Virginia Ranks 2nd in Nation in Highway Performance and Cost-Effectiveness

By Baruch Feigenbaum, Spence Purnell and M. Gregory Fields

Virginia’s highway system ranks 2nd in the nation in overall cost-effectiveness and condition, according to the Annual Highway Report by Reason Foundation. This is a 25-spot improvement from the previous report, where Virginia ranked 27th overall, as the number of structurally deficient bridges decreased and the state benefited from the report no longer measuring narrow rural arterial lanes (the state ranked 49th last year).

In safety and performance categories, Virginia ranks 10th in overall fatality rate, 16th in structurally deficient bridges, 39th in traffic congestion, 22nd in urban Interstate pavement condition and 14th in rural Interstate pavement condition.

On spending, Virginia ranks 12th in total spending per mile and 7th in capital and bridge costs per mile.

“To improve in the rankings, Virginia needs to reduce its traffic congestion. Virginia is in the bottom 15 of all states and has three of the most congested Interstate corridors in the country. Compared to neighboring states, the report finds Virginia’s overall highway performance is better than Maryland (ranks 39th), Tennessee (ranks 7th) and West Virginia (ranks 16th),” said Baruch Feigenbaum, lead author of the Annual Highway Report and assistant director of transportation at Reason Foundation. “Virginia is doing better than comparable states like Georgia (ranks 26th) and North Carolina (ranks 17th).”

Virginia’s best rankings are rural arterial pavement condition (6th) and urban fatality rate (6th).

Virginia’s worst rankings are urbanized area congestion (39th) and maintenance disbursements per mile (31st).

Virginia’s state-controlled highway mileage makes it the 3rd largest highway system in the country.

Virginia ranks 2nd in this year’s Annual Highway Report, a significant increase from last year. The state is able to maintain smooth pavement conditions with low overall disbursements.

Most states that rank in the top 20 are able to maintain a good quality system at a low overall cost. The state has also worked to significantly decrease its percentage of structurally deficient bridges. Virginia also benefited this year due to two changes in the metrics. Both the increased focus on fatality rate (the state typically has one of the lowest fatality rates outside the Northeast) and the elimination of the narrow arterial lanes category (Virginia ranked 49th last year) helped the state’s rankings. However, the state still has room for improvement. It’s urbanized area congestion ranking is 39th (or 12th worse).

Virginia may need to dedicate more of its resources to reducing congestion.

Reason Foundation’s Annual Highway Report measures the condition and cost-effectiveness of state-controlled highways in 13 categories, including pavement condition, traffic congestion, structurally deficient bridges, traffic fatalities, and spending (capital, maintenance, administrative, overall) per mile. 

The Annual Highway Report is based on spending and performance data submitted by state highway agencies to the federal government for 2016 as well as urban congestion data from INRIX and bridge condition data from the Better Roads inventory for 2017. For more details on the calculation of each of the 13 performance measures used in the report, as well as the overall performance measure, please refer to the appendix in the main report. The report’s dataset includes Interstate, federal and state roads but not county or local roads. All rankings are based on performance measures that are ratios rather than absolute values: the financial measures are disbursements per mile, the fatality rate is fatalities per 100 million vehicle-miles of travel, the urban congestion measure is the annual delay per auto commuter, and the others are percentages. For example, the state ranking 1st in structurally deficient bridges has the smallest percentage of structurally deficient bridges, not the smallest number of structurally deficient bridges.

This is the Virginia chapter of the Annual Highway Report, published by the Reason Foundation on August 22, 2019.

Baruch Feigenbaum is Assistant Director of Transportation Policy at Reason Foundation. He is a member of the Transportation Research Board Bus Transit Systems and Intelligent Transportation Systems Committees, Vice President of Membership for the Transportation and Research Forum Washington Chapter, and a member of the American
Planning Association, Institute of Transportation Engineers, and Young Professionals in Transportation.

 

Spence Purnell is a policy analyst at the Reason Foundation, where he works on pension reform, Florida policy issues and economic development.

