Behaving Like a Commonwealth

Posted on May 13, 2020 by Kerry Dougherty
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Gov. Ralph Northam’s press conferences are weird, unsettling events. They’re free of the fireworks and drama that are a regular feature of the president’s wild pressers. But there’s a sense of quiet despair and dictatorial impulses about them.
Northam is frequently befuddled on these occasions, as he was last week when he was asked why Virginia’s nursing home deaths had tripled overnight. He had no idea. And as he was weeks ago when a reporter asked about his plans to help the homeless during the health crisis. Again, not a clue.
At other times, Northam displays flashes of irrational stubbornness.
On Monday, for instance, Northam was asked if he would consider reopening Virginia by regions. After all, there are four localities with no infections at all and more with very few positive tests or hospitalizations.
Northam’s answer ? No.
Northam responded as he has several times before, insisting that Virginia is a commonwealth and we’re going to behave like a commonwealth.
Seriously?
I dug out my battered Webster’s to check the definition of “commonwealth.” In the simplest sense, it means “a group of people united by common interests” or “a political community founded for the public good.”
Nothing about commonwealth having uniform rules across every inch of the territory.
Come to think of it, wouldn’t it serve the common good – the common wealth – for at least part of Virginia to be back in business and generating revenue to send to Richmond?
Yes, I know, the U.S. has four commonwealths: Virginia, Pennsylvania, Massachusetts and Kentucky. When these states were formed they were designated as commonwealths in their constitutions, but in reality they are no different from any of the other 46 states.
Again, this time from Merriam-Webster: “The distinction is in name alone. The commonwealths are just like any other state in their politics and laws, and there is no difference in their relationship to the nation as a whole. When used to refer to U.S. states, there is no difference between a ‘state’ and a ‘commonwealth’.”
Which raises the question, why is Northam so hung up on the “c” word?
I called a local historian to ask if I was missing something about commonwealths that would require citizens to be treated with rigid uniformity. He said no. “Commonwealth was a term that started to be used more often in the 16th and 17th centuries in England. It just meant a government for the common good or commonwealth. It became more closely identified with a republic as time went on… But that has nothing to do with complete uniformity of laws across the commonwealth.”
More than you wanted to know. Definitely more than Ralph Northam knows.
In other words, there’s nothing in Virginia’s commonwealthiness to prevent the governor from opening the rural parts of the state – you know, where crops are grown and coal is mined – while keeping closed parts of Virginia where the infection rate is high and the inhabitants live in high-rise ant colonies and ride public transit.
In a pointed editorial, “Why Must Southwest Virginia Wait On The Rest of the State?” The Roanoke Times on Tuesday pointed out that only two members of the governor’s COVID-19 Business Task Force come from west of the Blue Ridge.
Too much of the pandemic has become unnecessarily politicized — and polarized. Yes, Republicans have been the loudest voices pushing for the economy to reopen and yes, most of Southwest Virginia votes Republican. However, we can’t help but point out that some other Democratic governors — from Andrew Cuomo in New York to Tom Wolf in Pennsylvania to Jared Polis in Colorado — have approached things on a regional basis. Northam’s decision not to in a state with such geographical differences as Virginia – and such a wide disparity in infection rates — is curious, indeed.
The paper gently mocked Northam’s silly contention that if he allowed parts of Virginia to open, people from other corners of the Old Dominion would rush in, bringing disease with them.
If every business in those zero-infection localities reopened today, would we really see a caravan of people from Northern Virginia driving down to a barbershop in Bland County or to a diner in Dickenson County? wondered the Roanoke Times.
No, we wouldn’t. Northern Virginians don’t even like Southerners.
The Times noted that using Northam’s logic, the entire U.S. should remain locked down until New York’s coronavirus outbreak ends. After all, what’s to stop people from the Bronx from getting in their cars and driving to the pristine mountains of Virginia, bringing their New York pathogens with them?
Northam seems to have a fundamental misunderstanding about what being part of a commonwealth means. Will someone please toss a dictionary to him at his next presser?
This column was published originally at www.kerrydougherty.com.
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California Wins Again

Posted on May 12, 2020 by Gary Baise
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The National Pork Producers Council (NPPC) and the American Farm Bureau Federation (AFBF) were defeated again, as was all of American agriculture, by the state of California defending its Proposition 12 laws on animal housing.


NPPC and AFBF filed an action for declaratory and injunctive relief in U.S. district court claiming California’s Proposition 12 violated the Commerce Clause of the U.S. Constitution. The California Egg Farmers Association filed an amicus brief to knock out NPPC’s and AFBF’s court complaint. The states of Alabama, Arkansas, Indiana, Iowa, Kansas, Louisiana, Missouri, Nebraska, Ohio, Oklahoma, South Carolina, South Dakota, Texas, Utah, and West Virginia supported NPPC and AFBF.


