Return of “The Stupid Party”

Share this article on:

From the ‘50s to the mid-‘70s, the Republican Party was known as “the stupid party” – locked in the past, making foolish decisions, promoting unwise and counterproductive policies.

Today, in Virginia, “the stupid party” has returned. But it is no longer Republican.

The current battle over Virginia’s budget and the prospects for tax reduction and reform affirms the Left’s governing philosophy: What the government has belongs to the government and what the taxpayer has is negotiable.

With a $5.1 billion surplus exceeding the last Fiscal Year’s projections, Governor Glenn Youngkin proposes to return $1 billion — less than 20 percent — to the taxpayers from whom it came in the form of permanent rate reform. He would spend the remainder on education, behavioral health, law enforcement and other projects. Senate Democrats, on the other hand, want to spend all of it offering, at best, a one-time rebate giving them “first dibs” on future excessive tax revenue.

It is a philosophy locked in the past. Nothing demonstrates it better – on taxes and other key issues — than the recent VCU Wilder Commonwealth University Poll.

My colleague, Steve Haner, has already documented the VCU poll’s biases which asked, for example, if voters want Youngkin’s $1 billion tax cut or spending on school construction – without informing the respondent that Youngkin’s proposal includes spending $2.4 billion on such projects.

Nonetheless, the survey provides an important snapshot of the tide of public opinion, and on issue after issue, the Left swims against the tide.

Take the simple question “What is the most important issue facing Virginia?” By two-to-one over the next highest response, the number one issue is “Inflation or the rising cost of living.” A smart party would focus on reducing the components of rising costs it can control – starting with the tax hikes passed by Governor Ralph Northam raising nearly 28 percent more tax dollars than before those hikes were passed, a full ten percentage points higher than the inflation rate over the same period.

Support for tackling the cost-of-living issue cuts across every region, age group, education and income level. Importantly, support includes 47.3 percent of Independents – higher than even among Republicans.

The issue can be addressed with tax reforms adjusting the tax code to inflation, increasing the standard deduction to comport with changes made by the Feds four years ago, and adjusting the top tax rate that kicks in at $17,000. Some of those ideas are captured in Governor Glenn Youngkin’s tax plan but seem lost in the miasma of secret budget committee discussions.

Instead, House of Delegates Democratic Leader Don Scott says “No,” dismissing voter concerns by declaring a tax-cut “irresponsible.”

It is not just taxes.

Asked if they have personally “experienced impacts from climate change,” 59 percent say “No,” including more than 56 percent of Northern Virginians, where one would expect the climate change canon to be strongest.

Yet, that 59 percent is being instructed by the Left, in party-line votes, to sacrifice their less expensive vehicles through a legislatively imposed ban on the sale of new gasoline-powered cars and trucks. This forced consumer spending comes despite the known higher cost of Electric Vehicles, their higher repair costs, the fact that most drivers will change cars before an EV will pay off, and that some cars are cheaper to fuel with gas than electric.

Those party-line votes stopped efforts to prevent localities from requiring the replacement of natural gas heating and stoves with electric, as has taken place in New York and California. Those retrofits are calculated to cost consumers as much as $27,000.

These are government-imposed increases, piled onto the rising cost of living, where grocery prices are high, gas prices are high, and mortgage rates have hit the highest in 20 years, putting the American Dream of home ownership out of reach for many.

So determined is the Left to impose a California agenda on Virginians that they ignore traditional allies in Black Virginians. Pounded unconscionably by school shutdowns resulting in massive learning loss and drops in test scores, 28 percent of Black voters name education as their top issue. Not far behind were Hispanic voters, naming education their number two issue, at 33 percent. Yet, elected Democrats snub the pleas of parents seeking quality alternatives for their children, even voting against using COVID funds to help parents find tutoring for their children.

Thus, Virginia Democrats have become “the stupid party” … ardently devoted to its most extreme wing, willing to ignore a long-standing base of its own voters, stepping most on those seeking only to make a better life for themselves and their families.

Whether Republicans have become “the smart party” – willing and able to sell their solutions to the public beyond the give and take of darkened Capitol hallways – on that, the jury is still out.

Posted in Government Reform, Politics | Comments Off on Return of “The Stupid Party”

Virginians Want Their Change Back

Share this article on:

The latest preliminary figures from the Virginia Department of Revenue put the current general fund budget surplus at more than $5.1 billion for fiscal year 2023, which ended June 30. This is more than double the $1.94 billion surplus the commonwealth posted in 2022. This huge surplus is money left over after every single item in the state budget was fully funded under the amended 2022 Appropriation Act, including education, health and welfare, transportation, public safety, and every department and program funded with state tax dollars.

