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Governor discusses plans for legislative session
Virginia
Business
January
2005
During
a recent interview with Virginia Business, this is what
Gov. Mark R. Warner talked about: the upcoming legislative
session, his legacy and his plans for the future.
Virginia
Business: Governor, this will be your last
session. What would you like to accomplish?
Warner:
There are four major areas that I want to focus
on. First, is transportation. Without transportation
improvements, the economic prosperity that Virginia
is enjoying now could be jeopardized. Maybe not next
month or next year, but over the long haul. And I’m
talking about not only in Northern Virginia, but also
Hampton Roads and also, for that matter, in parts of
rural Virginia where transportation is as much an economic
development issue as it is a question of how people
get around. My sense is that there is not much appetite
[in the legislature] after the tax reform of last year
for creating major dedicated new revenue sources for
transportation. That doesn’t mean there might
not be some minor changes, but in terms of a major item
like a significant increase in the gas tax, that just
doesn’t seem to be on the horizon from anyone.
But that doesn’t mean we can’t still make
a substantial investment in transportation. My transportation
package will put over $800 million of additional funds
into transportation this biennium. The whole basis of
my transportation approach is recognizing that much
of this money is one-time transportation money. It means
we’ve got to try, some different ways to deliver
transportation services. So, let me go through [the
proposal].
One, there’ll be a revolving loan fund [$140 million]
that will focus on public/private transportation projects.
This would include everything from the HOT lanes on
[Interstate] 95 to the third crossing [in Hampton Roads],
to the I-81 proposal, to a host of others. The problem
is…that most public/private transportation projects
rely on tolls, because that’s the only way the
private sector’s going to get paid. Even with
tolls, there is oftentimes a financing gap brought about
either because of the underlying economics of the project
or because of the timeframe it takes to move from idea
to a reality. So, this would be a revolving fund that
would help bridge part of that financing gap and move
some of these projects from good ideas into, hopefully,
reality.
A second initiative will be one that will have dollars
dedicated to encourage local governments to actually
oversee and manage certain small road projects. Virginia
is one of only two states in the country that basically
manages every road project. Virginia and North Carolina
are the only two. The others all do their local projects
at a local level. There are complaints, oftentimes,
from localities that “we’re going to jump
through all this bureaucracy in Richmond and they make
all these changes” and it adds to the cost and
the design. Well, I’m a big believer in decentralization.
And if a local government can feel like they can do
it quicker, faster, cheaper, we will give them the dollars
to do it, and we’ll even provide a little extra
management oversight to help build up that construction
management and oversight process at the local level.
We’ve already moved a lot of decision-making from
Richmond down to the district level. This is the next
step in the decentralization process. If other states
have tried it, let’s try it. Because many localities,
we’ve found, are intrigued about trying this.
But if it’s like “you’ve got to take
over all your local projects forever,” they might
not want to do it. And we re looking at doing this on
a revenue-sharing basis so it gives a little extra boost
to localities, moving some projects that may be not
on the six-year plan up the list.
The third area is to go ahead and clean up our transportation
balance sheet. We still have $256 million worth of projects
that Virginians are driving on right now that we haven’t
paid off. …We’re going to pay off the completed
projects. We’ve got to restore public trust
More funds for transit projects
And then another area is a dedicated source, a one-time
source of funds for transit projects. And that will
range from things like [Virginia Railway Express] cars
and metro rail cars to transit projects in Hampton Roads
to statewide bus purchases. And then another final area…
We are actually going to commit a dedicated source of
funding for rail. The auto rental tax, an existing tax,
generates about $23 million [annually]. We’ve
got to stop talking about the possibilities of rail
and actually start putting a funding source in place
that can be relied on over the long haul.
And the final piece of this package is there are a number
of legislators talking about different ways to protect
the transportation fund from being raided. …I
am taking some general funds on a one-time basis to…repay
the transportation trust fund for monies that were taken
before. …There’s about $25 million a year
on an ongoing basis that currently is our transportation
trust fund that actually go towards general fund projects.
And they’re good projects. They’re things
like driver’s ed…But the notion is, if we’re
going to try to build this wall between the transportation
trust fund and the general fund, let’s go ahead
and clean up past abuses, clean up our books, and separate
these funds. I know there are going to be others who
are proposing constitutional amendments and legislative
things. And I’ll take a look at all those. I’m
not weighing in on those, yet. But I think the better
[action] is, rather than talking about a process that’s
going to take, at best, three or four years on the constitutional
amendment process, let’s go ahead and do it now.
