Will The “Taxpayer Relief Fund” Become a Sham?

Posted on April 3, 2019 by matt ohern
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The Taxpayer Relief Fund to be created with the residual dollars from the 2019 state tax legislation on conformity has not seen the first dollar deposited and Governor Ralph Northam is already proposing to spend some of it, seeking to expand to 150,000 more Virginians the refund payments given in lieu of tax reform.
The Richmond Times-Dispatch story on the proposal, which you can read here, quotes state officials as pegging the cost at a modest $18 million, with 98 percent of the recipients being exactly the people Northam sought to reach with his failed proposal to make the Earned Income Tax Credit into a grant program.
Well, why not just include everybody? The $110 per person, $220 per couple one-time grants already authorized for most of us really have no relationship whatsoever to the impact of conformity with the federal Tax Cuts and Jobs Act. Whether your state taxes went up, went down, or stayed the same because of the federal changes, you will qualify for the grant. The check will arrive before Election Day.
The only way not to get a check was to not have any tax bill at all, which is the case with many of the people enrolled in the EITC program. The language which Northam is seeking to add to the state budget through an amendment will not mention EITC but will allow the grant for any taxpayer with zero tax liability due to any form of state credit. So, a wealthy taxpayer who wiped out their tax with a land conservation easement will get it along with that single mother working the minimum wage job paying zero state income tax due to EITC.
Sending these grants to anybody isn’t tax reform. It isn’t even tax policy. Given it is basically a one-time payment attempting soften the political blow of a major tax increase, why not send the checks to everyone? According to the newspaper account Northam’s idea has already been blessed by the Republican leaders of the two key House committees, but reluctance was expressed by Senate Majority Leader and Finance co-chair Thomas Norment.
As a Governor’s amendment, in this case to the budget bill, it will need a majority vote in both chambers for adoption. Presumably the Governor starts with his 49 House Democrats and 19 Senate Democrats, needing only a few Republicans to join.
There came a point late in the session on this tax issue when it was clear Governor Northam and the Democratic legislators were going to demand something in exchange for their votes on the conformity bills, which needed supermajorities. This is what many expected them to demand, a way to keep his lost promise to the EITC recipients.
Instead they talked the Republicans into higher effective taxes on the wealthy by restoring a cap on deductions known as the Pease Limitation.
State tax filing season is well underway, and by the deadline of May 1 most people will know what the 2019 legislative decision to conform to federal law – with no tax policy changes to reduce the impact – did to their state income taxes. Hundreds of thousands who once itemized deductions no longer will. The one policy change that matters for most people, a slight increase in the standard deduction, goes into effect for 2019 but had no impact on their 2018 liability.
If you compare your 2018 return to the previous 2017 state income tax totals, assuming nothing major changed on the income side, you can see the impact, if any. Unfortunately, most people have no idea what they pay overall and only see or seem to care about the level of refund, if any.
The General Assembly did make policy changes retroactive to 2018 on two business tax issues, one mainly important to foreign-owned or multi-national corporations and the other a subsidy for corporate debt. Draw what conclusions you will about how that speaks to the legislature’s priorities. Secretary of Finance Aubrey Layne said more than once that the standard deduction for families could also have been changed retroactive to 2018, but the legislature didn’t do it.
The very unsatisfactory outcome for individual taxpayers was softened by the prospect of future tax reform through the new Taxpayer Relief Fund. If conformity to federal rules has the expected state-level impact, that fund could grow to hundreds of millions of dollars or even billions within a few years. The final line of the new law reads: “The General Assembly shall appropriate any revenues in the Fund to effectuate permanent or temporary tax reform measures.”
It looks like the first use of those fund will be temporary, not permanent, and will not be tax reform at all. It can’t even be called a tax refund, because the individuals getting it will have paid no income tax. This does not bode well for the future of that fund, especially if the partisan make-up of the legislature changes and it is Democrats deciding how to use those funds.
Taxpayers (and voters) have a choice: They can either demand that the “Taxpayer Relief Fund” be used for the purpose it was designed for, or they can permit it to become little more than a political slush fund to satisfy the needs of particular constituencies.

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For Once, Compromise and Consensus Rule

Posted on April 3, 2019 by matt ohern
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Conservatives have always been skeptical about building massive government-run preschool programs. They frequently cite the cost, or the fact that some studies show the effects of pre-k programs fade or disappear over time.

Liberals, meanwhile, are customarily critical of anything that smacks of “school choice,” usually arguing that the answer to poorly educated children is to spend more money, opposing any programs outside of those tightly run by government entities.