This unprecedented revenue surplus was largely due to higher-than-expected payroll withholding of individual income taxes (which are still not indexed to inflation), as well as corporate and sales taxes.

In other words, Virginia taxpayers were overcharged $5.1 billion over the past two years and $3 billion more than the commonwealth’s own 2023 revenue forecast. And yet some members of the General Assembly, all of whom are up for re-election in November, don’t want to give any of it back.

This is akin to a merchant refusing to hand over the change when a customer paid more than the agreed-upon price of a purchased item. Virginians would be irate if a restaurant, bar, grocery store, or other private establishment decided to keep the change because the business might “need” the extra money in the future. Yet the General Assembly is attempting to do the same thing on a much larger scale.

The record budget surplus also undermines the argument that lowering taxes results in reduced state revenue. As Governor Glenn Youngkin pointed out, “Last year we provided $4 billion of tax relief for individuals, families, and veterans. What this year’s preliminary numbers tell us is that even after that historic tax package the Commonwealth ended fiscal year 2023 with $5.1 billion in excess resources, far more than forecasted.”

California is learning the hard way that overtaxing residents has unintended consequences. Unlike Virginia, California is now facing a $31.5 billion budget deficit after posting a $100 billion surplus just last year. But the state legislature spent all the surplus funds instead of returning the excess money to taxpayers. And wealthy Californians took notice.

In fact, in what is being called “The Great Wealth Migration,” the Golden State now has the largest net negative tax income migration in the U.S., losing $343.2 million in tax revenue as high-worth individuals took their money and moved to more tax- and business-friendly states such as Florida, Texas, and Arizona.

These are individuals who not only pay the bulk of state income taxes (the top 1 percent in California pay 50 percent of all state income taxes) but also have the means to start businesses and hire workers. Their loss is hard to replace.

In Virginia, after reaching an impasse in June, budget negotiators from the Republican-controlled House of Delegates and the Democrat-controlled state Senate met again in an attempt to iron out their differences. Republicans support Gov. Youngkin’s tax refund proposal; Democrats do not.

The Thomas Jefferson Institute for Public Policy has recommended that GOP legislators refuse to bargain away a tax refund this year. If the economy goes south or the commonwealth faces dire reductions in revenue, state legislators can cut spending, adjust taxes or do whatever is necessary at that time to make up the difference. They’ve done it before and they can do it again if necessary.

But allowing the commonwealth to overcharge taxpayers to the tune of $5.1 billion in unappropriated funds sets a terrible precedent. It tells future lawmakers that they can overcharge taxpayers with impunity.

Virginian taxpayers paid for everything the General Assembly included in their last budget. Now they want their change back. It’s as simple as that.

Barbara Hollingsworth is Visiting Fellow with the Thomas Jefferson Institute for Public Policy. She can be reached at [email protected]. 

Posted in Economy, Taxes | Comments Off on Virginians Want Their Change Back

Why Dominion is Calm in Wind Energy Storm

Share this article on:

With growing turmoil in the offshore wind industry finally being reported, it would be nice to turn the clock back a year and revisit the State Corporation Commission’s failed 2022 effort to impose a real performance standard on Dominion Energy Virginia’s $10 billion, 176-turbine project. No such luck, Virginia.

While two projects in New England’s waters are under active construction, and the Biden Administration’s Bureau of Ocean Energy Management is cranking out cookie-cutter approvals up and down the coast, major signs of financial stress are showing in many places. Some projects have been cancelled, some are being renegotiated for higher prices, and the proposal near North Carolina’s Kitty Hawk still lacks a buyer for its power.

Here is how Barron’s summarized the situation recently:

At least eight multinational companies in three states have quietly started to back out of wind contracts or ask to renegotiate deals in ways that will pass more costs to consumers. Beyond Shell (ticker: SHEL), they include BP (BP), Denmark’s Orsted (DNNGY), Norway’s Equinor (EQNR), Spain’s Iberdrola (IBDRY), Portugal’s Energias de Portugal (EDPFY), and France’s Engie (ENGIY) and state-owned Electricite de France.

