Category Archives: Politics

Hyra’s Ideas on Taxes Deserve a Wide Hearing

Cliff Hyra in campaign mode. Photo credit: Richmond Magazine

I’m glad to see that the Richmond Times-Dispatch actually gave some ink to the official campaign launch of Libertarian Party nominee Cliff Hyra. As far as I can tell from my perusal of the Virginia Public Access Project’s daily VaNews digest, the T-D was the only major newspaper to do so.

(However, Richmond Magazine did publish an interview with Hyra here, and Bearing Drift covered his campaign announcement here.)

Hyra’s predecessor, Robert Sarvis, won 6.5% of the vote running against Terry McAuliffe and Ken Cuccinelli. While the Libertarian Party is not threatening to win a statewide office any time soon, its candidates do bring fresh perspectives to otherwise stale debates.

Hyra, a 34-year-old patent attorney residing in a suburb north of Richmond, could liven up the campaign. His big themes are innovation and inclusion. He advocates a cut in the state income tax, legalization of marijuana, pardons for prison inmates convicted for drug offenses, more charter schools, and elimination of Virginia’s Certificate of Public Need restrictions on healthcare facilities. 

That’s certainly not a package of proposals you’re likely to see from anyone in either the Republican or Democratic parties.

Hyra’s tax proposal differs from Republican nominee Ed Gillespie’s by spreading the benefits more widely among taxpayers. Where Gillespie would cut existing tax brackets 10% across the board, conferring the biggest benefits upon higher-income taxpayers in higher tax brackets, Hyra would raise household exemptions up to $60,000. All taxpayers would benefit, but working class and middle-income citizens would enjoy a bigger break as a percentage of income than the well-to-do.

Unlike some Libertarian candidates, Hyra has concrete ideas on how to pay for the tax cuts — and they don’t require any hocus-pocus assumptions that cuts would stimulate enough economic growth to pay for themselves. He proposes dusting off the recommendations of the 2002 Wilder Commission, proposed during the Warner administration, to see if some never-implemented ideas might be resurrected. Specifically, he would look to see if the state’s real estate portfolio could be administered at lower cost, and if excess property could be sold.

Hyra proposes to save more money through reforms to the criminal justice system — fewer inmates might allow the state to close a prison. Also — I offer this free advice — he could consider rolling back tax breaks, exemptions and deductions in the state income tax code, which usually go to the well-heeled, to pay for his tax break. Hyra’s idea could accomplish the seemingly impossible: cut taxes, make the tax code more progressive, yet not stick it to the rich.

Hyra’s ideas on taxes probably could use some polishing. But his proposal certainly is credible enough to deserves airing in the campaign. I would love to see Hyra and Gillespie go one-on-one on how best to structure tax cuts and pay for them. Perhaps Democrat Ralph Northam could chime in on why tax cuts are not a good idea at all. Citizens would benefit from a more vigorous discussion of the issues facing Virginia.

I hope the media treat Hyra as more than a curiosity, and I hope he fares well enough in the opinion polls to warrant inclusion in the major candidate debates. That would make the debates worth watching!

Update: Bart Hinkle, the Times-Dispatch libertarian editorial page editor, writes favorably about Hyra here.

Campaign Contributions and Selective Indignation

Steve Nash, author of “Virginia Climate Fever,” is on a crusade against Dominion Energy, electric utilities, the coal industry and other corporate special interests that donate vast sums of money to Virginia politicians. He has been submitting op-eds to newspapers around the state taking Dominion and Appalachian Power to task for their outsized campaign contributions.

Writing most recently in the (Lynchburg) News & Advance, Steve asks:

So whether you’re conservative, green, libertarian or liberal, here’s the question: Can your legislator explain why it’s OK to accept “donations” from the two power companies and still cast votes on legislation that affects not only their profits, but also our electric bills and, crucially, our environment? For that matter, why is it legitimate to take money from any corporate interests who also have legislative needs that should not pre-empt the public interest?