 

 

Gregory Fields is a retired military officer with degrees from West Point, Webster University in St. Louis, and UNC Charlotte. He is enrolled in the PhD program in Urban Regional Analysis at UNC Charlotte and has participated in a number of comparative transportation studies.

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A Bipartisan Trade Agreement Good for Virginia’s Economy

Governor Ralph Northam recently suggested caution in the face of recessionary concerns:  “As the global economy changes, we must be both cautious and strategic.”  Those concerns were largely echoed by the actions of Republicans in the General Assembly who made a priority of boosting the state’s cash reserves.

But another way to help build a healthy state economy is expanding Virginia’s international trade, lowering barriers with our most important trading partners, and creating policies spreading the benefits of trade throughout the Commonwealth, both geographically and by industry sector.

Virginia Members of Congress have an opportunity to do just that by ratifying the U.S.-Mexico-Canada Agreement.

Last year, Virginia exported $18.6 billion worth of American-made products across the world, supporting an estimated 78,000 jobs.   More than $4 billion of that went just to Canada and Mexico, which purchase more American goods than our next 11 trading partners combined.

With bipartisan support over the last decade, this economic boom has spread across all sectors in Virginia.  For example, Virginia’s motor vehicle exports to Canada and Mexico have more than doubled and the Commonwealth’s food and beverage exports to those countries have increased more than three-fold.  Small Virginia companies and their employees have been major beneficiaries:  Two-thirds of the state’s exporters of transportation equipment to those countries have been small and medium-businesses, as have 61 percent of Virginia’s food products exporters.

In fact, one out of six Virginia manufacturers – including nearly 500 smaller companies — export to Canada and Mexico, and more than 13,200 Virginians depend on those exports for manufacturing jobs paying an average $70,244.

The USMCA is a proposed replacement for the North American Free Trade Agreement (NAFTA), now more than 20 years old. This new agreement, which was signed by the three governments and already ratified by Mexico, will make vital improvements to North American trade while also preserving tariff-free regional trade. It would bring North American trade into the digital, 21st-century economy and provide much-needed certainty to businesses and workers across the country.

NAFTA was in sore need of replacement, having been approved long before the digital revolution of the last two decades.  Importantly, the USMCA establishes higher standards for protection of intellectual property, including updated obligations for each country to safeguard patents, copyrights, regulatory data, trademarks and trade secrets against foreign theft.

It also adds an entirely new chapter on digital trade, ensuring a rules-based foundation for businesses to expand online trade and investments safely and securely, and would work to protect employees across North America by ensuring all three countries adhere to core labor standards. 

Finally,  the agreement for the first time specifically addresses new agriculture technologies to support innovation and reduce trade-distorting policies.  And it ensures Virginia’s farmers have new export opportunities in poultry, eggs and dairy, while maintaining access in soybeans and corn.

Unfortunately, trade issues have taken on increasingly volatile tones in recent years – despite the fact that an economy thrives most in an environment of certainty. 

But the USMCA is an opportunity to give the American economy confidence in our international commerce.  The agreement has bipartisan support from lawmakers in Washington and, most importantly, support from the majority of Americans.

Mexico has already ratified the agreement, and Canada has agreed to follow suit.  Now it is up to Congress, where delay and deadlock are too easily the norms.

The Virginia Congressional delegation has an opportunity to offer bipartisan unity in support of a measure of critical importance to Virginia’s economic health, and should work to break the deadlock and pass the USMCA.

Chris Braunlich is President of the Thomas Jefferson Institute for Public Policy. A version of this commentary originally appeared in the September 4, 2019 issue of the Culpeper Star-Exponent.

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Calling It What It Is: A $450 Million Windfall Tax Hike!

Virginia state government ended Fiscal Year 2019 awash in cash largely for one reason: A $466 million tax increase that fell on about 30 percent of individual taxpayers, caused by conforming to the new federal tax law without any corresponding tax reform.