The two trade groups alleged that California’s Proposition 12 violates the Commerce Clause because it reaches outside the state of California and imposes substantial burdens on interstate commerce. The plaintiffs sought an injunction against the enforcement of Proposition 12 concerning pork.


As you may recall from my past blogs, California’s Proposition 12 forbids the sale in California of pork from sows not housed in conformity with California’s view on how animals should be housed. Proposition 12 “…requires that a sow cannot be confined in such a way that it cannot lie down, stand up, fully extend its limbs, or turn around without touching the side of its stall or another animal.” California’s Proposition 12 bans the use of individual stalls thus any pork sold in California must come from sows allotted 24 square feet in a group pen.

NPPC and AFBF said these requirements will “…impose costly mandates on producers that interfere with commerce among the states and impose costs on pork producers that will ultimately increase costs for American consumers.”


The Court dismissed the plaintiffs’ complaint, declaring they had failed to state a claim upon which relief could be granted. The U.S. District Court judge even granted a motion for judgment on the pleadings because the plaintiffs were entitled to no legal remedy.
The district court relied heavily on U.S. Supreme Court authority. It said California’s Proposition 12 did not discriminate against interstate commerce and did not directly regulate extra-territorial conduct. (Nonsense!)


The Court also indicated that any law that “regulates even-handedly to effectuate a legitimate local public interest, and [where] its effects on interstate commerce are only incidental, will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefit.”


NPPC and AFBF also argued Proposition 12 regulates out-of-state conduct. The Court blew away this argument as well, saying “A statute is not invalid merely because it affects in some way the commerce flow between the states.”


The Court claimed that when a statute “has significant extraterritorial effects it passes Commerce Clause muster when those effects result from the regulation of in-state conduct.”
The Court made clear that California’s Proposition 12 and implementing statute applies to both California hog producers and out-of-state producers therefore not targeting an extraterritorial activity. The Court stated “In-State and out-of-state hog farmers are burdened in exactly the same way – all are effectively prevented from raising hogs in violation of Proposition 12 if they wish to sell their products to California.”


Costs for out-of-state producers
NPPC and AFBF complain that California’s Proposition 12 places excessive burdens on interstate commerce. The Court was not impressed that the proposition would create substantial costs on out-of-state producers. The Court made it clear it believed “…there is no burden on interstate commerce merely because it is less profitable than a preferred method of operation.”


The Court concluded saying “…Plaintiffs have failed to demonstrate that there is a substantial burden on interstate commerce.”

Not a good decision for agriculture. Now on to the 9th Circuit Court of Appeals!
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You’re Invited to Our Tele-Town Hall Meeting: Re-Opening Our Communities with George Allen

Posted on April 29, 2020 by Jefferson Policy Journal
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Virginia and our nation are facing one of the greatest challenges of our lifetime. The lives and livelihoods of millions of Americans are now at stake from an invisible enemy: the coronavirus and COVID-19. But it’s a false choice to say we can only save lives or save livelihoods.

That’s why the Thomas Jefferson Institute for Public Policy is hosting a Tele-Town Hall Meeting at 3:00 pm on May 6, with former Virginia Governor George Allen, a member of the National Coronavirus Recovery Commission.

You can register to participate in this Tele-Town Hall Meeting by clicking here.
Governor Allen will be joined by another member of the Commission, Northern Virginia entrepreneur Noe Landini, owner and operator of several restaurants in Northern Virginia and DC, including Landini Brothers, the Fish Market and Pop’s Ice Cream in Alexandria.


The National Coronavirus Recovery Commission, a project of The Heritage Foundation, has brought together some of the nation’s top experts and thinkers to offer their specialized experience and expertise to chart the path ahead, and the mission of addressing when and how to begin getting Americans’ lives “back to normal” again.

The Coronavirus Commission will issue a new set of recommendations on May 5. Governor Allen and Mr. Landini will discuss those recommendations from their unique perspective as government and business leader, and answer your questions about how best to re-open our communities and get the economy safely moving again.

Our Tele-Town Hall meeting will call participants at the phone number they choose at 3:00 pm on May 6.


You will be able to hear their remarks and ask questions from the comfort of your home. And you will not be subject to any other phone calls or “robo-calls” from us. But Registration is Required!


To register for the Thomas Jefferson Institute’s first Tele-Town Hall Meeting, click here!

