Northam Administration Still Avoiding Discussion of TCI

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Why do Virginia’s leaders run away from the Transportation and Climate Initiative? Could it be because the first state legislature to consider it, in reliably Democratic Connecticut, just adjourned without even taking a vote on the proposed carbon tax compact, despite strong support from Democratic Governor Ned Lamont?

The Virginia Department of Environmental Quality has called a June 24 public meeting to discuss efforts to ramp down carbon dioxide emissions from transportation sources, but it made no mention of the pending TCI interstate compact. Instead it focused on the General Assembly’s approved 2045 goal of “net zero” emissions in all sectors of the economy, including transportation.

Reaching this target will help Virginia do its part to address the climate crisis, improve air quality and public health, and tackle inequities in our transportation network. The first step to these efforts will be public outreach and engagement by DEQ with support from our project facilitator AECOM. This project will inform an upcoming DEQ report that will investigate strategies to accelerate low-carbon transportation solutions and ultimately eliminate greenhouse gas pollution from the transportation sector,” DEQ wrote.

Is the stated goal of TCI, a 30 percent reduction in CO2 emissions by 2033 achieved by taxing and rationing gasoline and diesel, no longer considered sufficient by Virginia leaders seeking to avert to claimed catastrophe of climate change? Will some different “strategy” be proposed? Or are they just pretending to back away from the TCI approach for the time being? June 24 may finally bring the issue to light.

More information on TCI and its impact on Virginia can be found in this short video.

The DEQ meeting call came out the same day as the Georgetown University Climate Center was hosting another webinar on the TCI program, rolling out a new Model Rule version and a long summary of the recent round of public input, which elicited a detailed comment from the Virginia Manufacturing Association among hundreds of others.

Industry groups with an interest, pro or con, would be well served to review the new documents, which also include more details on how the state-based panels that will advise on spending the money must be controlled by environmental justice advocates, communities considered overburdened by transportation-relate pollution, and advocates for low-income residents.

Organizers resisted the push in the comment process to expand the target that 35 percent of the fuel carbon tax funds – which could be billions of dollars – be spent on those priorities. But the new documents make that 35 percent figure a floor and explicitly allow a larger percentage.

Also resisted were efforts to increase the targeted reductions beyond the stated 30 percent over ten years, although it is now mandated that will be reviewed three years in. Efforts to expand the use of carbon offsets were also not adopted, but what carbon offsets might be allowed will be left to the member states.

The new documents are now open for another round of public comment through August 13 on the TCI-P Public Input Portal.

During the 90-minute virtual meeting June 10, the June 24 DEQ meeting was referenced as a sign of Virginia’s “great conversation” over TCI, which made the DEQ announcement language harder to fathom. As the only hard proposal on the table, the discussion should continue to focus on TCI and voters should be informed about it during the coming election season.

Any proposal that seeks to wean Virginians more quickly off internal combustion engines, in cars, buses or work vehicles, is likely to produce even higher consumer cost than the considerable hit TCI would create. An analysis sponsored by Thomas Jefferson Institute put the figure at more than $700 per year for a family.

Only three states and the District of Columbia have indicated they will join the interstate compact so far. In the District and Massachusetts, legislative approval is not being sought. In Rhode Island, the issue is still in play.

Where Connecticut stands now is unclear, but its representative on the call said the Lamont administration remains committed and is exploring how it can move forward. The bill on the subject never came to an actual vote outside of the adoption of a substitute, and the analysis on the legislative website doesn’t even hint at a likely consumer cost.

The online CT Mirror account linked above is strongly pro-TCI, but gives credit for the defeat to a strong response based on the likely consumer cost:

But TCI’s legislative meltdown is clear, and it began when Connecticut Republicans, local oil industry leaders and other business groups labeled the potential gas price increase a “gas tax” that would trickle down as price hikes in everything from gas to groceries. Even though the “tax” label is inaccurate, it stuck, and TCI supporters were unable to deploy an equally effective counter-punch.

In the coming months, Virginians will decide for themselves if the “tax label is inaccurate,” unless in this state TCI continues to simmer without any news coverage or political debate.

Posted in Economy, Environment, State Government, Taxes, Transportation | Tagged , | Leave a comment

Considering Public Sector Collective Bargaining? Here’s How to Protect Taxpayers and Workplace Freedom

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Twenty-eight years after Governor Doug Wilder signed it into law, the Virginia General Assembly lifted the ban on public sector collective bargaining. As of May 1st, localities in Virginia could give government unions a monopoly to represent all employees at a particular worksite.