That represents almost 60 percent of the $797 million end-of-year cash balance announced by Governor Ralph Northam on August 20. The $466 million in higher individual taxes was offset by an $11 million reduction in business income taxes as a result of the federal Tax Cuts and Jobs Act, leaving a net tax hike of $455 million. The 2019 General Assembly took steps to blunt the 2018 tax hike on business, but not on individuals.

The tax conformity windfall amount was calculated by outside consultant Ernst & Young LLP, Secretary of Finance Aubrey Layne told a meeting of the combined legislative money committees Tuesday. That is not the same firm hired last year to project the state tax impact of the federal TCJA. Layne said he wanted an independent look at the results.

The E&Y report is the final 23 pages of Layne’s slide presentation to the committees, here.

The first company, Chainbridge Software, LLC, estimated (here) the first-year tax hike from Virginia adopting the new federal rules – with no policy changes to compensate – would be $594 million, 28 percent higher than E&Y found. The 2019 General Assembly made no tax policy changes for individual taxpayers for 2018 and during the session Layne continued to express confidence in those estimates.

The smaller result measured by Ernst & Young is based on an actual comparison of 2017 and 2018 tax returns, with an effort to tease out the higher revenue due to the tax changes from the higher revenue due to income growth or asset sales. It only looked at returns filed by July 1, so individual and business returns delayed or extended for later filing are not included. Any windfall taxes paid by them will show up in fiscal year 2020.

The report indicates individuals overall paid $466 million more, which was reduced by an $11 million drop in corporate income tax revenue. But E&Y had only 155 tax returns from corporate income tax entities to analyze, compared to 1,284 returns from 2017. That indicates how many corporations take advantage of the opportunity to extend filing. Individual taxpayers who extend also tend to be higher income.

The gap between Chainbridge and E&Y might shrink with full data. The 200,000 late individual returns and 1,100 late corporate returns need to be wrapped in to draw firm conclusions, and those conclusions will matter because this windfall is not just a one-time thing. The General Assembly has promised to track and segregate the on-going higher taxes caused by conformity into future years in a Taxpayer Relief Fund and use it for future tax reform efforts.

As predicted by Chainbridge, the additional state revenue mainly resulted from almost 800,000 tax returns switching to the standard deduction at the federal level, and thus making the same switch at the state level. Far more people made that change than predicted by Chainbridge, Layne reported. While the federal standard deduction rose, the state’s stayed the same, resulting in higher tax.

The net effect of all those decisions to switch was an additional $7.5 billion subjected to state tax (E&Y Table 7). That accounted for almost $400 million of the tax hike revenue. The rest came from other tax changes people couldn’t avoid, including limits on business loss deductions and a change in the inflation index being used. Another change with a big impact was the new $10,000 deduction cap on state and local taxes for those who continued to itemize.

The General Assembly did make tax policy changes for individuals for tax year 2019, now underway. It increased the standard deduction starting this year, from $6,000 to $9,000 for a couple. For 2019, unlike in 2018, if you do take the itemized deductions at the state level you are not limited by the $10,000 deduction cap on state and local taxes. Those two steps will give back much, but not all, of the ongoing windfall revenue.

The General Assembly also restored a wealth tax provision for 2019, the Pease Limitation, which had been a part of federal law, but which was eliminated by the TCJA. The details on how the state will impose that with the IRS no longer doing so need to be worked out. It is possible the Northam Administration will count that revenue against the TCJA windfall, reducing future relief.

For this year, an election year of course, all Virginia taxpayers get a check. Most will get $110 per individual or $220 per couple. It will deplete $431 million of the $466 million in higher individual taxes for that year. It has no relationship to the actual TCJA impact. Many taxpayers saw no change from conformity, some saw taxes go down, and most who did pay more paid far more than $220.

More than 1.9 million of the 3.4 million resident returns examined showed no tax change due to TCJA. Of the rest, 417,000 showed that their state tax was reduced and only slightly over one million paid all the higher taxes. (E&Y Table A-3) In no single income category of that group, from negative taxable income to taxable income over $1 million, does the $220 check cancel the tax increase.