Posted in Economy | 1 Comment

Mutated by COVID, Unemployment Insurance Unsustainable

Posted on April 29, 2020 by Stephen D. Haner
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unemployment sign

Image by Nick Youngson: CC BY-SA 3.0


America’s and Virginia’s unemployment insurance program – born of the Great Depression and the Social Security Act of 1935 – may be another casualty of the COVID-19 pandemic. The virus has mutated unemployment insurance into a form not financially sustainable.
Each state has its own unemployment insurance trust fund, financed by taxes on employers and steadily growing in good times. The last time the Virginia Employment Commission publicly reported on our fund’s status, almost a year ago, it projected a balance of $1.3 billion by the end of 2019.
Confidence was so high the legislative commission charged with oversight did not even hold its scheduled December meeting. The most recent federal report pegged Virginia’s fund at just slightly over (101%) the minimum balance the federal government considers solvency, ranking Virginia in the middle among the various states. It assumed Virginia had money for 12 or 13 weeks of benefits.
We do not. More Virginians have applied for unemployment insurance in three weeks (415,000) than normally apply over two to three years. The run on that particular bank (a perfect metaphor) is only starting.
When state trust funds run dry, federal loans (not grants) pick up the slack, and Virginia needed federal loans to pay benefits in the last recession. The loans this time will be the largest ever. When this deeper crisis passes, those loans must be repaid by the higher employer taxes which kick in automatically.
How deep will the financial hole be? Partly that depends on how Congress has changed the program.
First, Congress authorized (and apparently did pay for) a massive increase in the weekly benefit amount. Congress apparently added a flat $600 per week across the board, more than doubling Virginia’s existing maximum benefit of $378 per week in 2019. Some recipients will receive as much or more in benefits as they did in pay.
Congress will not let that increase expire until this crisis passes. Returning to the lower benefits which have been standard for almost a century will be politically unpopular. Unless Congress wants to make unemployment insurance into another entitlement program based on borrowed dollars (and it should not) future employer taxes will explode.
Second, Congress expanded benefits to cover self-employed workers, clearly a growing element of our economy. Not being employees, none of them have had taxes paid into the state or federal unemployment insurance funds on their behalf. There was no trust fund for them. They have never collected UI checks in previous recessions.
Right now, they are being paid benefits with federal money under a new and separate program, Pandemic Unemployment Assistance. When the smoke clears Congress is likely to decide that income replacement benefits for those workers should continue going forward.
A government-managed unemployment pool for self-employed workers is possible. Actuaries would need to determine the proper level of taxation. Traditional employers will be highly resistant to letting their taxes be used to protect this new, less stable group of workers. The self-employed may resent and resist a new tax. The political battle could be fierce.
The basic federal unemployment tax (FUTA) is 8 tenths of one percent of payroll. The state’s basic tax (SUTA) ranges from one tenth of one percent on the first $8,000 paid ($8 per worker) for established firms with no claims up to 6.2% on a company with a history of major layoffs. The tax for them on the first $8,000 in wages works out to $496 per worker and coming out of this crisis more companies than ever before will face maximum or near maximum UI taxes.
Virginia’s employers face two other taxes which will be higher. When the trust fund falls below 50% of solvency, a “fund builder” tax of $16 per worker is added for everybody. Virginia businesses paid that from 2010 through 2015 after the last, much shallower, recession.
Finally, there is a pool tax applied to all employers to cover deficits created by companies that go bankrupt and default, or who create such massive drains on the fund that even their maximum taxes do not repay their debt. The pool tax peaked at $42.30 after the last recession and is likely to be larger than ever before after this crisis.
Even if the benefit structure is rolled back to pre-COVID levels, the trust fund deficit will be so deep a future General Assembly will face choices. To rebuild the fund, it may have to raise the state tax schedule beyond the current maximums or accept that the maximum tax under the current schedule will be applied for the foreseeable future.
The consequence is simple: If it costs more to hire people, fewer people will be hired.
A version of this commentary was originally published in the April 23 edition of  The Richmond Times-Dispatch.

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Mass Transit After COVID-19

Posted on April 29, 2020 by Baruch Feigenbaum
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COVID-19 has caused most transit agencies to enter crisis mode. Ridership, understandably, has declined between 50 and 95 percent in most major cities during the shutdown. Transit agencies are also spending more resources sanitizing buses and trains. And to protect drivers many transit operators are boarding bus passengers through the back door, foregoing the farebox revenue that is typically collected at the front door.

