Stealth Regionalism Quietly Makes Headway on the Coattails of ‘GO Virginia,’ Part Two
In Part One of my look at GO Virginia, I covered a sampling of the recently created regional subcommittees who were appointed for the most part from the private sector. The plan is to have these subcommittees vet business plans in each of the nine regions of the state created by the “big GO Virginia” or state board, and all endowed with powers and monies granted them by the Virginia General Assembly.
Now let’s delve into the overall governing structure of this sweet deal which was created by legislation.
The Virginia Initiative for Growth and Opportunity Act is actually a two-part piece of legislation passed in 2016 by our General Assembly. The bill is commonly known as GO Virginia, and was initially given a basic funding award of nearly 36 million. When the budget went south, and the Governor did not get his medicaid expansion, he pulled $15 million back by the end of 2016. He claimed a $13 million savings from Medicaid expansion was on his mind when he approved the original monies for Go Virginia. Apparently his blessing on GO Virginia was tied to the expansion, as in you scratch my back and I’ll scratch yours, and McAuliffe didn’t like his end of the deal.
This year, the legislators who carried GO Virginia fought for funding restoration and got 85 percent back, or about $27 million, with more to come next year. While the bill was touted as bi-partisan, due to the presence of Senator Janet Howell (D-Fairfax) in the mix, the fathers and nursemaids of the whole legislation package are basically Republicans. These include Senator Tommy Norment, Delegate Kirk Cox, and Senator Frank Ruff. The “money guy” is Chris Jones from Suffolk, also a Republican and Chairman of the House Appropriations Committee.
Senator Ruff comes into the plan with his Virginia Collaborative Economic Development Act, a companion bill to GO Virginia. Jones’s contribution was the creation of the Virginia Research Investment Fund, which is a more than interesting funding mechanism and tough to understand. The fund was originally slated to be endowed with $22 million in the budget and $20 million for capital improvements in something called “amended bond legislation.” Research online by this reporter and apparently by others revealed a figure as high as $100 million plus, and available to be given out by the state board of GO Virginia. The other funding mechanism, the amended bond legislation, is shown to be as high as $2.5 billion. This convoluted set-up is is why the amounts reported are different in just about every news source that covered it.
If you are confused by now and unable to follow the money, I’ll try to sew it up. GO Virginia has different pots of funding available to access, depending on the needs of its board members, who represent the different industries who are ideal to receive it. As long as it can be said to benefit a region in various ways, and is approved by both the regional and state board of GO Virginia, it can get the green light. This can be research and workforce development, or just about anything the way the legislation is written. It is the ultimate of ultimate, self licking ice cream cone.
As you read more about GO Virginia, you can see that Senator Ruff’s legislation is really the only concrete offer in the whole package of any return or incentive to localities who are able to participate. It’s specific, and states that two or more localities who collaborate on a business that produces jobs can receive 45 percent of the state taxes paid by the workers at that business, for up to six years, or a $20 million cap. My economic development friend, who I have known for 20 plus years, asked me if I could hear her eyes rolling over the phone when we discussed this. She said the amount of money produced by this “incentive” is in no way significant enough to offset the normal costs, and pointed out the “catch” I missed.
Here’s that catch on this highly touted incentive in all the press releases: the localities have to invest at least $25 million and the business must produce 200 jobs. This lets out three-fourths of rural Virginia from the get go. When this continued to be brought up during discussion at the GA level, Ruff offered a hardship provision for less affluent rural localities that could not meet the standard of a minimum investment of $25 million and creation of 200 jobs.
The hardship amendment allows an investment of only $1 million and 20 jobs to receive the incentive, but you have to prove the hardship as well as how this is a once in lifetime economic development deal. Should a locality ever accomplish this, they then get back 45 percent of what 20 employees pay into state taxes for six years. Yes, this is what your General Assembly thinks is smart legislation and an “incentive.”
Both economic development directors I talked to outside of Caroline told me the dollar figure from, say, even 50 jobs at 45 percent and subsequently split with another locality would not even be enough to realize it was coming into county coffers.