However, the law passed in Richmond is unique from other states as it sets virtually no guidelines on what government unions can bargain over and how they can be formed. Thankfully, it also does not mandate public sector collective bargaining, allowing localities to keep the status quo that the Commonwealth has had for decades.

First and foremost, it should be pointed out that localities can reject public sector collective bargaining. There is good reason to do so, as simply administering the process is expensive. In fact, localities that are considering allowing bargaining are estimating hundreds of thousands or even seven figures for ongoing costs for negotiations and compliance. This spending will not go for better wages or benefits for current public employees or better services for citizens —it is simply to hire more employees to administer the infrastructure of bargaining.

The costs alone could be a large reason that, while the state law allows public employees to petition their local elected officials to vote on allowing bargaining, those representatives will vote no and keep the process that has worked in the Commonwealth for generations.

However, there may be some instances where a locality will allow public sector collective bargaining. For this reason the Thomas Jefferson Institute recently published “Recommendations and models for local collective bargaining in Virginia.”

While voting “no” or not voting at all if not required is the best option for Virginia localities, this “toolkit” outlines options for forming unions, protections for public employees, complying with state laws, and what topics a locality should bargain over (or not bargain over) if it must vote yes.

These include complying with Virginia’s secret ballot protection law, ensuring public employee votes to form a union are done securely and employee privacy is protected. Because unions will have a monopoly to represent all employees (even those who do not wish to join the union or be represented by it), the union should need a majority of all workers (not just those voting) to vote yes before they are given the privilege of collective bargaining.

Future employees should also not be locked into today’s decisions in perpetuity.  Unlike some other states where unions were voted in generations ago and simply remained, public employee should have the right to periodically vote on whether to keep the union at their workplace, vote it out, or select a different union.

Ordinances should also be specific about complying with the spirit and letter of Virginia’s transparency laws, ensuring that collective bargaining negotiations are conducted in the open, similar to other public meetings affecting Virginian taxpayers and citizens.

The Supreme Court has said that everything government unions do is political and public employees have a First Amendment right to choose to pay union fees or not. Public employees should be informed of these rights before any money is taken from them. Further to prevent misunderstanding or fraud, any ordinance should include language similar to a recent Indiana bill requiring public employers to confirm with the employees that they wish to pay dues before money is deducted from their paychecks. Alternatively, the locality could follow the lead of states such as Michigan which prohibit union dues being deducted from some public employees’ paychecks.

While public employees who work for the union may need to do some union business during the workday, they should not receive their taxpayer funded salaries during this time. Public employees should be allowed to use vacation time or take unpaid time off while doing union business but paying these employees to do union work on the taxpayer’s dime should be forbidden. Similarly, unions should pay fair market value for office space in public buildings or the use of government equipment.

The people’s local elected officials must have the final say over both budgetary (required by state law) and policy issues. The employer’s negotiating team and the union may agree to a tentative contract but it should not go into effect until the local elected body approves it. Similarly, arbitration, where an unelected arbitrator or arbitration panel writes the final contract, should be avoided.

Local ordinances allowing for public sector collective bargaining can also specify what unions can and cannot bargain over. The best model is Wisconsin which allows government union to bargain over wages only but limits that to inflation without a voter referendum.

If the locality must for whatever reason allow a broader scope of bargaining there are several things that should be expressly prohibited. These include:

Seniority pay systems: the ordinance should ensure that good employees can receive raises for how hard they work.  Local governments should not be constrained from compensating employees based on skill, effort and competence rather than merely “time served”;

General staffing and personnel decision: determination about who can be hired and staffing levels should be left to the employer;

Layoffs and last in first out: ordinances should prevent a collective bargaining agreement from dictating newer employees be laid off before more senior employees regardless of performance;

Ancillary services: localities should be free to do competitive bidding and should not be locked into buying services such as insurance from a specific provider because of a collective bargaining agreement;

Other issues that should be off the bargaining table include the school calendar and scheduling; discipline and grievances; pensions; performance evaluations; and school curriculum.

Many of the above issues are already prescribed by state law, especially for education employees and may not be bargained over anyway. As with any large-scale contract, local counsel should be consulted before allowing any specific subject in a collective bargaining agreement.

Allowing public sector collective bargaining will be a very difficult, time consuming, and expensive process. The easiest and most cost-effective route that protects public employees and stops a third party from coming between them and their employer is for localities to keep the status quo and vote no. If this is not possible local elected officials should first attempt to follow Wisconsin’s lead. If they must allow larger bargaining the several subjects outlined in the toolkit should be considered to be specifically taken off the table.