The projects those companies are building will collectively cost tens of billions of dollars to construct and connect to the grid. The cost problems they’re facing make offshore wind a dicey investment proposition today, with the potential for substantial write-downs ahead.

The issues go beyond rising construction costs. Siemens Energy saw its stock plummet in late June after reporting maintenance issues with its products (here is the Wall Street Journal report.) And there is growing recognition that the long-term threat in a salt-water setting has always been corrosion.  It is cited as the leading cause of maintenance failures.

Dominion’s Coastal Virginia Offshore Wind (CVOW), on the other hand, seems to have avoided the storm. The utility reported to the SCC on May 1 that it believed its original price estimates and schedule were still accurate.

The same assertion was made as the utility applied to the SCC to increase the amount customers will pay monthly toward the coming construction. The SCC blessed an increase to $4.74 per month for a residential user with a 1,000-kilowatt hour bill, with actual power production still years away. If you have believed all the political hype about “rate relief,” September’s bill is going to be an awakening.

Dominion is a well-managed company and there is no reason to doubt it aggressively negotiated tight contracts with suppliers and has wisely hedged foreign currency issues. Even so, the bottom-line difference between CVOW and these other projects, the reason they are in heavy seas and CVOW is not, is Dominion’s stockholders are protected and the bulk of the risk lies with its 2.6 million ratepayers.

Dominion’s CVOW remains the only U.S. project to be fully owned by a monopoly utility and fully funded by its captive ratepayers. Only Virginia’s General Assembly has done that to citizens.

That is what the SCC tried hard to address a year ago, with some energy performance requirements Dominion complained would kill the project outright. Now we understand better why the utility warned the standards might be fatal.  All the independent wind energy generators mentioned by Barron’s do not have the same ability as a monopoly integrated utility to shield their stockholders, and those under deep pressure are (as they must) putting their stockholders first.

Fearing Dominion would cancel the project, Virginia’s political leadership lined up in bipartisan fashion behind a counter proposal they claimed would “protect ratepayers.” The deal basically gave the utility a green light to spend 40% more on construction (the construction risk, part of which Dominion did assume) and removed any financial penalty to the utility if the turbines do not produce the amount of electricity promised for the length of time promised (the performance risk.)

The final order where the SCC relented and accepted the counter proposal contained this one sentence, which clearly explains why all is calm down at Dominion headquarters, the industry turmoil elsewhere notwithstanding (emphasis added):

In addition, if the Project never becomes operational or is at some point abandoned {e.g. due to cost, construction, or operational issues that make it imprudent or impracticable to proceed), the Company has described how customers would still pay for costs incurred up to the point of abandonment. For example, even if the Project is abandoned at the end of 2023, Dominion still estimates it would have incurred close to $4 billion of costs to be recovered from customers.

That paragraph does not apply to Avangrid, Iberdrola, Siemens-Gamesa, BP, Orsted or any of the other private wind developers. It only applies to Dominion and its customers.  Creation of this risk is squarely on the members of the Virginia General Assembly who undercut the SCC’s authority to protect consumers over multiple bills and years and the governors of both parties who have seen mainly dollar signs in the coming forest of ocean turbines.

Posted in Energy | Comments Off on Why Dominion is Calm in Wind Energy Storm

Other States Have Updated How Schools Are Funded: Why Can’t Virginia?

Share this article on:

In an August 1 commentary published in The Richmond Times-Dispatch, Thomas Jefferson Institute Senior Advisor and former President Chris Braunlich looks at the recent education funding report issued by the Joint Legislative Audit and Review Commission. He examines more closely a solution that would improve public education delivery to children, hold leaders accountable and gain the confidence of a taxpaying public.

Read Braunlich’s commentary in the Richmond Times-Dispatch by clicking here.

Posted in Education | Comments Off on Other States Have Updated How Schools Are Funded: Why Can’t Virginia?

Other States Have Updated How Schools Are Funded: Why Can’t Virginia?

Share this article on:

In an August 1 commentary published in The Richmond Times-Dispatch, Thomas Jefferson Institute Senior Advisor and former President Chris Braunlich looks at the recent education funding report issued by the Joint Legislative Audit and Review Commission. He examines more closely a solution that would improve public education delivery to children, hold leaders accountable and gain the confidence of a taxpaying public.

Read Braunlich’s commentary in the Richmond Times-Dispatch by clicking here.

Posted in Government Reform | Comments Off on Other States Have Updated How Schools Are Funded: Why Can’t Virginia?