I digress, however. I just wanted to make sure we all understood the “incentive” which really isn’t one at all.
As 2016 moved on, the whole GO Virginia deal was threatened just as the GA adjourned when Governor Terry McAuliffe got cold feet about the whole thing. An article by Michael Martz of the Richmond Times Dispatch on April 3 began with the following:
“GO Virginia has come to a near-halt in the office of Gov. Terry McAuliffe, who has asked for a legal opinion from the attorney general on the constitutionality of the regional economic development initiative approved by the General Assembly with little opposition.
“McAuliffe, who championed the initiative and included almost $39 million for it in his proposed two-year budget, said he had warned lawmakers previously about his concerns that legislators would exercise too much control over a new 22-member state board that would have the ultimate say over funding of economic development projects proposed through a new regional framework.”
This was a curious statement considering there were only seven members of the General Assembly on the board, or about one-third of the total makeup, hardly the majority. Even stranger is that McAuliffe saw the problem as just the opposite of most of GO Virginia’s skeptics, who worry that non-electeds would control it way too much.
What the Governor knew, but stopped just short of saying, was that due to the large amounts of money paid by some private sector members and the businesses they represent to the elected officials on the same GO Virginia board, the chances of dissenting opinions was about nil to none.
McAuliffe apparently later got over his misgivings after Norment and Cox agreed to give him several more appointments to the board, and left it open-ended about who had the last say on who would make hardship exceptions to those collaborative jobs projects. It’s not clear today who can approve those pesky smaller projects — the Governor, the GA, or a simple majority on the GO Virginia board. This was a huge bone of contention between the two factions and speaks strongly to the underlying purpose of GO Virginia which, in a nutshell, is stealth regionalism, a movement I’ll go into a bit later.
Suffice it to say that when the sheer size and odd makeup of the regions were announced, the obvious goal was to make those as large as possible. It’s impossible to tell which side the Governor was on, unless he just wanted his misgivings loudly on record when in the future the money is gone and this doesn’t work out so well. Caught between a rock and a hard place, he could not let the cat out of the bag because his own party electeds receive money from the same movers and shakers associated with GO Virginia. I chuckled when I read in that RTD article a mention of an impending clash with members of the Governor’s own party if he did not come around. The effort itself was not bipartisan and the Governor knew it, but had to satisfy himself with direct Gubernatorial appointments to the GO Virginia Board.
So to recap: both the Republican and one Democrat slated to join the GO Virginia Board receive large campaign contributions from private business owners or CEO members of the GO Virginia board. We are talking thousands of dollars at a time, either personally or from the businesses they represent. So while lowly reporters like me are chasing the reason why CEOs want to donate their time to divvy up dollars that amount to peanuts after it’s divided between nine regions, it’s not about that $36 million at all.
In all fairness, local economic development directors can, in theory, when the “time is right” submit projects to these “top business leaders” that meet the criteria (if it can ever be understood). Ostensibly those projects are approved first by the local governing body, or have been approved in the past and could have stalled for lack funding, but this is all conjecture on my part and not specifically spelled out in GO Virginia.
I posed a question to the Director of the George Washington Regional Commission who helped and supported all this from the beginning. GWRC is paid now to administer GO Virginia locally for our region. He could not give a single example of any project that might qualify. When pressed, these folks always come back to research and workforce development which honestly could mean this is simply a vehicle to funnel money to colleges, universities, and hospitals.
Incredibly, here in Caroline a speaker for GO Virginia was just asked publicly by a member of our board of supervisors if a private citizen could submit projects and was told absolutely. Of course, he said the regional board would have to score it and pass it up the chain. No mention whatsoever of input by a locality.
An article in the Richmond Times Dispatch on March 12, 2017, actually reported (and I don’t blame them) that GO Virginia was a “concept.”