Posted in Government Reform, State Government | 1 Comment

Northam Regs Out of Step With Reality

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Despite the stunning and rapid success of the vaccines in arresting the spread of COVID-19, if you enter a Virginia workplace you go back in time to the pre-vaccine era of doubt and fear.

Virginia acted in haste in adopting permanent workplace rules related to COVID 19. Now that the Centers for Disease Control has relaxed many of its requirements and conceded that others were not backed up by evidence, the state’s employers are in limbo. The workplace regulations are now badly out of step.

There was no allowance for vaccinations in the regulations, which became permanent in January just as the population was starting to get shots.

Governor Ralph Northam was warned this would happen if the temporary COVID-19 rules were made permanent but barreled ahead to the applause of organized labor. The regulations carry the weight of law and can be enforced with severe sanctions, whether or not they are in direct conflict with the latest CDC guidance.

Outside of workplaces, Governor Northam has used an executive order to relax masking, social distancing and capacity rules effective May 28, but the underlying state of emergency remains in effect until at least June 30. At that point it could be extended. The workplace regulations cannot yet be changed.

In a joint letter, about 35 business organizations have asked the Governor to immediately lift the state of emergency that underlies the workplace regulations, and then quickly call back the state Safety and Health Codes Board which adopted the permanent regulation on a split vote. Only that board can amend the rules to reflect the current CDC advice and the success of the vaccines or repeal the regulations outright.

The joint letter, which the Thomas Jefferson Institute for Public Policy also signed, reads in part:

Now that Virginia is getting closer to fully re-opening the economy, business owners are faced with a legal predicament on whether to follow the science (CDC guidance and recent executive orders) or the permanent regulations (16 VAC25-220). There are several unanswered questions about how business owners should still operate since the COVID-19 regulations passed by the Safety and Health Codes Board are permanent. Will all of 16VAC25-220 be in place after the May 28th? Will they be in effect on or after the end of the State of Emergency on June 30, 2021?

…As the three critical pieces of the Permanent Standard – 1) social distancing, 2) wearing face protection and 3) increasing sanitation measures are expected to be removed on May 28th, there will no longer be a need for the Permanent Standard. The numerous conflicts between the changing CDC guidance, Executive Orders, and Permanent Standard are causing confusion and stress on Virginia’s employers and employees as they rebuild their businesses, as well as causing time allocation and costs on the agencies that are responsible for enforcement of the regulations.

Even before the recent collapse of the masking and other rules outside of the workplace, conflicts between the regulations, previous CDC guidance and simple common sense had sparked a massive effort by the state to respond to questions. Several answers in the “Frequently Asked Question” list seem to relax or downplay the regulations, but an FAQ written by a state bureaucrat does not override a regulation and release the employer from regulatory risk.

One FAQ answer cited by the business coalition letter seems to put a burden on an employer facing a complaint to demonstrate that employees have been vaccinated.

Our members would appreciate clarification regarding what qualifies to fulfill the “an employer can demonstrate” standard? Does an employer need to require a copy of an employee’s vaccination card? Is a written record of an employee’s status needed? Would requiring and maintaining this information place employers in violation of HIPPA rules, require small employers to institute specific security measures to protect an employee’s privacy and ensure other employees do not have access to a fellow employee’s medical history?

Lawyer and Richmond Times-Dispatch labor law columnist Karen Michaels wrote about the dilemma facing employers May 25. She quoted Richmond lawyer and Safety and Health Code Board member Courtney Malveaux, who voted against making the regulation permanent.

“The board intentionally dodged the issue of different rules between vaccinated and unvaccinated individuals, even though the vaccine was becoming available,” he said.

The state now has a standard based on the science of January in May. “From the beginning, VOSH [Virginia Occupational Safety and Health] should have embraced the science and should have required employers to follow the CDC guidance in real time. It still has an opportunity to do so now,” Malveaux said.

He recalled that an earlier draft of the standards contained a safe harbor provision providing that if the employer was complying with the CDC that the employer was in compliance with the (state) standards.

That safe harbor, which would have greatly reduced the current conflicts and confusion, was stripped out of the draft. Odds are research will continue and best practices will continue to change, and if any part of these regulations remain in force, that safe harbor should be added.

Posted in Regulation, State Government | 1 Comment

With Tax Revenue Exploding, Virginia Should Boost Standard Deduction, Index for Inflation

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One of the big financial winners with the May 1 Virginia minimum wage increase is the state itself, because the entire raise is subject to a 5 percent state income tax. With its low standard deduction and personal exemption amounts, Virginia squeezes income tax out of even its lowest wage workers.