Both expanded pre-school and expanded education choice came together last week in a bill signed by Governor Ralph Northam. And the result was: Children won.

Northam quietly signed legislation introduced by State Senator Bill Stanley expanding the existing Education Improvement Scholarship Tax Credit (EISTC) Program to preschoolers. The bill passed with bipartisan support (10 Democrats voted aye, even as four Republicans voted No).

Currently, the EISTC offers donors to approved scholarship foundations a state tax credit and the foundations, in turn, provide scholarships to at-risk K-12 public school students seeking to attend a private school that better fits their educational needs. The revenue lost to the state through the tax credit is more than compensated by the savings from no longer paying for the child’s public education.

Today, the EISTC provides more than $13 million in scholarships to 4,300 K-12 students. Some schools, like St. Joseph’s in Petersburg, survive solely because of the tax credit. Others, like the soon-to-open Cristo Rey High School (see adjoining story) opened here precisely because the EISTC exists. All the at-risk students are receiving additional options they wouldn’t otherwise have.

But, until now, preschoolers weren’t part of the equation … and they desperately needed to be.

Created during the George Allen Administration more than 24 years ago, the Virginia Preschool Initiative currently serves more than 17,000 at-risk four-year-olds not served by Head Start or other public preschool programs. Under it, the state and localities share financial responsibility.

But thousands of children are left without access to the program, for three primary reasons: Some localities are unable (or choose not to) meet the required local match. Others have insufficient space in their public schools. And, especially in rural areas, there are sometimes too few eligible students spread too thinly to make a program cost-effective.

Stanley’s expansion law allows scholarship foundations offering scholarships to K-12 students to offer similar scholarships to at-risk four-year-olds who are unable to get into VPI or Head Start. By expanding the pool of providers to include the private sector, more unserved children will receive services that have proven valuable.

Indeed, studies of VPI consistently show that children attending the program are more likely to meet early literacy benchmarks, score higher on the third grade Standard of Learning assessments, and more likely to be promoted on-time to eighth grade.

Which is why the new law also requires private providers to mirror the Virginia Preschool Initiative by requiring a high quality curriculum, at least one teacher for every 10 students, at least a half-day program, and professional development of credentialed teachers in the classroom.

The legislation offered consensus and compromise. For once, both sides did not get bogged down in a dispute that lost sight of the main objective. And now that it’s law, the objective of expanding opportunities for at-risk children who do not receive these important services can be met.

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How to Fund I-81 Improvements: Six Principles to Consider

Posted on April 3, 2019 by matt ohern
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Just prior to yesterday’s Veto Session, Governor Ralph Northam was pitching another plan to raise money for improvements to the Interstate 81 corridor: (1) Increase the statewide diesel tax to pay for transportation projects across the state, and (2) impose a regular gas and diesel tax along the I-81 corridor to raise revenue directly for I-81. The combined measures would raise about $150 million a year for I-81, a fraction of the $4 billion in identified needs, reports the Roanoke Times.
The proposed budgetary amendment came in response to flailing efforts by lawmakers to find a funding solution for western Virginia’s increasingly congested and accident-prone traffic artery. All previous efforts have floundered because they offended one constituency or another. The root problem, of course, is that everyone wants more money for their roads, but everyone wants someone else to pay.
The political horse-trading approach seems not to be working. Perhaps it’s time to step back from the deal-making and articulate some basic principles that people can buy into in the abstract. If we can gain agreement on the principles, perhaps we can take a fresh look at devising a workable solution. Herewith are some principles worth considering:
User pays. The impulse of politicians is to grab revenue from any source available, a practice that over time creates vast networks of subsidies and cross subsidies that are too complex to unravel and fully understand. A “fair” system (insofar as any tax system can be deemed fair) would charge vehicles for the maintenance and construction of I-81 in direct proportion to which they benefit from those expenditures.
Some state funding justified. As an interstate highway, I-81 is part of a national highway system connecting U.S. metropolitan areas and expediting interstate commerce. That critical function warrants some federal and state funding support, just as all interstate highways do.
Some local funding required. However, as occurs elsewhere, local governments along Interstate 81 have co-opted the transportation capacity of the highway. A tremendous amount of the congestion along I-81 comes from local traffic. Other regions should not be expected to subsidize local traffic generated by land use patterns that off-load the cost of building and maintaining local transportation networks to the state. Reforming local land use — the clustering of development around Interstate interchanges — needs to be part of any long-term solution for I-81.
Trucks need to pay more. Heavy tractor-trailers cause significantly more wear and tear on highways than light vehicles. While trucks do pay more in taxes than cars, the revenues generated are not sufficient to make up the difference in pavement damage. The tax system should ensure that tractor-trailers pay the full share of long-term costs of maintaining Virginia’s state and interstate highways.
Maintenance versus congestion. As a general principle, every vehicle should pay its fair share of maintaining the Interstate. Vehicles add to wear and tear whether they use the highway during rush hour or 3 a.m. The question of addressing congestion — too many vehicles on the road at the same time of day — is a separate issue and, ideally, requires a different solution. The virtue of variably priced tolls, as unpopular as they are, is that they charge highway users for contributing to congestion and encourage some trucks and motorists on the margin to shift to other roads or other times, or, thinking the unthinkable, share rides with others.
Local alternatives. Traffic congestion is not uniform up and down I-81. It is worst in the metropolitan areas — Winchester, Harrisonburg, Staunton, Roanoke, Blacksburg, and Bristol — where motorists use the Interstate as a local highway. Where practical and economically justified, these communities should prioritize improvements that increase the carrying capacity of roads and highways running parallel to I-81. It is far cheaper to expand the capacity of roads built to local street standards than expand the capacity of a highway built to Interstate standards.
In an ideal world, Virginia would scrap its jury-rigged transportation funding formula and replace it with a system aligned with these principles. Doing so would make the job of finding an I-81 funding solution a lot easier. But barring such a revolutionary change, we should at least endeavor to apply these principles to the I-81 corridor.
A version of this commentary originally appeared in the March 29 edition of the online journal, Bacon’s Rebellion.
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Cristo Rey Offers New High School Choice for Richmond Students In Need