Now, Steve is a very close friend of mine, and we debate issues like this with regularity. One of the things that I love about Steve is that, although he is tenacious in his beliefs, he does make an effort to understand the other side of the argument. He engages in reasoned, gentlemanly discussion rather than resorting to change-the-subject evasions and ad hominem attacks. I will endeavor to engage Steve’s arguments in the same generous spirit.

It is an article of faith on the left that the coal and electric-power industries, and Dominion most of all, are fending off worthy environmentalist legislation by buying legislators’ loyalties. Dominion, as Steve points out, has given more than $7.4 million to legislators of both parties since 2016 — $826,000 in 2016-17 alone. The company is Virginia’s top donor. And it doesn’t hand out the money in a spirit of charity and good will. Like everyone else, Dominion gives money because it hopes to get something in return — access, if not legislators’ votes.

As Steve writes:

Public servants who take Dominion’s and Appalachian’s money have voted on countless power-utility-related bills, listened to the pitches of the sturdy corps of power company lobbyists, and then handed those companies a lengthening series of legislative home runs worth hundreds of millions of dollars — perhaps a billion or two by some estimates. And they routinely vote on legislation affecting the bankers, realtors, beer wholesalers, the health industry and their other benefactors.

Please note that Steve seems to have no problem with environmental interests donating large sums of money. As the Staunton News Leader observed recently, the top three environmental campaign donors, the League of Conservation Voters, NextGen Climate Action, and the Sierra Club have shelled out $5.0 million to individual statewide candidates over the past decade, compared to Dominion’s $3.3 million. (The comparison is not entirely fair because it doesn’t include other utility and fossil fuel interests. But the article makes the point that environmentalists aren’t slouches when it comes to throwing around big money.)

Steve and other environmentalists frequently note that Dominion donated $75,000 to Governor Terry McAuliffe’s 2014 gubernatorial campaign, not including thousands more from individual Dominion executives. Although I don’t recall Steve making the connection, others have suggested that such campaign booty explains the governor’s support for the controversial Atlantic Coast Pipeline, of which Dominion is the managing partner.

But the critics of utility donations never acknowledge that NextGen Climate Action, founded by California hedge-fund billionaire Tom Steyer, donated more than $1.6 million to McAuliffe! Another $1.7 million came from the League of Conservation Voters, and nearly $470,000 from the Sierra Club. Nor do the critics ever observe that, as a reward to his environmental supporters, McAuliffe appointed Angela Navarro, an attorney with the Southern Environmental Law Center, as deputy secretary of Natural Resources.

When was the last time a Dominion Energy executive was appointed to a senior administrative post?

Steve holds up as exemplars more than five dozen House of Delegates candidates who have signed a pledge to refuse to accept campaign cash from either Dominion or Apco. These are mostly Democrats, but Steve argues that conservatives should join the movement, too. After all, big money in politics encourages big government.

As a libertarian, I agree that big money and big government are intertwined.  And as a libertarian, I have no problem with candidates voluntarily turning down corporate money — as opposed to restricting the right of corporations to offer the money. But as best I can tell, Tom Steyer, the Virginia League of Conservation Voters, and the Sierra Club are not calling for less government. They just want to utilize the power of state government to different ends.

The difference between the electric utilities and the environmentalists, Steve implies in the quote above, is that the utilities are lobbying for their own private interests while environmentalists are pushing for the “public interest.”

It’s fair to say that environmentalists believe they are working for the public interest. But they’re working for their definition of the public interest. Their’s is not necessarily the same definition that, say, coal miners in Southwest Virginia would adopt. Or that economic developers in natural gas-constrained Hampton Roads would use. Or that electric rate payers would use. Or that businesses and homeowners counting on the reliability of the electric grid would use.

Environmentalists are a special interest lobby just like Dominion, Apco and the coal companies. That doesn’t make them evil; it doesn’t even make them wrong. Indeed, I’m happy to entertain the idea that in many instances, they are right. But it is romantic nonsense to insist that environmentalists dwell in some higher ethical plane and that their goals are any more pure than anyone else’s.