In light of the massive tax increases Virginians have seen due the Governor Ralph Northam’s recent policy changes, some of the heaviest falling on the state’s businesses, it is clear the state is on a sound financial footing. Another major surplus of more than $500 million looms. The initial 2019 promise made by the legislature to continue efforts for tax reform, abandoned by both parties after the 2019 election, should be revived.

The recommended focus remains the same as the Thomas Jefferson Institute position two years ago:

  • Virginia needs to substantially increase the standard deduction it offers to all taxpayers, with the goal of matching the amount offered on their federal taxes. That would be an increase from $9,000 tax free income for a couple filing jointly to $25,100 for that same couple, removing more than $16,000 from taxable income. An individual’s standard deduction is $12,550.
  • Virginia needs to index its tax code to inflation, again mirroring federal practice. Failure to do so, and allowing tax rates to increase due to inflation, is itself a form of tax increase. This is even more important now because the massive federal deficit spending on individual cash benefits, and other federal actions to overheat the economy, are likely to produce the kind of inflation many of us remember from the 1970s.

Complaints that the state cannot afford this should be hooted down, although it may need to be phased in, starting with a standard deduction increase to $6,000 for an individual and $12,000 per couple. State General Fund tax revenues are up about 30 percent in just four years, and the explosion from the tax increases and super-heated economy is just starting. If the Biden Administration gets even part of the tax package it wants through Congress, Virginia will quickly conform to any of the changes that produce additional revenue for the state. Most of them will.

The next Governor and 2022 General Assembly should act immediately to protect Virginia families and the Virginia economy from what is coming. Shielding a higher portion of every Virginia family’s income from income tax is easy to explain and provides a level tax benefit to rich and poor. As a portion of income, it is of far greater benefit to the lower income workers.

In 2019, Virginians were asked about doubling the standard deduction as a method to return some of the coming state tax bonanza due to the 2017 federal tax bill. By wide and bi-partisan margins they endorsed the idea, but the General Assembly took only a small step and raised the deduction 50 percent. A major increase in the standard deduction will be just as popular today, if not more so.

The Thomas Jefferson Institute also recommended changes to the corporation income tax in 2019, which again were roundly ignored by leaders of both parties. It was clear that the federal rules changes in the Tax Cuts and Jobs Act of 2017 would produce an avalanche of new state corporate taxes unless we made state-level adjustments. Fixing that is of lower priority than the other two goals, a meaningful standard deduction and annual inflation adjustments.

Much of Virginia’s business income is reported and taxed on individual returns, since many businesses are not structured as corporations. An increase in the standard deduction is of direct benefit to those unincorporated business owners. For corporations, the higher standard deduction is of benefit to employees and stockholders but not the business entity.

The General Assembly has now decided to increase the state’s fuel taxes annually to keep up with inflation in future years. It has voted to raise the minimum wage annually due to match inflation. It is long past time to give the same protection to Virginia’s taxpayers. The current chair of the House Finance Committee in the General Assembly, Delegate Vivian Watts, D-Annandale, has introduced an indexing bill already, but so far has been unsuccessful.

Many Democrats share the desire to reduce income taxes on Virginia families by working up from the bottom but prefer to do it with a mechanism called the Earned Income Tax Credit. Recent General Assemblies have also considered and rejected efforts to make that tax credit “refundable,” meaning that taxpayers who qualify could actually receive an annual check from the state. The proposal is likely to surface again.

That approach does nothing to reduce the tax burden on middle income Virginians because the EITC phases out quickly as income rises. And it involves the state taking the taxes out of paychecks and then returning them at a later time, rather than simply not taxing it in the first place. EITC becomes just another government entitlement, more bureaucracy.

Many Democrats also oppose the idea of a higher standard deduction because the benefit is nearly universal, reaching even higher income families if they do not take itemized deductions. If the federal tax changes President Joe Biden wants are enacted, the higher state standard deduction will make only a small dent in higher tax bills coming their way.

Finally, matching the federal standard deduction brings Virginia into line with a number of other states competing with Virginia for new jobs and residents. The District of Columbia and South Carolina match the federal amount, and North Carolina comes close. For most low income Virginia workers and many retirees, there would be zero income tax, the same as in Florida, Texas, or Tennessee.

Posted in Economy, Government Reform, State Government, Taxes | 1 Comment

Sign the Petition!

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Posted in Government Reform | 1 Comment