Richmond to Parents: “You’re on Your Own”

A week after party-line votes killed Republican initiatives to assist parents of school-aged children financially with federal COVID-19 dollars, Governor Ralph Northam proposed sending another $223 million of those dollars to public schools, adding to millions already sent.

There is a major divide in the way Republicans and Democrats view the role of parents in a child’s education. In this age of COVID, parents need bipartisan support. They are not receiving it.

Northam’s proposal sends funds to public schools for testing supplies, personal protective equipment, sanitation supplies and technology for distance learning. While public schools have mostly not been open for in-school classes, they will receive $175 per pupil. Private schools, which mostly have been open, have not been told whether they will receive an equal per-pupil share of the funding to protect the children attending their schools.

The first GOP proposal came from Delegate Kirk Cox, a retired high school social studies teacher. Cox’s budget amendment would have helped parents desperately trying to ensure their child receives an education while the schools are limited by inadequate online programs. Cox proposed taking $100 million from federal COVID funds and allow parents to use them for tutoring services, educational therapies, private online tuition, nationally-normed achievement tests or college admission exams, transportation, technology, or other education consumables.

His proposal died in a straight party-line vote, despite his having first voted to protect public school funding despite pandemic-related enrollment losses. Democrats leading the House of Delegates did not permit debate on his proposal, they just voted no.

Senator Steve Newman offered a similar benefit, raising the figure to $300 million, offered only to public school parents and capped at $500 per child.

Senator Siobhan Dunnavant, an obstetrician who sees plenty of mothers and children, noted she had talked “with women every day who really are on the brink of exhaustion … this is an opportunity for us to fulfill that commitment that we support them in the education of their children.”

The stresses are especially hard on low-income parents. By last month workers with bachelor’s degrees had nearly recovered the jobs lost in spring. But there were still almost 12 percent fewer jobs for those with just a high school diploma and more than 18 percent fewer for those who had dropped out.

State Senator Jen Kiggans, a nurse practitioner who is also a former Navy helicopter pilot and knows something about military families, echoed their concerns: “These guys don’t have a choice, they can’t work virtually, many of them deploy, and many don’t have family in the area so they can’t call their parents to come watch their kids. If both people are in the military, these are people who just have to go to work.”

The GOP proposals offered parents options, allowing them to decide what their family needs to fill in huge gaps left by inadequate online “schooling.” For one family it might be more internet bandwidth. For another, a tutor. For others, books. For a child with disabilities, educational therapies. What is needed most is decided by the parents closest to the needs.

The loss of in-classroom teaching hurts all children but is especially dire for low-income parents unable to afford the resources or the parents of children with disabilities for whom falling further behind without in-school instruction can have tragic consequences. These parents are struggling for their children, in a unique situation that is forcing expenses on them they would not have were schools open.

“For the families, for the children, for the working Mom, for those who are trying to make ends meet in a year where there is unusual financial stress in the home,” said Dunnavant, as the Senate voted the proposal down. “We should not just abandon them.”

Federal COVID-19 funds have been distributed to local governments, to businesses large and small, to those who can’t pay their rent and to those who can’t pay their electric bill.

But the message from Richmond is clear: Parents, you’re on your own.

Chris Braunlich is president of the Thomas Jefferson Institute for Public Policy and a former president of the Virginia State Board of Education. A version of this commentary originally appeared in the October 16, 2020 edition of the Fredericksburg Free Lance-Star.

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Session Makes Economic Recovery Harder

Now that the Virginia General Assembly’s “Cops and COVID” special session is all but finished, will it be easier or harder for the state’s struggling economy to recover in 2021?  It will be harder, probably.

The initial reason Governor Ralph Northam recalled legislators starting August 18 was to review the state budget for COVID recession-related changes. Then a series of confrontations between police and Black Americans added law enforcement and criminal punishment to the agenda.

But the legislators reached far beyond those issues in the 270 pieces of legislation introduced, of which 56 have now passed (many of them duplicates).  The Assembly merely recessed October 16, it did not adjourn, and that will delay the effective date of the various new laws until at least March 1.

What did the legislature do for or to the business climate in Virginia?

It made it much more likely that a local or state inspector will impose a cash fine on any business deemed to be in violation of Northam’s various executive orders related to the pandemic.  Previously only a criminal penalty could be imposed, very unlikely for most violations.  House Bill 5093 will allow that $500 civil penalty instead, which may become quite common.