Bacon’s bottom line: If Dominion, Apco, the coal industry, Tom Steyer, the Sierra Club, and every other corporate or special interest group under the sun didn’t believe that money didn’t buy them access, they wouldn’t give the money. Clearly, money does influence the public policy process. But so does the media. So do grass roots organizing efforts. So do lawsuits. And, believe it or not, so do the actual merits of the case.

Thanks to the Virginia Public Access Project, it’s easy to follow campaign money. However, a large fraction of the cash dedicated to influencing public policy is invisible. We can’t track how much different groups are spending on public relations and influencing the press. We can’t track how much money is spent on research, organizing demonstrations, letter-writing campaigns, and other grass-roots activities. We can’t track how much money is spent on filing lawsuits and pressuring regulators.

Wouldn’t it be great if the electric utilities and environmental groups alike revealed how much they spent on such efforts? I’m not holding my breath. Most groups hew to the ethic of “Transparency for thee, but not for me.” Until such time as we know the bigger picture, I’m not inclined to make a big deal about disparities in one channel — campaign contributions — for influencing the political process.

Update: I just came across a 2014 Mother Jones article that said Steyer’s NextGen Climate Action spent $8 million “to keep Republican Ken Cuccinelli out of the state’s top office.” So, Steyer spent more money in one year than Dominion donated in ten.

A Fourth Force in Virginia Energy Politics

The political economy of energy in Virginia used to be simple. Three main interest groups contended to formulate energy policy in the state: environmentalists, consumers, and electric utilities. Consumers, both homeowners and businesses, pressed for lower electric rates. Environmentalists fought for cleaner air and, more recently, lower CO2 emissions. And utilities — the only parties responsible for keeping the lights on — lobbied for reliability at a reasonable cost (within a framework that preserved profits).

In the last few years, a fourth force has entered the picture, and the political dynamic is changing. The Old Dominion has seen a surge in the number of small, independent solar- and wind-power developers. They have exercised limited political clout, but now large, national corporations embracing a green energy agenda have entered the fray.

Half the Fortune 500 companies have committed to green agendas, and they signaled their desire earlier this year to see policies in Virginia that were friendlier to wind power, solar power and energy efficiency. (See “Clean Energy Options and Economic Development.”) Their message: If Virginia wants to attract outside corporate investment, the state had better get on board the solar-powered electric train.

Then, in an unprecedented flexing of political muscle last week, a green industry group injected itself into the Virginia gubernatorial race. Advanced Energy Economy (AEE), an association of green industry companies, delivered a policy memo to the campaigns of GOP nominee Ed Gillespie and Democratic nominee Lt. Gov. Ralph S. Northam.

“Evolving consumer preferences, dynamic new technologies and aging infrastructure are causing the energy system as we have known it to modernize,” states the memo. AEE outlines four priorities:

  • Allow competitive procurement to attract investment and benefit consumers. Virginia energy policy should open up third-party market alternatives. “While current Virginia law allows competition in statute, more could be done to attract investment and benefit consumers.”
  • Expand access to advanced energy options. The ability to control energy costs is a factor in where many corporations choose to locate. But they’re not just looking for cheap energy — they want green energy.
  • Maximize energy efficiency and demand-response. Under Virginia regulatory regime, electric utilities lose money when customers reduce their electricity consumption, discouraging utilities from investing in energy efficiency programs and demand response. Virginia should “decouple” electricity sales from profitability so utilities don’t lose when they invest in energy efficiency and demand-response programs that cut sales.
  • Modernize the electric grid. Evolving consumer preferences, new technologies, and the need to replace aging infrastructure have created a need to modernize the electric grid. The regulatory system, which inadvertently stifles innovation, needs to be modernized.

AEE wants more wind and solar, more electric vehicles, more energy efficiency, more innovation, and more freedom for entrepreneurs to design solutions for customers. At the same time, the association acknowledges that the way to achieve these aims is not to browbeat electric utilities into submission but to change their incentives, which would take a major re-writing of regulatory law.