Posted on April 3, 2019 by matt ohern
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(Editor’s Note:  The Cristo Rey school set to open in September will provide a new opportunities for at risk students … not only in education but in preparation for life.  Not only is the school partnering with a large number of Richmond businesses, but a large number – if not all – of the students will be recipients of scholarships through the Education Improvement Scholarship program.)
During the final week of January, communities like ours across the nation celebrated National School Choice Week — a week designed as an opportunity to consider the educational options available to young people in our local community as part of a “non-partisan, non-political, independent public awareness effort.”
According to its website, “NSCW recognizes all K-12 options, including traditional public schools, public charter schools, public magnet schools, private schools, online academies, and homeschooling. Started in 2011, NSCW is now the world’s largest annual celebration of opportunity in education. The various celebratory events raise public awareness of the different K-12 education options available to children and families while also spotlighting the benefits of school choice.”
Our U.S. educational system has always offered school choice in the form of various private options and still does today — namely Catholic parochial schools, other faith-based/denominational schools, and secular private schools. Having school choice means giving parents access to the best education options for their children.
Various studies in recent years have shown that school choice strengthens schools overall and improves the quality of education in general, by increasing competition and raising the level of conversation, attention, and interest in education, which in turn often means increased funding and support for educational programs across the board. And school choice is, above all, empowering parents and helping students achieve their dreams, in the manner and environment they determine to be the best for their student.
I believe every child in Virginia deserves an effective, challenging, as well as motivating educational experience. “Today’s students are tomorrow’s leaders,” and all children should have the opportunity to achieve their dreams.
As research shows, empowered parents who chose the educational environment they believe works best for their kids are more likely to see their children succeed and graduate from high school. Every child is unique, a one-of-a-kind treasure, and students thrive best when they are matched with learning environments that meet their individual needs and aspirational goals.
I am happy to share about one such new environment.
Rising high school students from limited-income families now have a dynamic new choice for high school in Richmond: Cristo Rey. This year, Richmond will become the 37th city in the U.S. to have a school that is part of the only network of high schools in the nation designed exclusively for limited-income students.
From freshman year, Cristo Rey schools establish a culture of high expectations by blending rigorous academic preparation, significant professional work experience through the Corporate Work Study Program, Catholic educational values, and support for students to and through college.
This unique educational model has powerful formational impact on students — demystifying the world outside their neighborhoods, developing valuable workplace readiness skills, introducing them to inspirational role models and supportive mentors, and building the competence, confidence, and aspiration so important to college and career success.
Each student receives a job at one of our work-study partners and will work five full days a month at their business location — and will spend the rest of the month in a high-achievement academic classroom. This opens up for the student a world of possibility never considered for their own future, in college and in life.
By selecting this new Catholic private school option, students with limited economic resources will graduate from Cristo Rey prepared academically to succeed in college, and have four years of significant work experience in an outstanding local company or nonprofit. Across the country, Cristo Rey students graduate from college at three times the national rate for students from similar economic backgrounds.
A recent U.S. News & World Report article describes Cristo Rey’s impact: “In a world where the social fabric is fraying, Cristo Rey weaves it back together. Businesses, schools, churches, families, children, and communities all come together in the mutual pursuit of providing quality education. As a result, students enjoy a more diverse experience than they would get in a traditional educational setting; co-workers get to meet, mentor and learn from students who may come from a different background than their own; support for the school is cultivated in the community; and families are able to afford an education that would otherwise be beyond their reach.”
By choosing Cristo Rey, the lives of our students and their families will be different because we will provide the resources required for their success in getting to and through college — and joining the workforce fully prepared to be successful.
The choice is clear. With Cristo Rey now a viable alternative for students from limited-income families, Richmond’s educational outcomes are about to change for the better. The Cristo Rey model, along with our students, their families, and our work-study partners, will together change the trajectories of Richmond’s under-resourced students, families, and neighborhoods forever. That is certainly a choice worth making and celebrating.
This commentary first appeared in the February 16, 2019 edition of The Richmond Times-Dispatch. 
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Want to Stop the Insanity? Focus on Education