Transit ridership has been declining since 2014, long before COVID-19, however. Every major transit agency in the country lost ridership between 2018 and 2019—with the exception of Seattle, which has been building new light rail at a frantic pace. Per capita transit ridership has declined even faster, falling from 287 trips per urban resident in 1920 to 38 trips per resident in 2017.

The current problems provide transit agencies an opportunity to rethink how they fit into the mobility landscape. Many agencies cling to 20th-century operations in a 21st-century world. Transit managers are focused on short-term day-to-day operations as opposed to long-term strategies. And their short-term approach focuses on operating as much service as possible, sometimes at the expense of their employees’ health and agencies’ bottom lines.

Despite an 87 percent drop in ridership, New York’s Metropolitan Transportation Authority (MTA) has cut service by only 25-to-35 percent. The Chicago Transit Authority saw ridership drop 82 percent recently but does not plan to cut any service. The Metropolitan Atlanta Rapid Transportation Authority (MARTA) reduced bus service 20 percent after ridership fell 55 percent. Among large transit agencies, only the Washington Metropolitan Area Transit Authority (WMATA) has made drastic reductions. It is now operating on its modified Sunday schedule on weekdays and operating only 27 “lifeline” bus routes on weekends.

Transit systems are going to need to make reforms to remain viable over the long-term. And this is the time to start making changes. First, transit agencies need to understand their mission. Transit’s number one purpose is to provide service to low-income transit-dependent riders. The only rationale for subsidizing transit services is to provide these residents with an affordable and reliable trip to work. Political actors may see value in subsidizing trips of upper-middle-class commuters, but most researchers and transit industry staff think it is bad policy.

The way the Metropolitan Transit Authority of Harris County in Houston redesigned its bus service to focus on transit-dependent riders should be a model for other systems. These days, such riders are more likely to travel from suburb to suburb. Therefore, the agency changed its service network from a radial design to a grid design that more effectively serves dispersed housing and employment locations. The agency eliminated stops that had proliferated over 50 years, even if they no longer served any riders. Finally, since transit-dependent residents don’t all work 9-5 jobs, the agency increased transit service on Saturday and Sunday up to 40 percent and decreased service slightly on weekdays. Many agencies including L.A. Metro are following Houston’s lead. But some of the redesigns fall short because agencies are spending limited resources building light-rail lines instead of operating better bus service.

Second, transit agencies are an integral part of the new mobility universe, but they are only one part of it. Providing mobility is not about expanding the agency; it is about serving the customer. Transit agencies need to transition into mobility agencies, overseeing and coordinating service rather than operating it.

The Regional Transit District (RTD) of Denver, for example, functions as a partial service coordinator. It coordinates service across the metro area, eliminating duplication. RTD oversees special services such as the ride-home program for folks who use transit to commute to work and have an emergency and need a vehicle to commute home.

Third, transit agencies need to issue requests for proposals to the private sector for building and operating service, maintaining vehicles, developing IT services, writing transit grant applications, and entering into transit-oriented development. Often times the private sector can operate better service. Sometimes the transit agency will have the advantage. But transit agencies that don’t examine private contracting will never know.

Few large transit agencies contract out most of their services. Denver’s RTD entered into the design-build-operate-maintain Eagle P3 to build its A Line, Gold Line, Northwest Rail Line, and a commuter rail maintenance facility. But RTD is not interested in contracting with private providers to operate its existing service despite the potential for improved performance and cost savings.

Fourth, agencies can partner with Uber and Lyft and private transit providers to operate services. Many transit agencies contracts with Uber and Lyft for first-mile/last-mile service in areas with low population and employment densities where fixed-route bus service is not practical. The Massachusetts Bay Transportation Authority (MBTA) pilot program, in which Uber and Lyft provided paratransit service, was more popular with riders than any paratransit service in the country.

Unfortunately, most agencies have typically been hostile towards private transit operators. In San Francisco, Leap provided supplementary private bus service on certain routes. Yet the city shut the service down for operating without a permit. Leap had applied for the permit, but the city refused to provide it. And private bus service is a developing model; Kansas City’s partnership with Bridj ended and the company dissolved. But it would be more helpful for parties to work with each other instead of protecting their own turf.

Finally, transit subsidies are not endless. The transit industry was fortunate to receive $25 billion in bailout funding. Yet, even that may not be enough for many transit agencies. And as the COVID-19 crisis plays out, policymakers focused primarily on health care and the economy. In a post-COVID world, nothing is guaranteed, including state and local subsidies. Mass transit agencies need to make reforms today in an effort to become less dependent on subsidies in the future.

A version of this commentary was originally published in the April 9, 2020 online Surface Transportation News. 

Baruch Feigenbaum Email this author

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