“The concept is to work like this: The business-led regional councils will apply for state funding for ideas that involve collaboration among business, education and government. That could include such things as workforce development or career and technical education. The big board would then decide which projects to fund.”
Now I know exactly what else you’re thinking, besides the fact they will apply for state funding for “ideas.” What stops these private but completely philanthropic business people at both board levels from scoring projects which benefit their companies’ bottom line? The answer is nothing.
Further, as I pointed out in Part One, some of the legislation put into the General Assembly from private businesses and regulated industries would no longer be necessary. These things could simply be fast tracked via GO Virginia as good for whatever region and don’t need any official GO Virginia funding. This entity can operate with or without funding from the GA, which is why I pointed out in Part One that the original $36 million is in the noise.
Take light rail in Virginia Beach, for instance, if approached from a different angle, via GO Virginia. Let’s say it’s resubmitted by the planning office with the prerequisite partner in a neighboring locality making it “regional” and scores high, and is accepted.
Speaking of Virginia Beach, the brains behind the GO Virginia empire, as well as its overall chairman of the “big board” is “Wayne O. ‘Dubby’ Wynne” who just happens to hail from Virginia Beach. In addition, no conversation would be complete without mentioning another major player and “big board member,” Thomas F. Farrell II, President and CEO of Dominion Resources. Billed by reporters in several articles as “aggressively pushing GO Virginia,” both are steadily moving to control the PR aspect of an initiative which should, if viable and reasonable, be selling itself. Wynne is also chairman of the Hampton Roads Community Foundation as well as the retired President of Landmark Communications. Both he and Farrell have been making the rounds touting the benefits of the legislation and have even “co-authored” articles.
Many of the board members on the state Virginia Board are non-partisan givers. That is, they split their millions between parties but have their favorites who sometimes get as much as $10,000 a check. Wynne’s favorites include Delegate Chris Jones, his fellow GO Virginia Board member, to whom he threw a cool $50,000 over a five-year period. His other favorites include Senator Tommy Norment, who was the recipient of $40,000, and another fellow board member, Senator Janet Howell, who received $10,000 between 2015 and 2016. Oh, and surprise-surprise, another favorite of Mr. Wynne’s, the light rail guy, Virginia Beach Mayor Will Sessoms who got $26,000 over the years.
He also gives to various leadership PACs so that’s hardly the real sum which has been filtered to campaigns. Dominion CEO Farrell, on the other hand, is a bit more GOP minded, having personally donated over the years a mere $694,077, according to VPAP. However, the big bucks come from Dominion itself which also gives through a variety of PACs and committees. A recent newspaper article credits them with donating $1.6 million to various candidates and legislators since 2013, so we’ll leave it at that. Since 2003, Senator Tommy Norment has received $107,740 from Dominion and Senator Janet Howell has received $47,500.
Don’t get me wrong though, as I do my best to tell the whole GO Virginia story. There is nothing illegal about properly reported campaign contributions, and I have nothing against the lobbyists who are front and center of this effort as well. I have good friends who lobby for a living and they have been great to local government. I also have nothing against the healthcare industry, and think the GA is on the right track to throw dollars into research and the training of the new millennial workforce.
When I see contributions of these sizes, and the relationships they create directly among those in charge of GO Virginia and the potential future monies to be made, given out and donated, it raises a red flag. These shenanigans certainly at the very least remove a level playing field among the healthcare and education entitles who might get these dollars. The following members serve on the Richmond Regional Board, and it will interesting to see how much is awarded in the end to VCU, John Tyler, and J. Sargeant Reynolds Community College:
– Michael Rao, president, Virginia Commonwealth University and VCU Health System
– Edward “Ted” Raspiller, president, John Tyler Community College
– Gary L. Rhodes, president, J. Sargeant Reynolds Community College
– Carrie Roth, President and CEO, Virginia BioTechnology Research Park; Executive Director, Virginia Biotechnology Research Partnership
Next week in Part Three: The “Big GO Virginia Board” and your gift as a tax payer to their $1,600 dinner at the Berkeley Hotel.