…
Equally important, I believe, is to make sure that the
reforms at VDOT [the Virginia Department of Transportation]
continue, that the continued reforms in terms of transparency
— the ability of the driving public to access
VDOT’s dashboard, which will tell you the status
of any road project in this state — where it stands,
whether it’s on time and on budget, continue.
We need to continue to see improvement on time and on
budget with our projects. In two years, VDOT has doubled
its on-time record and on-budget record. So, [there
is] that continuing restoration of trust that VDOT’s
going to be a good steward to your tax dollar and not
have problems. And again, one of the areas where, and
probably our biggest single area district-wise is —
and we’ve got new leadership there now —
is Hampton Roads where both through a combination of
mistakes and just some bad luck, that region’s
still been plagued by more problems. So, transportation
funding, new ways of doing business, and continuing
transportation reform will be number one.
Economic development: Number two, in terms of the legislature,
is some significant changes in how we do economic development.
With all the budget cuts, our economic development efforts
have been cut back, north of $50 million. We’re
putting back about in the $20 million-plus range of
dollars that will be committed towards adding on and
reinforcing our economic development efforts for particularly
rural communities. … While some parts of Virginia’s
economy are red hot — Northern Virginia in particular,
and to a lesser degree, Hampton Roads, Charlottesville,
Richmond — now’s the time we have to be
willing to invest a little bit more to jump-start the
communities that are still struggling. Now, there are
more than seven or eight different initiatives inside
this package, but there’s a more comprehensive
approach for us in a couple of regions that we’re
trying that would focus on promoting existing industries.
Most of our traditional economic development, particularly
for rural communities, is all about how do you bring
that factory into the community. We’re going to
continue that, but we need to try some different things.
One of things is doing a better job of supporting existing
industries. And that will tie into some very creative
approaches on work force.
The second area is how we promote asset-based development.
That means taking advantage of the resources already
existing in communities. Let me give you some specific
examples. We’re going to have, on the tourism
front, for example, a greater promotion of a rails-to-trails
program, where you see what’s happened on the
New River trails or on the Music Heritage Trail in Southwest
Virginia. We’ve got a 30-mile stretch in Southside
and we’re going to move on that project. We’re
going to move on continuing to promote the whole trails
concept. …We’ve got a Civil Rights Trail.
We’ve got a Civil War Trail. …We could potentially
have a Revolutionary War Trail. We’re looking
at other potential multisite trail concepts. We’re
going to have an initiative that’s going to focus
on how we can emulate what’s been done in North
Carolina and West Virginia promoting the arts and crafts
industry. I don’t know if you’ve ever been
to a place called Tamarac in West Virginia. But that
notion of a cooperative, physical location that can
be used as a way to highlight arts and craft work. In
North Carolina, it’s a $122 million industry.
We think we can promote that.
Attracting new industry
We’re looking at, in terms of attracting new industry,
how we will do some things to advance manufacturing,
both in terms of work force development and how we can
do a better job on marketing for advanced manufacturing.
In many Southwest Virginia communities, the best site
for a facility is where there is an old factory already.
…You’ve got an old building there; you’re
in the mountains, that’s the only site. …But
it’s a heck of a lot easier to market that [site]
if the building’s on it. We’ve got a series
of sites around the region were we do a competitive
bid on that.
One of the things that we are looking at as well is
giving the governor, working with the legislature, some
ability on extraordinary projects both in terms of new
jobs or in terms of saving jobs, to go beyond the current
rules. We’re talking about creating a five-member
investment board that would have gubernatorial and legislative
appointments —that you have to get four out of
five to agree — so when the legislature is not
in session, if you need a couple extra million dollars
to close a deal beyond what the Governor’s Opportunity
Fund allows…The classic example is the Pilgrim’s
Pride [processing plant in Hinton]. Luckily we were
able to find some resources. …But if there’s
a major manufacturing company or a major production
company that’s going through a financial restructuring
that has multiple thousand jobs in a distressed community
and they’re a million dollars short, well, we
have no tool to do anything. … So, that’s
our economic development package. … I should also
add that we’re putting up better use of the new
market tax credits. Those won’t require additional
state dollars, but it’s making better use of federal
programs and taking advantage of this community development
bank concept that, again, certain neighboring states
have used better than we have. But an economic development
effort focused on distressed communities. That’s
our second major focus.
Higher education
The third area is going to be the question of how we
deal with higher education funding, but more from a
kind of a governance issue. There are proposals from
U.Va. and Virginia Tech and William and Mary to move
on a charter university concept. There’s a separate
proposal talking about the creation of a Southside university.