If some customer thinks you have unfairly raised prices on some scarce product or service (and the shortages we went through in March may repeat), House Bill 5047 adds far more authority for the state to investigate and punish you.  The so-called anti-gouging statute will now apply to manufacturers and distributors, not just retailers.

If you are a residential landlord,  both approved bills and a provision in the new budget will protect your non-paying tenants from eviction, and dictate the terms of re-payment you must accept.  The restrictions are in place until the official emergency ends, probably well into 2021.  Only dwelling units are covered, so any commercial lease is still enforceable by eviction or other legal means.

If you are a creditor of a different kind, any funds which the debtor has received in the form of government COVID-19 relief may not be sought to cover the debt.  House Bill 5068 was one of the few to pass with an emergency clause, so it will go into effect as soon as Northam signs it.  It may not mean much unless another round of stimulus payments is made.

Another aspect of the debt crisis spawned by the pandemic and layoffs involves customers not paying their electricity, natural gas, water, and sewer bills.  That moratorium on disconnections is also extended by language in the budget, and the State Corporation Commission is directed to

raise future bills for everybody to make the utilities whole.  The legislature did commit $100 million from federal COVID funds toward paying down the bad debts, but it won’t be enough.

As with the rental provisions, only residential customers are protected.   No business struggling to pay utility bills is offered protection or relief or extended payments.  But if there are also utility bad debts from businesses, they will also be among those collected by raising rates on remaining customers.

The utilities are the only private businesses the General Assembly acted to protect from bad debts during the recession.

There is a special provision for the state’s largest electricity provider, Dominion Energy Virginia.  It will fully forgive the unpaid bills of certain residential customers as of August 31, restarting the clock for them.  The estimated $78 million that will cost will be recovered next year, in the scheduled utility rate case, by reducing any customer credits due because of excess profits over four years.

Those excess profits were, of course, extracted from both residential and business customers of the utility, and any rebates would have gone to both, as well. Business ratepayers will also be told to pay extra on their bills to repay the utilities their pandemic bad debts next year.  Like residential customers, they face higher utility bills as they seek to rebuild next year.

Certain medical facilities received some protection from lawsuits.  Nothing else that passed the General Assembly and was sent to the Governor made things easier for businesses or employers.  Several such bills were introduced – efforts to limit COVID legal liability for most businesses, to limit taxes on COVID financial assistance received by businesses, and to provide a tax break for landlords who allowed tenants to skip rent.  All those failed, usually without a hearing.

It was almost worse.  Several other proposals which would add huge costs to doing business in Virginia during the pandemic were defeated, but only by a handful of votes.  Advocates for both will be back in January pushing hard for them during the 2021 regular session.

Most of the Assembly’s Democrats were ready to create a presumption that COVID-19 is caught at work, and that employers are thus responsible for health care, leave pay and even disability through the Workers Compensation system.  The bill passed in the House but failed in a Senate committee, mainly because of the expected cost to the government for its own workers.

That was also the fate of legislation mandating paid leave for employees who were dealing with COVID, either their own disease or someone they care for. That was also a Democratic priority, especially within the House. In that case, there is a current federal mandate that businesses could point to, arguing they didn’t need a second and different set of rules.  Expect another full court press in January.

The attitude of the special session toward Virginia’s employers was an extension of that demonstrated during the 2020 regular session, before the pandemic.  At that gathering employer mandates and new employee grievance options proliferated, many subject to state investigations or punished by civil lawsuits.  The balance in Richmond has shifted against businesses and employers, except a favored few.

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Wind and the Grid: A Precautionary Tale from the U.K.

So, you think the rolling blackouts experienced in California were a fluke and of no relevance to Virginia? Well, then, consider what’s happening right now in the United Kingdom, where “unusually low wind output” and a series of planned power plant outages puts the nation at risk of blackouts. You see, the U.K. relies upon wind power for literally half of its electricity, which is just dandy when the wind is blowing, but not so great when the airs are calm.

As it happens, here in Virginia, Dominion Virginia Power has finished installation of its first two offshore wind turbines. Those two units are paving the way for a much wider deployment of wind power in the Atlantic Ocean. The utility forecasts that wind will account for 5.1 megawatts of its electric-generating capacity (about 20%) within 15 years.

In the U.K. the becalming of the wind — windpower is expected to drop from 51% of output to as low as 10% over the weekend — coincides with planned outages at two of the country’s nuclear reactors, reports the Daily Mail. The National Grid Electricity System Operator reassured the Brits that it would “make sure there is enough generation” to prevent blackouts…. In other words, the U.K. will be cutting it really close.