Posted on April 3, 2019 by matt ohern
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How many shake their heads every time they listen to the news?
If you are like me, you wonder what in the world is going on in our society today. It seems everything has become so politically partisan. When it comes to opinions Republicans are phobic and racist, Democrats are liars with delusional ideas and no matter what bad thing happens in our country or around the world, it is President Trump’s fault. Would you call this insanity? I would!
As a conservative that believes God created all of us in His image and every life is precious, I sit back and wonder when the partisan bickering will stop or at least subside. When will people attempt to have an element of logic or common sense interjected into the discussion? I question if people really know or understand what they are saying. I wonder if people really believe in what they are supporting. I don’t understand why people have to be so mean, cruel and unkind to their fellow human being.
I would like to point out that we are not as different as many would want you to think. As Americans we strive to live a good life, improve our economic status, care for and be supportive of family and friends, and help others less fortunate than ourselves. These are what I believe most strive to achieve.
So where did the partisan and divisive attitudes come from? Are we born to think a particular way? Have limited thought? View ideas from one perspective? Many lessons can be learned from the innocence of children. From an early age children are free from the attitudes of judgment, bigotry, elitism and partisan labels.
Consider a 5 year old and how they react to other children when they begin their primary education. Many are scared about leaving mom. Yet, children go to a place where their surroundings are unfamiliar, don’t have their own toys, and a stranger is telling them to do things they don’t necessarily want to do. However, after a short period of time, often less than a week, children become familiar with their surroundings and start making friends. They don’t notice skin color, fashion labels, titles or other status conscious signs adults tend to focus on. They just know they like their classmate, or not, and want to enjoy playing with their newfound friends.
As children progress in their education, I’m pretty sure they are taught attitudes that deviate from those of that 5 year old. They not only learn academics in an education environment, but also behaviors that shape their attitudes and future actions towards others in society. I would argue a significant element of learned behavior centers around embracing a political correctness mindset vs. an exchange of ideas mindset. For decades our children have been taught there are differences based on a variety of perspectives. Though we are all different, we are all humans and should advance unity. But, our differences have been highlighted to a point were we see children self-segregate based on social expectations or perceived norms. Is this good for society? Is this good for the future?
The future of America should be a focus for all. Believing in America and its greatness should be a goal we all can embrace. Therefore, a primary focus needs to be on the education of our children. If we do not understand the long-term impacts of an education system, look no further than what is going on in society today. In many places, we have failing schools that fail to prepare our children for life and the workplace. We have bribery and fraud within our higher education institutions. We have young adults who believe socialism is good for our economy. It is the education system that plays a major role in shaping attitudes and behaviors, which is reflected by its people in any society. And too many parents have surrendered their responsibility by expecting the system to assume responsibility for their children.
I challenge American’s to get serious about the education system. We need to get back to basics that will truly benefit children. The economy is humming along as reflected by the great numbers reports. Yet, we continue to have available jobs in which necessary skills are lacking or non-existent. The system need not offer courses that provide unnecessary and/or non-relevant knowledge that does not align with a student’s interests, talents and/or career choice. For example, if students want to learn how to take care of large or small animals they should seek opportunities to work on a farm, at a pet store, veterinary office or volunteer at an animal shelter. This would allow individual talents and interests to be driven by way of partnering with private industry while allowing students to learn skills relevant to their career aspirations. Let’s ensure our children are focused on and excel in learning the basics: reading, writing and arithmetic.
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