Both of these proposals deserve consideration, but they
deserve consideration in the context of where do we
want higher ed in Virginia overall to be by 2010? You
know, how are going to continue to promote additional
research from our universities? How are we going to
do a better job of making sure we guarantee access?…At
the same time, how do we make sure the state’s
goals are met in terms of overall economic development,
in terms of increasing the number of degrees being granted,
in terms of making sure that the universities are not
simply doing what is in their particular best interest,
but what is in the state’s best interest. They
are public institutions. For example, we need more nurses,
teachers and engineers. If we’re going to loosen
the ties with some of our universities, how does the
state make sure that the universities are going to produce
the workforce that we need?
Virginia Business: So, you’re
saying, then, that you might want to put the brakes
on the effort?
Warner: No, what I’m saying is
that we need to not look at this in the context of what’s
simply in the best interest of these three universities.
We need to look at what’s in the best interest
of higher education. I want something to happen this
session, but I want it to be done in the context of
somebody’s got to look out for the state’s
interests here, and I think that’s my job and
the legislature’s job, to look out for the state’s
long-term interests. That may be exactly in tandem with
what the universities want in certain areas. …Certain
of these things you want we can give you, but also you’ve
got to show us how you’re going to guarantee the
state’s overall needs are going to be met. …
Virginia Business: Recently, you spoke
at a business function and said that one of the first
things economic prospects ask about when visiting Virginia
is its system of education.
Warner: No one asks about the taxes.
They say, “Tell me about your education, your
work force. We’ve got a low tax. We’ve got
a pro-business tax. But they ask about educating the
work force. There’s always somebody who’s
going to be willing to maybe give a little extra tax
benefit or a little extra payment up front. There’s
always going to be somebody that’s going to have
a cheaper labor rate. The way Virginia stays competitive
is by offering a good quality of life, a stable financial
environment, and the best educated work force possible.
Virginia
Business: So, would [the universities] have
to present more figures or have more specifics in the
proposal about how they wish to accomplish things in
order to win approval
Warner:
You’re
thinking about it in the concept of what they have proposed.
Don’t think about it that way. Think about it
in the same sense that any university wants more freedom
to build their buildings without going through all the
hoops in Richmond. …There are very real questions
here. There are also questions if you’re going
to get this freedom: One, demonstrate that you have
the capacity to manage these kinds of projects. Two,
demonstrate how are you going to make sure that, if
you’re going to expand your campus, how are you
going to make sure that we continue to guarantee access?
Some of the universities have said, “Well, we’re
going to make sure everybody who has a financial need,
gets a financial need package.” Well, that’s
great at that kind of headline level, but you’ve
got to peel back and say are 5 percent of the kids having
financial need, or 10 percent or 15 percent? What have
their historic trends been? There’s no doubt some
of our universities could dramatically raise tuition
and completely fill their whole student body with well-qualified
people and they wouldn’t have to offer a dime.
But that’s not in the best interests of Virginia.
We’re trying to promote access to people all across
the state and have a student body still reflective of
the population in Virginia. So, these are all things
that are part of this debate and can’t be taken
in an isolated context.
Virginia Business: Do you think something will
happen this session?
Warner: Yes. That’s my hope.
I think there are parts of these proposals that make
a great deal of sense. And I’d like them to happen
on my watch. But I also want to make sure the state’s
long-term interests are met. In talking about these
things, we’re talking about how we’re going
to meet all these [needs]. For example, in the three
universities’ initial proposals, I think they
were planning to take about 2,000 more students in total
by the end of the decade. We’ve got 40,000 more
students. So, who’s going to take all those and
how are we going to pay for them? How does this fit
in with a concept of a university in Southside? That
has some merit. But maybe one of those universities
ought to maybe help that university get started rather
than trying to start it in isolation. And the reason
I have some confidence is there are discussions going
on right now.
Government
reform
Virginia Business: What about government
reform?
Warner:
[We’ve
done] technology consolidation, procurement reform,
[and we are] taking on a firestorm about trying to look
at the real estate holdings of the state on a portfolio
basis. And that’s going to make a lot of people
mad because they’re not going to be able to have
the kind of current deals they get with the state. …We’re
looking at consolidating mail services. The nitty, gritty
business operations…that’s where we’ve
got to continue to press, because that’s where
you’re really going to find long-term cost savings.
Technology we’ve done. And we’re starting
to see some of the benefits. …We’ve got,
for example, an Internet-based system to look at procurement.
We’re expanding that. Again, you get people mad
because if you no longer go down and buy paper from
the local stationery store, the local business guy isn’t
seeing a profit. But if I can cut the price of paper
or cut the price of light bulbs, then that’s real
money. When you’re looking at the state’s
real estate portfolio, instead of having 94 separate
real estate offices around the state, each deciding
where VDOT and Corrections and ABC does their real estate,
we’re going to have…a major real estate
management company manage our real estate portfolio.