Bacon’s bottom line: To advance AEE’s vision, Virginia would need an upgraded electric grid flexible enough to accommodate a less centralized, more distributed grid while still maintaining system-wide reliability. In effect, the green businesses are calling for a deregulation of electric power production. But no one wants to build a competitive and redundant electric transmission-distribution system.

Any viable energy system of the future must allow electric utilities to continue investing in, and earning a profit on, their transmission-distribution systems. Also, deregulation of electricity generation would require grappling with the issue of “stranded” investments — investments in generating capacity that utilities made in good faith under the existing regulatory environment that might not be economical and must be scrapped in deregulated environment.

Like the environmental movement, this Fourth Force in energy politics wants to see a fundamental transformation of Virginia’s electric power system. Unlike the environmentalists, many of whom see Dominion and Appalachian Power as the enemy, the Fourth Force acknowledges the need for a healthy utility sector. This new interest group has plenty of money, which means it can afford to hire lobbyists and spread cash to political campaigns. Plus, these new voices will be more credible to Virginia’s pro-business legislators than the more strident environmentalists had been. 

The politics of electric power in Virginia has reached an inflection point. We are entering a new era.

Ed Gillespie: a Leader with Imaginative Ideas and Meaningful Solutions

William J. Howell

by William J. Howell

The June 13th Virginia Primary is quickly approaching and it is time to choose a Republican who can offer the kind of responsible, conservative solutions our Commonwealth needs and deserves.

Fortunately, we have a candidate in Ed Gillespie who is wholly committed to ideas and policies based on principles of limited, effective government. He will lead Virginia with humility and fortitude, and will work closely with the Republican-led General Assembly to govern.

I have known Ed and Cathy Gillespie for a more than a decade, and I have always been impressed. He was an aide to House Majority Leader Dick Armey, the primary author of the Contract with America, and served as a state and national party leader. He is well versed in policy details and is an authentic and genuine communicator.

But what impresses me the most today is his laser-like focus on policy. Never have I seen a candidate so focused on substantive issues and real solutions. To date, Ed has released four policy plans, including a plan to provide meaningful tax relief in a responsible way, a 15-point ethics plan to increase confidence in government, a real reform plan to make state government work better, and a path toward regulatory relief that will tear down barriers to entry for job creators. His imaginative ideas and pragmatic approach to government is what Virginia needs to get back on track.

Our economy struggled during the McAuliffe-Northam Administration. Our growth rate was stagnant at two percent or below for five straight years and Virginians from every walk of life took hits. We need a governor who will work with our General Assembly and act in a collaborative manner to enact change. Ed will do that, as is evident from the support he enjoys from over two-thirds of the Republican members of the House of Delegates and Senate of Virginia.

As I think back on my time as Speaker of the House of Delegates, I am reminded of the countless conversations I’ve enjoyed with hard-working Virginians about our great Commonwealth. There were good times and bad but through it all, the honor I felt in being given the opportunity to serve never diminished.

I also had the opportunity to watch and work with many gubernatorial candidates – some went on to be successful at the polls and at the Capitol, others saw different results. Few have impressed me in the way Ed Gillespie has in his run for governor this year. Ed is a man of character and ideas.

As we come upon the time of year in Virginia where it is time to make a choice about our candidates for governor, I encourage you to join me in voting for the man I am confident will lead with focus and in the same tradition of our most effective governors.

Ed often says he isn’t running to be something rather he is running to do something. He’s earned my vote and my confidence.

William J. Howell, R-Stafford, is Speaker of the House.

Frank Wagner in the Center Ring

By Steve Haner

Sen. Frank Wagner, R-Virginia Beach, came to the General Assembly in the 1991 election, as part of a large GOP class that included future Governor Bob McDonnell, future Attorney General and Supreme Court Justice Bill Mims, future U.S. House of Representatives Majority Leader Eric Cantor and current State Senate Majority Leader Tommy Norment.

Those names probably produce a mix of reactions with readers, but if you take the job of legislator seriously there will be bumps in the road and controversy. People will cheer you sometimes and cuss you other times. Like the others listed above, Wagner has taken the job seriously. Nobody gets mad at the back-benchers, but years later people also strain to remember them.