One big difference between the UK and Virginia is that the UK continues to invest in nuclear energy to supply a reliable base-load of electricity. Here in Virginia, the 15-year forecast in Dominion’s Integrated Resource Plan (IRP) assumes that its two aging power stations will be re-licensed. But powerful environmental groups oppose the projects, which are still several years out, in the expectation that energy conservation and battery storage will be able to make up the difference.

Another difference is that Virginia’s portfolio of renewable power sources will rely heavily upon solar. Indeed, the IRP forecast projects three times as much solar as wind. That makes Virginia less vulnerable to a falloff in wind but more vulnerable to extended cloudiness.

The UK experience points out other problems associated with excessive dependence upon renewables:

During the national lockdown earlier this year, the network was inundated with extra power.

National Grid had to spend £50million on the second May Bank Holiday weekend alone to pay power producers – including surplus wind and solar farms – to switch off.

It spent almost £1billion on extra interventions to prevent blackouts during the first half of the year and also handed out money to EDF Energy to halve the amount of power generated at its Sizewell B nuclear plant.

Bacon’s bottom line: Virginia will get to a 100% renewable grid eventually. But it is reckless and dangerous to set arbitrary deadlines in the hope that somehow, maybe we will have developed batteries or other energy-storage mechanisms that will allow us to maintain reliability without driving electricity rates into the stratosphere. Until such technologies are proven, we need to maintain a base supply of nuclear and, dare I say it, natural gas. Further, we’ll need quick-surge natural gas capability to fill in when the sun don’t shine and the wind don’t blow.

The most discouraging thing about the discourse about maintaining the reliability of Virginia’s electric grid is that the environmental lobby has yet to say anything more reassuring than, “We’ll figure it out.”

A version of this commentary was originally posted on October 16, 2020 in the online Bacon’s Rebellion.

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Holiday Spending Could Be a Bumpy Economic Sleigh Ride

The official kickoff to the holiday selling season starts next month, but Christmas trees have already started showing up at retail stores.
It is an important time of year for retailers as holiday sales represent about 20% of the retail industry’s total sales.

The typical signals forecasters use to predict holiday sales are not very helpful during this COVID-19 environment.

Increasing consumer spending is typically associated with growing employment and low unemployment rates.

The coronavirus pandemic put the economy into a tailspin with employment still 10.7 million below pre-COVID-19 levels in September and the unemployment rate at 7.9% after peaking at 14.7% in March.

Not surprisingly, consumer spending on goods and services plunged 16.5% in April, compared with a year earlier. The latest data for August shows improvement, but sales remain 3.2% lower than a year ago.

These trends, along with the social distancing and concerns over coming down with the virus, seem to point toward a dismal holiday selling season.

Is it possible to see more sales over the holidays than last year? The National Retail Federation, the nation’s largest retail trade group, predicts holiday sales will increase between 3.5% and 4.1% to more than $3.9 trillion during the upcoming holiday season.

The forecast, which excludes sales at automobile dealers, gas stations and restaurants, represents sales to be generated in November and December. Holiday sales grew between 3.2% and 4.2% annually over the past five years.

“Consumer spending has seen a clear V-shaped recovery thanks in part to $1,200 stimulus checks issued in the spring and enhanced benefits for the unemployed,” said Jack Kleinhenz, the NRF’s chief economist. “I am cautiously optimistic about the fourth quarter in terms of the economy and consumer spending, but the outlook is clouded with uncertainty pivoting on COVID-19 infection rates.”

Global financial services firm Deloitte is not as optimistic. It is looking for holiday retail sales to increase between 1% and 1.5% when compared with last year.

This forecast comes by melding together two scenarios.

The first is that sales increase only 0% to 1% as consumers remain concerned about their finances and health. A more optimistic scenario of 2.5% to 3.5% year-over-year sales growth would occur if consumer confidence rises due to additional federal pandemic relief and the creation of a vaccine.

Since people have not traveled or eaten in restaurants as much in the COVID-19 environment, some of that spending might shift to holiday spending under the more optimistic Deloitte forecast.

My view about holiday spending is in line with the NRF forecast for a couple of reasons.

Consumer confidence about the strength of the economy has risen. The Conference Board’s monthly survey index value stood at 101.8 in September, up from a low of 85.7 in April during the COVID-19-induced recession.

Fiscal stimulus and high savings rates also put consumers in good shape to spend this year.

Sales might be a bit higher in Virginia because our economy has rebounded slightly faster than the nation.

But the one thing all forecasters seem to agree on is that the shift toward e-commerce sales will accelerate this holiday season because of virus concerns.

