

Tax on Paycheck Protection Program Grants

The General Assembly session deadlines require final decisions on various revenue bills before the final budget bill is adopted, in theory keeping the two issues separate. What is good tax policy should not be driven by the need or greed of the appropriators. 

But the conference committee overseeing the final decision on how much of the Paycheck Protection Program Grants will be taxed is dominated by appropriators, including the chairs of the both the House and Senate budget panels. The Senate’s proposal to allow $100,000 of PPP grants to be tax free produces less revenue, so the House’s position of allowing only $25,000 to be tax free meant the House budget includes another $70 million in spending.

The announcement that the state’s economy continues to hum and produce additional revenue, adding $730 million more in the General Fund, would allow for the Senate position to prevail without the need to cut the existing House budget. But the pressure remains to tax more and spend more, with Governor Ralph Northam raising expectations even higher with a late proposal for fatter employee raises.

The conference report will appear sometime in the coming week. Republicans who favor the Senate position retain major leverage, because no bill can pass as an emergency measure without their votes. Absent that emergency clause, changing all those tax rules on July 1 really messes with the state’s May 1 tax filing deadline.

None of the 100,000-plus PPP grants, which maintained hundreds of thousands of Virginia jobs in the pandemic, should be taxed. But Governor Ralph Northam wants to skim 6% off the top of that federal funding rush. Of the two viable choices, the Senate version should prevail and that can pass with the emergency clause.

Percentage of Income Payment Plan Tax on Electricity

After Bacon’s Rebellion undertook the all-too-unusual step of actually reading a bill and reporting what it did, the bill in question was substantially changed. The version of the Percentage of Income Payment Plan which advanced out of the State Senate Friday was a shadow of the one subject to that report.

The substitute removed any reference to whole home retrofits, which were to include converting heating plants from natural gas or propane to electric heat pumps. The stripped-down bill is back to focusing (mainly) on providing electricity bill subsidies for low-income families. The proposal to extend those subsidies to Dominion Energy Virginia and Appalachian Power customers with incomes at 200% of the federal poverty level was reduced to 150%.

It also included a reenactment clause, meaning the bill would only go into effect after passing again in 2022. That may or may not mean anything, since the program is already authorized under existing law because of the 2020 Virginia Clean Economy Act. Only the changes or clarifications in this bill would be delayed.

The Senate substitute, which finally had a spotlight on it, squeaked out on 20-19 (roll call not yet posted by Senate staff, sorry). It immediately was rejected by the House of Delegates, so that bill is also now in a conference committee. The more expansive provisions could return. There was no indication either utility was opposed to the more expansive and expensive version.

Senate Majority Leader Richard Saslaw, D-Fairfax, belittled concerns and reported it would cost residential consumers $1.25 per month. That assumes an average Dominion monthly electric bill, was a higher figure for APCo, and also assumes the bare bones program reviewed by the State Corporation Commission.

Those using more juice, especially commercial, government and industrial customers, would see a major price increase. And there is no reason to believe this will stay bare bones before final action.

Saslaw was answered by a passionate speech from Senator David Suetterlein, R-Roanoke, who started listing all the other ways our electric bills have seen $1 or $2 added here or there, over and over, to the point it is becoming a major burden on family budgets. The full list begs for an airing.  A PIPP as it passed the House would be far more expensive than the misleading estimate Dominion lobbyists fed Saslaw.

Electric School Buses in “By for The Day” Limbo

School bus? Storage battery? No, utility profit center.

Having been defeated and reconsidered, Dominion Energy Virginia’s proposal to force ratepayers to finance a battery-operated school bus fleet with guaranteed fat profit margins for itself remains on life support. Monday may tell the tale, after proponents declined to take an additional vote on Thursday or Friday. This would be another of those taxes hidden on your electric bill Suetterlein was discussing.

Again, there are amendments proposed seeking to reduce the cost and the objections. The fleet is now down to 1,000 buses rather than 1,250, cutting the bill to ratepayers to about $225 million (before annual profit margins). But micromanaging “equity” language was added by the House, seeking to steer the buses to Title I schools and to neighborhoods with poorer air quality.

A similar bill for electric buses, but not calling for ratepayers to cover the tab thus making the utility rich, is also going “by for the day” in the Senate, perhaps awaiting the outcome of the Senate bill in the House. It is a good vehicle for an amendment giving the utility-written approach a final chance to pass.

Should this pass, 1,000 buses would only be the start. Diesel is on the way out with the current leaders of Virginia, who paid zero attention to what kept running in Texas last week and what did not.