Combine Wagner’s legislative success with his Navy career and his experience building a ship repair company, and Wagner is extremely well prepared to be Virginia’s next governor. If he gets there, I’m confident he will think long-term and value good policy. He will have my vote June 13 and I hope I get a chance to vote for him again in November.

A third of a century watching the doings in Richmond has taught me that governors do matter. When big things happen, good or bad, it is usually with the governor doing the pushing and the pulling.

But what governors propose the legislature must dispose. If Wagner does not get a chance to move into the mansion and pick his own brew for the kegerator, he will remain chair of a key Senate committee and a member of the budget conference committee. The next governor (if smart) will be calling Wagner as often or more than Wagner will be calling that new governor.

The power in Richmond abides with the Assembly. This was on my mind as I listened to a tribute Monday to retiring Speaker of the House Sen. Bill Howell, R-Stafford. I doubt he would trade his two decades as speaker for one term as governor, and few governors in my experience have had greater impact on the lives of Virginians than Howell has. And yes, some people have cussed a time or two.

The General Assembly takes its lumps on this blog, with one contributor in particular comparing it to the Ringling Brothers’ clown corps. Me, I always liked the clown acts. Emmett Kelly. Lou Jacobs. Reflecting on my own time inside the tent, holding safety ropes, scooping poop, hawking cotton candy, enjoying the view from ringside, it is the legislators I’ve known who come to mind. That Class of 1991 turned out extremely well. But as a rule, every legislator I’ve known had the ability to make a contribution, had some issue they understood well, had their own shot at the center ring. Most were and are remarkable in some way. Virginia has been better served than many realize.

Sure it’s a circus, and there are clowns, but look up there above the center ring.  Now it’s Frank out there walking the high wire hoping for stardom and risking a big fall.  t the other end of the wire is another performer who climbed up from the sawdust, Ralph Northam. That’s the show we all came to see.

Steve Haner is a lobbyist who is the principal of Black Walnut Strategies.

Woo Hoo! Stewart Promises Billions in Toll-Free Projects

Photo credit: Washington Post.

Claiming the populist niche in the contest for the Republican gubernatorial nomination, Corey Stewart has given away a semi-automatic rifle as part of a fund-raising effort, defended monuments of Confederate generals, and bashed Dominion Energy for its coal-ash disposal plans. Now he’s added to his rabble-rousing resume by promising voters to meet Virginia’s transportation needs without raising taxes or imposing new tolls.

“We obviously have transportation needs, and the way we’re going to fund those is by finding efficiencies within existing spending in Virginia. No new tolls; no new taxes. That’s what I’m pledging,” Stewart said yesterday in a Virginia Beach news conference.

Where would the money come from to pay for projects such as two more lanes for the Hampton Roads Bridge Tunnel, costing an estimated $3 billion? Reports the Virginian-Pilot:

Stewart said he would eliminate the need for new tolls by slashing $2.2 billion from the state budget, which is about $104 billion over two years, and redirecting it toward transportation.

Under Stewart’s plan, the $2.2 billion in redirected spending would come in his second year in office. He’s proposing that on the heels of another plan calling for cutting another $2.2 billion in spending in his first year so the state could reduce the income tax rate most people pay from 5.75 percent to 4.75 percent.

Stewart did not specify what would be cut from the budget under his proposals, but said “there are billions of dollars worth of savings out of the state’s annual $52 billion budget that can be found.”

Bacon’s bottom line: This is magical thinking, and it’s wrong in oh so many ways.

First, it is a fantasy to think that billions of dollars of “inefficiencies” can be squeezed out of the existing state budget by going through by line item by line item — the only way to achieve savings under the current paradigm of government. Medicaid, a federally mandated programs, continues to grow at the expense of other programs. (Virginia, by the way, already operates one of the leanest Medicaid programs in the country.) The state is under-funding its K-12 schools based on Standards of Quality, and it has chopped per-student support to higher education. Virginia has huge unmet needs for mental health and substance abuse. It has massive unfunded pension liabilities. The list could go on and on. Anyone who thinks they can cut the income tax rate at a revenue cost of $2.2 billion and then find another $2.2 billion laying around to be reallocated to transportation is deluded.