A version of this commentary was originally published on December 11, 2020 in the Richmond Times-Dispatch.

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TCI Returns

Having imposed a carbon tax on Virginia electricity generation in 2020, the General Assembly starting in January 2021 will consider adding a similar tax on every gallon of gasoline and diesel sold for vehicle use. The Transportation and Climate Initiative, an environmentalist dream for a decade, is finally ready for its close up.

Advocates in the 12-state region that would make up the proposed interstate compact held two webinars in September, one focused on additional modeling on the project and the other discussing all the racially- and environmentally-just ways they believe states can spend the billions in new taxes.

The new modeling results did not change the basics of the program. TCI is a cap, tax and trade system that imposes a dollars-per-ton cost on the carbon dioxide emissions released by burning the fuels. The tax rate is set by an interstate auction, and the tax itself is imposed on the fuel wholesalers. The amount of fossil fuel emission credits that wholesalers may bid for will be capped and then will shrink a certain percentage every year.

The advocates have still not released a new memorandum of understanding, which Virginia would need to agree to. During the 2020 General Assembly, members of Governor Ralph Northam’s administration stated the issue would be brought before the full General Assembly and he would not simply sign the deal.

Once approved, the details of implementation would need to be worked out in a regulatory process imposing the supply cap and tax mechanism on all wholesalers serving the Virginia markets. Maryland will be the only adjoining state in the compact, creating additional pressure on the fuel industry along most of Virginia’s borders.

That still-hidden-in-the-weeds MOU will be crucial because it will set the reduction targets. The higher the targets, the higher will be the carbon tax and the steeper will be the slope on the reduced amounts of fuel for sale. The new models still project that a 20% reduction over a decade will start with a tax of 5 cents per gallon, while a 25% reduction will start with 17 cents per gallon and climb from there.

The final MOU is expected to include mechanisms to decrease the amount of emissions available slightly if auction prices drop too or increase them if they spike quickly. But there will still be a steady decrease in the number of gallons available for sale throughout the region, a form of rationing.

Governor Ralph Northam was just branded with a grade of “F” by the Cato Institute in part for raising gasoline taxes ten cents per gallon in some parts of Virginia and almost 18 cents per gallon in other parts of the state. That will put the state gas tax around 34 cents per gallon by July 2021.

With TCI carbon taxes added on, Virginia’s fuel taxes may be exceed 50 cents per gallon by next summer. Legislators seeking their own re-election, or seeking a statewide office, may need to explain why some parts of Virginia saw fuel taxes triple in two years.

The increases imposed this summer and fall have been all but invisible, with fuel prices down in the recession. A year from now could be different, the economy and fuel prices up, and another fuel tax hike then might be quite apparent to voters and business owners.

And to accomplish what? The new TCI modeling shows what the old version did: With no action whatsoever, market forces are already driving down emissions in the transportation sector. Old vehicles are being replaced by new, more efficient models, and electric vehicles are growing in popularity. By 2030 vehicle-related emissions could drop 19% or even more, without any caps or carbon tax.

Against that backdrop, the TCI goal is really to add only one to 6 additional percentage points of reduction in CO2 emissions. To claim substantial environmental or even health-related benefits from that is a stretch. The Thomas Jefferson Institute’s David Schnare, Ph.D., dismantled the earlier environmental and health benefit claims in a 2019 review, still valid apparently.

One of Schnare’s criticisms is the money being raised by the TCI carbon tax is not going to transportation infrastructure, while the declining cap on fuel sales will reduce the traditional sources of revenue for road construction and maintenance funds. The TCI organizers want to use the new tax revenues to subsidize electric cars and trucks, mass transit and non-vehicle travel (bike and pedestrian options.) Their models depend on assumptions that doing that will reduce fuel sales.

One of the TCI sales pitches will be promising to focus the financial aid on lower income communities. A major topic of that webinar’s discussion was the premise that urban and low-income citizens have been overburdened by traditional energy development and related pollution. At the webinar, Chris Bast of the Virginia Department of Environmental Quality touted the 2020 Virginia Environmental Justice Act and Northam’s creation of a cabinet-level Chief Diversity Officer.

Programs outlined in other states included subsidies for electric cars and buses, building out EV charging stations, residential development on transit lines and for home energy efficiency projects. The General Assembly debate could quickly devolve into a sticky contest between drivers who would pay the higher taxes or feel the pinch from a supply cap — heavily business, suburban and rural — and those who believe they will benefit from the new taxes, mostly urban.

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