E&Y found that for 3,000 returns above $1 million the tax hike averaged $12,316 and for 12,000 returns between $500,000 and $1 million it averaged $3,082. The Chainbridge report had also predicted that the impact of conformity to TCJA would fall on only a small percentage of total taxpayers, and many would see state tax reductions or no change. The General Assembly knew that.

For most Virginians the election eve check is neither refund nor rebate, but an income transfer payment from the one million or so paying the entire windfall.

The E&Y report, at least the portion released, does not include any forward-looking estimates for the out years based on this new review of the results. Chainbridge had looked out six years and estimated $4.6 billion in higher taxes over that period. Other than in the first two years, the legislative action had not counteracted most of that. The E&Y report would point to a lower estimate.

If, as expected, the 2019 taxpayer checks total $431 million, that will leave only about $25 million to be held in the Taxpayer Relief Fund established by the 2019 conformity legislation and the state budget. The state budget revenue estimates consciously excluded any conformity windfall projection for either year, but rule one in Richmond is that no General Assembly can bind the actions of the next one. The survival of the Taxpayer Relief Fund is not guaranteed.

A version of this commentary originally appeared in the August 21 edition of the online Bacon’s Rebellion.


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For Prepared Citizenship, Civics Education is a Must

By George Nethercutt and James Dillard

Education is usually at the top of the list of national priorities, especially for American

Presidential candidates. If one looks at the mission statement for many schools and school districts, it usually includes statements about producing or preparing students for active citizenship. The U.S. should make civics education a priority.

Civics education encompasses the study of U.S. history, government, economics and foreign policy. It can include other basic topics as well, but civic learning has been largely absent from educational discussions for years, though it’s now staging a “comeback.” Some state legislatures have passed state laws requiring high school graduates to pass the U.S. Immigration test (The one that applicants for American citizenship must pass.) This rote memory test, however is no substitute for a class in Civics. While naturalized citizens must pass a civics test, natural born citizens need not do so. Other state requirements for the study of Civics have passed, too. Virginia offers a course in Civics and Economics at the middle school level. Virginia and US Government is required in high school and a passing grade is required to receive a diploma.

One Millennial recently stated, “Why must I learn about Civics? It won’t help me get a job.”

That’s why STEM subjects (science, technology, economics and math) have received such attention in our schools, as they’re the focus of most high school education efforts: job possibilities. While the Millennial may be correct, there are plenty of CEOs and other employers though, who are of a generation that believes civic learning is important to every citizen. How

America was established is not well understood by many Americans—only 26 percent of Americans in a recent national poll could name the three branches of government, let alone know what they do. Nor can most Americans understand how to navigate the federal government. Of the 1,000 Americans who took the Immigration test via Newsweek a few years ago, most flunked.

Even though the Internet is prominent and one can find answers to most fundamental questions through Google, civic learning, including a basic understanding of the Declaration of Independence and the U.S. Constitution, is increasingly important since it’s essential to good citizenship. America has the longest surviving constitution in history—only amended 27 times.

While many countries change their constitutions when leaders change, America has not. Instead we made the Constitution sacrosanct and a part of all legislation passed by Congress. The law requires that each bill expressly assert it is constitutionality, affirming the importance of the Constitution.

Neither the Declaration nor the Constitution are lengthy and can be read quickly. Every American citizen should read them, and should also attend the swearing-in ceremony of new citizens in a U.S. District Court held periodically. Observers will see how important American citizenship is to successful applicants.

Knowing about Civics makes us all better Americans. As state legislatures focus more on civic learning, Virginia has been a leader. The General Assembly established the legislative Commission on Civic Education whose mission is to prepare students to be successful participants in the democratic process. The State Board of Education has recognized the importance of civic education in their “Profile of a Virginia Graduate” which includes civic learning and critical thinking skills. In addition, the Board has added the third “C”, civic readiness to their goals of college and career readiness.

How the three branches of government operate at the three levels of government is essential knowledge required to become an effective citizen. Understanding how our system operates can empower the individual to make a significant difference in the decision-making process of governing. This is particularly true at the state and local level.