Second, Stewart is misguided in his no-new-tolls stance. But at least he has a rationale. Quoth the Pilot:

What makes this tolling plan so absolutely heinous is that taxpayers have already paid for these roads. It’s absolutely wrong. It’s absolutely wrong to tax citizens twice for the same road. You need a third crossing, we need a third crossing here in Hampton Roads, but that project is really a state project. It should not be borne upon the citizens of Hampton Roads to pay for a project that is really meant for the Port of Virginia, which is owned by the entire state.

I would agree, it is wrong to “tax” (or toll) citizens twice for the same road. But doubling the capacity of the Hampton Roads Bridge-Tunnel would not be tolling the “same road.” Most likely the new tunnel would be set up as HOT lanes, in which motorists would continue to use the original tunnel for free but would pay a premium to use the new tunnel as a way to bypass congestion. No one would be compelled to use the new tunnel; no one would be forced to pay the toll. But everyday motorists would benefit to the extent that the tolled road diverted some traffic from the untolled road.

I also would agree that it is reasonable to ask the Port of Virginia to help pay for transportation improvements that give tractor-trailers better access to inland markets. But the most logical way to collect money from port-related activity is for time-sensitive tractor-trailers to pay tolls to avoid congestion!

Corey Stewart reflects the id of the Virginia psyche in which everyone wants transportation improvements but they want someone else to pay for them. Stewart is promising to find “someone else” to pay. Thus, roads and highways effectively become free goods — free to the motorist, not the taxpayer. In other words, Stewart is a transportation socialist. The Bernie Sanders crowd might be OK with that. But I can’t imagine the gambit will take Stewart far with the Republican Party.

Virginia Voters Back Pipeline by Nearly Two-to-One

Question: Do you support or oppose building the Atlantic Coast Pipeline?

Registered voters in Virginia favor construction of the Atlantic Coast Pipeline (ACP) by an almost two-to-one margin over those who oppose it, according to a poll released by the Consumer Energy Alliance (CEA) today. Fifty-four percent support the controversial project strongly or somewhat, while 31% oppose it.

Eighty-three percent of voters say they consider “energy issues” to be very or somewhat important in the upcoming gubernatorial election. Forty-eight percent say that are more likely to support a candidate who “favors more infrastructure projects like the Atlantic Coast Pipeline” while 27% say they would more likely prefer a candidate opposed to the pipeline.

The poll of 500 Virginia voters was commissioned by the CEA, a non-profit, non-partisan trade association for the purpose of “providing reliable, affordable energy for consumers.” The organization strongly supports the pipeline. Dominion Energy, the managing partner of the ACP, is a member. (See the questions and results of the Virginia polling here.)

Clearly, the results are favorable to the ACP, which has encountered stiff resistance from environmentalists and landowners along the pipeline route. In rolling out the poll to the media, CEA made no secret of the fact that the timing is designed to stiffen the backs of gubernatorial candidates who favor the project. Tom Perriello has made opposition to the pipeline a major issue in a tightly contested race for the Democratic Party nomination against Lieutenant Governor Ralph Northam.

In past posts I have noted biases, both pro and con, in polls that framed questions to elicit answers from respondents that their sponsors were looking for. This poll shows no obvious sign of such of bias. Here are the two key questions:

I’d like to talk now about energy issues. Have you heard or read anything about a proposed natural gas pipeline from West Virginia to public utilities in Virginia and North Carolina, or is that not something you have heard or read about?

And:

As you may know, there is a proposal to build a 600-mile Atlantic Coast Pipeline to bring natural gas from West Virginia to public utilities in Virginia and North Carolina. Do you strongly support, somewhat support, somewhat oppose or strongly oppose building the Atlantic Coast Pipeline?

The polling sample seems reasonably representative of the Virginia population: 74% white, 16% black, 36% Democrat, 27% Republican, 23% conservative, 16% liberal. The margin of error due to sample size is +/-4.4%. The polls results do not provide a geographic breakdown.

