by James A. Bacon
I can’t say I’m surprised that the Commonwealth of Virginia now faces a $1 billion shortfall in the next biennial budget. That’s what happens when economic growth decelerates rapidly, as Virginia’s economy has been doing since the federal budget sequester put the quietus on the great Northern Virginia economic boom. We’ve been flagging the warning signs on this blog for a couple of years now. Our economic growth model is broken. Virginia’s major metropolitan regions are under-performing. Sadly, no one is heeding the wake-up call.
Virginia has long relied upon the economic engine of Northern Virginia, which in turn relied upon the never-ending expansion of the federal budget. The glory days of federal spending are over. And while it is plausible to think that the Northern Virginia tech sector may reinvent itself — it’s got a lot of really smart people and a respectable venture capital industry — it will take years of private-sector growth to offset the loss of federal jobs and restore the region to its old growth path.
Meanwhile, the economic development model of downstate Virginia never evolved past the 1970s. The big “economic development” issue in the Richmond region these days centers on construction of a minor-league baseball stadium. A minor-league baseball stadium! How bush league can you get? Of all the causes to get fixated on. Of all the projects to propose dumping public money into. What a massive failure of imagination! Meanwhile, Hampton Roads pins its hopes on a widening of the Panama Canal to jump-start port growth and industrial development. The first mistake is counting on the Panamanians to keep their act together. It turns out that the canal may not open on time. The second is counting on the Virginia Port Authority to get its act together. The port is losing money and a VPA governance crisis has landed in the lap of the McAuliffe administration.
Downstate economic development efforts still are organized around the 70s-era triad of corporate recruitment, tourism and agriculture. Incredible! Corporate relocations have declined to a dribble, tourism of the type that Virginia has — history, mostly — is declining in popularity, and agriculture is not exactly a hotbed of wealth creation these days. Yet no one at the state level seems to have gotten the memo. I see signs here and there that Virginians are thinking about what it takes to prosper in a knowledge-intensive economy, but those initiatives are mainly local and limited in scope.
In my other blogging job, I track the rise of the “Internet of Things” (IoT) — the spread of ubiquitous devices, inexpensive wireless technologies, cheap data storage capacity, and numbers-crunching power — that represents the next great wave of innovation, institutional transformation and wealth creation across the world. People are talking about the IoT everywhere — everywhere but Virginia, it seems. One of the most exciting applications of IoT technologies is in the realm of “smart cities.” The concept is hot, hot, hot in East Asia, India and Europe but if anyone in Virginia is talking about it, the conversation has yet to make it into the public realm.
With very few exceptions (click here to read about one) Virginians aren’t even talking about smart cities at the most primitive level of cutting costs, much less more esoteric applications such as environmental monitoring, engaging the citizenry or guiding decision making in land use and infrastructure investment. Two days ago, California-based Silver Spring Networks paid $8.75 million for a small French company, Streetlight.Vision, which specializes in networking streetlights to conserve energy. Streetlight.Vision has installed systems in Paris, Copenhagen, Dublin, Miami, Oslo and Barcelona. The company claims it cut electricity expenditures for Oslo by 70%; 50% savings are typical. The previous week Royal Philips (formerly Philips Electronics) announced a deal to refurbish 300 street lights in Barcelona. Smart streetlights use energy-saving bulbs and they shine only when someone is walking or driving near them. The payback for public investment is incredibly high. What’s happening in Virginia? Nothing right now, although the Washington Metropolitan Area Transit Authority reportedly has inked a deal with Philips.
Right behind street lights in the smack-yourself-in-the-face-why-didn’t-I-think-of-that-earlier department is installing sensors to monitor pipes for water leakage. The rule-of-thumb is that municipal water systems leak 20% of their water! What a waste! Virginia Beach has spent inordinate effort and sums of money over the past two or three decades trying to lock up long-term water supplies. As an alternative, has anyone there tried installing sensors on the city’s pipes and fixing the leaks!
Earlier this month I profiled how San Francisco is using IoT technology to optimize the use of its on-street parking. A small horde of Richmonders descended upon Tampa earlier this year in search of good ideas and best practices. Has anyone thought of visiting SFPark? The Virginia Department of Transportation is increasing its commitment to Intelligent Transportation Systems (ITS) but the sum remains a pittance compared to dollars spent on roads and mass transit. And don’t even get me started on the topic of Massively Open Online Courses (MOOCs) and flipped-classrooms as a way to bolster the effectiveness of our schools and colleges!
As recently as the 1990s, Virginia seemed on top of the world. Northern Virginia’s tech industry had aspirations to rival Silicon Valley. Downstate metros were competitive in the quest for corporate investment. Virginians were doing great things. The future looked bright. Today, I see a state that’s run off the road and gotten stuck in a rut. The world is passing us by while we argue how to change the tire. We think small. Worse, we think the same way we did thirty years ago. As a result, our economy is under-performing and tax revenues are suffering. The looming budgetary crisis is not a one-time fluke. It is symptomatic of a state that has lost its mojo.
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