A quality education encompasses civic learning as well as other specialties, such as a STEM education. A truly educated citizen will know America’s roots. A knowledge of our history and its application to today’s national problems is essential to avoid making the mistakes of the past.

Our education system should have as a primary obligations instruction in what the U.S. Government does and how government at all levels works, with an emphasis on how to be active and successful participants in our democratic system. America’s education system is stronger if civic learning for all is a priority.

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George Nethercutt is a former Member of Congress from Washington state, serving for ten years on the House Appropriations Committee.  He is Founder and Chair of the Nethercutt Civics Foundation, which fosters an understanding of government and public policies in young adults.

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James H. Dillard is a former member of the Virginia House of Delegates, where he chaired the House Education Committee, and a former member of the Virginia State Board of Education. He is Founder and member of the Virginia Commission on Civics Education

 

 

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Crash and Burn: How Misguided Policies Ruin Lives

Give Richmond educators credit for brutal honesty. A presentation of the school system’s five-year plan surfaced some devastating data: Only one in ten Richmond high school students is ready for college and a career, according to College Board criteria. If it’s any comfort, that number is up from 9% in the 2017-18 school year.

“Finally we can demonstrate with empirical evidence that RPS has failed our students and our families and our city,” said Board member Jonathan Young, as quoted by the Richmond Times-Dispatch. That sentiment was echoed by Superintendent Jason Kamras. “It’s devastating. We, the adults, have failed our kids for years.”

Indeed, the educational system has not only failed Richmond’s predominantly African-American students, it has shepherded many young people into college programs from which they subsequently dropped out. Left unsaid in the analysis is that college drop-outs are typically saddled with thousands of dollars in student debt, which many cannot repay. In other words, the coupling of high expectations (every student has a right to attend college) with abysmal performance is ruining thousands of lives.

Statewide, 44% of students meet the benchmarks:

For 10th-grade students, the college and career readiness benchmark for reading and writing is 430 and 480 for math. It’s 30 points higher in both subjects for 11-graders. Students who meet those standards have a 75% chance of earning a C or better in an introductory college class, according to the College Board’s description of the benchmark.

Only three in four Richmond students who start 9th grade end up graduating — 16 percentage points below the state average, the RTD reminds us. This data has been widely reported.

Here is what is not well known. While only 10% of Richmond high school students are college ready, 52% from the graduating class (or about 40%) end up going to college anyway. Once they get to college, many never finish. Reports the RTD:

Roughly 2 in 5 of the RPS alumni who go on to college earned a year’s worth of college credit within two years of their high school graduation, according to federal data for the graduating class of 2015 for the city’s five comprehensive high schools.

Only 14% of that year’s total class earned at least 30 college credits, the National Student Clearinghouse reported.

Not surprisingly, most academically ill-prepared students crash and burn. Statistics don’t convey the personal tragedy. Some 25 years ago, I used to live next door to a guy who dropped out of college (I don’t know whether it was due to lack of academic preparation or the difficulty of paying the bills.) He worked as a check-out clerk at Blockbuster. I judge that his life really sucked by the fact that he frequently took out his frustrations on his girlfriend. One time her screams were so bad I nearly called the police. (Looking back, I probably should have. But that was long before the #metoo era, and I was more worried then about being tagged a racist busybody than a misogynist.) I felt bad for him. He was a decent enough fellow most of the time, whose life had hit a dead end. I’m sure he felt like a failure. I’m sure he felt tormented.

The fact is, not everybody is cut out for college. But some are equipped for manual trades and occupations, from brick masonry to nursing home aides, that pay a living wage. I don’t have the numbers, but my sense is that public schools have systematically under-invested in education of the trades — out of a misguided sense that is “racist” to shunt minorities off the college-prep track. Well, this isn’t the 1950s anymore. It’s time to acknowledge the damage done by funneling students onto college/career paths where they have little hope of succeeding. Surely we can encourage those who have the potential to succeed in college while providing career alternatives for those who don’t.

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