While supporting the ACP, voters gave even stronger endorsement of “renewable energy projects, such as solar and wind power” — with 69% strongly in favor, and 20% somewhat in factor. Weaker majorities favored expanding offshore oil and gas drilling in U.S. waters, and generating electricity using coal-fired plants.

Dominion has been criticized for its influence in state politics during this campaign season. Another questions asked: “As you may know, Dominion is one of the companies that has proposed the Atlantic Coast Pipeline.” Seventy-eight percent said that Dominion’s involvement would have no influence on their support, either way. Ten percent responded they would be more likely to back the pipeline; 8% said they would be more likely to oppose it.

Remarkably, despite intensive media coverage of the pipeline controversy, 47% of respondents replied that they had not heard of the ACP.

Yes, Virginia, There Will Be a Third Party Choice this Fall

Cliff Hyra

The major media took absolutely no notice, but over the weekend the Libertarian Party nominated a candidate for governor: Cliff Hyra, a Richmond-area patent attorney. His top three issues are economic growth, criminal justice reform, and adding choice to the education and health-care systems.

Rick Sincere, a libertarian blogger, covered Hyra’s nomination for Bearing Drift.

Hyra’s advocacy of cutting taxes and regulations echoes the national priorities of President Trump. But he has a very different approach to law-and-order issues. Virginia should de-criminalize marijuana and stop arresting 35,000 to 40,000 people a year for victimless drug crimes. He also would “introduce elements of competition and choice” to education and health care, he says.

Hyra’s first challenge is obtaining 10,000 valid signatures of registered voters, including a minimum of 400 from each of the eleven congressional districts, in order to get on the Virginia ballot. The deadline is June 10. Bo Brown, chairman of the Libertarian Party of Virginia, said that he had about 7,000 signatures in hand or turned into the State Board of Elections.

A Business-Like Approach to Paying for I-87

Proposed route of I-87 linking Raleigh and Norfolk.

Proposed route of I-87 linking Raleigh and Norfolk.

Sen. Frank Wagner, R-Virginia Beach, is the Republican candidate you’d almost forget was running for governor were it not for the occasional newspaper article like the one in today’s Richmond Times-Dispatch. He doesn’t have Ed Gillespie’s financial resources, and he lacks Corey Stewart’s penchant for controversy. But he’s out there, plugging away. As a long-time legislator, his ideas deserve a hearing.

Some of his ideas make sense. He is a fiscal conservative disinclined to gamble with big spending schemes or tax cuts that could disrupt the state budget. “This is not the federal government,” he said at a recent reception in Mathews County. “We cannot print money. We have to balance budgets day in and day out every day.”

But some of his ideas need work. His proposal for jump-starting the economy is to increase transportation spending. Because he’s a fiscal conservative, he would finance that spending through a tax hike, shifting to a sliding scale in which gasoline taxes are higher when the retail price of gasoline is lower, and taxes are lower when the price of gasoline rises.

In the article, Wagner elaborated on his thinking about transportation as a driver of economic development:

Virginia’s transportation network does not foster economic growth, he said, and the state will fall further behind North Carolina without major improvements. For one, North Carolina is planning a highway to connect Raleigh and the research Triangle to Norfolk and the port.

“That’s what business-people do,” Wagner said. “They make strategic investments and expect a return on that investment.”

Another thing business people do is conduct cost-benefit analyses before they make big investments. If anyone has conducted a reputable cost-benefit analysis of Interstate 87 between Raleigh and Norfolk, you can’t find it on the website of the Triangle’s Regional Transportation Alliance (TRA). (If someone knows of such a study, please let me know.) By way of justification, the RTA offers gassy language about investment that would accrue to North Carolina communities along the route (without acknowledging that communities not on the route might see investment shrink) and make it easier for tourists up north to reach the Raleigh area.

The singular virtue that I can see in I-87 is that half the proposed route is already constructed to Interstate standards. Supposedly, the 213-mile Interstate would cost only $1 billion to build. By eye-balling the map, I’d guesstimate that North Carolina would be responsible for building and maintaining 90% of the length. If North Carolina wants to waste its money, well, what the heck, maybe Virginia should be willing to throw in a few bucks to open up a new route for truck shipments from Virginia ports.

But that’s all back-of-the-envelope thinking. The acid test of whether such a project would be an economic boon or drain is whether it could support itself through tolls. Is there sufficient demand for a Norfolk-to-Raleigh connection — perhaps from trucks emanating from the Port of Virginia — that it could pay its own way? If so, and if private sector concessionaires were willing to put their own money into a public-private partnership, I’d be inclined to support the project. Conversely, if business people look at the project and decline to invest their own funds, then I’d be inclined to think that I-87 is just another boondoggle backed by civic boosters angling for Some One Else’s Money.

If Wagner really wants to do like business people do, perhaps he should get business people to pay for the project — and not raise Virginians’ taxes.

Standard & Poor’s Rains on Candidate Parades

Standard & Poor's "negative" rating on Virginia's AAA bonds could squelch candidates' plans for spending sprees and tax cuts.

Standard & Poor’s “negative” rating on Virginia’s AAA bonds could squelch candidates’ plans for spending sprees and tax cuts.

When you run for governor in Virginia, you have to make promises, and when you make promises, the only ones that cut through the media clutter are vows to cut taxes or launch expansive new spending programs.

Thus, this year, Republican candidate Ed Gillespie has rolled out a plan to cut taxes by $1.25 billion (assuming tax-revenue forecasts allow it), Democrat Ralph Northam proposes to eliminate the sales tax on groceries at a cost of $500 million, Republic Corey Stewart pledges to abolish the income tax entirely, and Democrat Tom Perriello has touted spending proposals that would jack up spending by $1 billion. Republican Frank Wagner wants to ramp up transportation spending, but he at least proposes a gasoline tax increase to pay for it.

Amidst all these promises, Standard & Poor’s Global Ratings has issued a sobering warning. While the firm affirmed Virginia’s AAA bond rating, it has dialed back its outlook from “stable” to “negative,” writes Jeff Schapiro in the Richmond Times-Dispatch.

Schapiro paraphrases Secretary of Finance Ric Brown as saying:

S&P is worried about two things, both of which are inextricably bound: the cash cushion the state maintains against a reversal in the economy and doubts about Trump-era federal spending, which would significantly increase defense spending — and Virginia’s nagging dependence on D.C.

S&P cited the big withdrawal — about $600 million — from the so-called rainy day fund that Gov. Terry McAuliffe, a Democrat, and the legislature used to help close a $1.5 billion hole in the budget attributed to sequestration.

With a balance in the emergency account of only $281 million, the credit agency views “this as a low level of reserves relative to similarly rated peers and a situation which could weaken the commonwealth’s ability to respond to economic and financial downturns in the future,” said Brown.

Concern about the draw-down of the rainy day fund is easy enough to understand. Less comprehensible is S&P’s worries about the Trump budget, which includes a proposed $50 billion in increased defense spending. The budget may or may not be good for the nation (we can debate that another time), but it would be unquestionably good for Northern Virginia’s and Hampton Roads’ defense-heavy economies.

Whatever… S&P has its reasons. And state legislators are paying attention. When Schapiro asked Chris Jones, R-Suffolk, chairman of the House Appropriations Committee, if tax cuts and spending hikes are justified, he replied: “From my perspective, I have an obligation to the commonwealth to have a structurally balanced budget that is conservative and prudent.” In other words, Jones is extremely cautious regarding any big spending and tax-cutting plans.

Update: In a statement released today, Gillespie is using Standard & Poor’s announcement to double down on his tax plan. He regards his 10% across-the-board cut to state income tax rates as part of the tonic — along with changes to education and workforce training, regulatory reform and a new approach to economic development — needed to “spark the natural, organic economic growth our Commonwealth needs.”

I still like Gillespie’s tax plan, but spending pressure from Medicaid, K-12 schools, higher-ed, mental health and other sources is not abating. The news from S&P reduces Virginia’s margin for error.