It makes sense. Now, we’re going to get enormous
grief and it will be interesting to see whether it can
stand the political attack. But you’re going to
save real money. Over the life of the leases, tens of
millions of dollars saved.
Virginia Business: Are you talking with an
in-state or out-of-state real estate company?
Warner: I’m not going to tell
you. …It’s a national brand; People will
recognize the company.
Virginia
Business: So, you want to privatize real estate
management?
Warner: I’m not using that term.
…I’m going to bring in some outside expertise
to help us. Make sure we maximize taxpayer value. After
we went through the first couple years of this administration
and we consolidated or shut down 58 different agencies,
boards, and commissions, after we eliminated 3,000 positions
in state government…none of that was easy. I’ve
still got people angry over the DMV (Division of Motor
Vehicles) office closures. But you take DMV. We’re
going to continue to move these transactions to online
or over the telephone so you don’t have to go
and wait in line. … Changing the culture of government
is an ongoing process. It’s one of the things
where I hope most of the folks who want to succeed me
will embrace these changes as well. I’m working
very hard to get some legislative champions on this
because you can’t get it all done in four years.
If you don’t have that sense that it will continue,
you’ll have certain employees to say, “We’ll
just wait this guy out.”
Virginia Business: I think the real estate
thing is interesting.
Warner: We spent the last year-and-a-half
getting it together. We’ve got a consultant, we’re
spending money. We’re doing this. We’re
just now in the process, over the last few months, of
telling everybody, oh, don’t renew that lease.
Virginia Business: Do you expect an effort
in the General Assembly to appeal the tax package from
last year?
Warner: There may be some legislation
but mostly political grandstanding. I don’t think
it’ll get through the House.
Virginia Business: In connection with that,
do you expect any retribution against Republicans who
voted for the tax package?
Warner: If anything, there may be some
of these out-of-state interests who like to come in
here and hold press conferences. But I think there’s
a broad base of support from the business community
to step up and support not only the Republicans but
the Democrats [who stepped up] as well.
Virginia Business: Do you feel you built a
coalition from last year that will stay together?
Warner: I sure hope so. …The
tax reform effort was absolutely the right thing to
do. It put Virginia on a solid financial basis. …You
got the AAA bond rating reaffirmed. That’s all
very important, but I do think what I would argue is
equally important is the fact that this sensible center
came together. I sure as heck would like to try to hold
it together. People all over the country are looking
at Virginia and kudos to people like John Chichester.
…Because of the spiraling Medicaid costs and because
of action in the late ‘90s where they either cut
taxes too much or created new government spending programs.
[Every state is] going to have to go through what we
went through. …The economies of many of the Midwestern
states are still in big red ink. But even states that
have a little bit of money right now oftentimes still
have structural budget imbalances resulting from shortchanging
things like maintenance reserve or fully drawing down
rainy day funds or other things that from a long-term
fiscal basis, they’re never going to get back
to where they were a couple years back. So, they’re
going to have to take on this issue. My hope is that
this [sensible center] will hold together, but time
will tell. In an election year, it becomes increasingly
difficult.
Virginia Business: It sounds like you will
be leaving the office in much better shape for the next
governor coming in.
Warner: Regardless of who gets this
job next, I’m not going to leave them with the
same mess that I had.
Virginia Business: How would having a second
term change your approach? Would you do anything differently?
Warner: I don’t think I’d
do anything different. …We’d have to address
transportation. There would be these government reforms.
The people who are not on the program would get on the
program. The economic development efforts, sometimes
when you’re trying to bring particularly a large
entity to Virginia, it takes years. You can’t
underestimate the value of personal relationships. And.
as somebody who spent 20 years in business, I speak
a CEO’s language. That kind of continuity helps….
And I hope that the legislature will seriously consider
[a second term for governors] again this year. …They
constantly remind people, “Hey, you know, governors
come and go, but we’re here forever.”
Virginia Business: Looking
to the future, what would you like to be remembered
for?
Warner: When I first got this job,
what I wanted to be remembered for most was [being]
the governor that gave that kid in Martinsville or Grundy
the chance to stay in his community, [to be the governor]
that really spread economic prosperity across the whole
state and not just in certain sections of the state.
And I think we’ve made some progress. Not as much
as I’d like, but…I’m not satisfied
that we’ve got the lowest unemployment versus
national unemployment that we’ve ever had. On
a relative basis, Virginia’s never been doing
better. I’m not satisfied as long as we’ve
got parts of the state that are underperforming, oftentimes
through no fault of their own but just because of the
changing economy. So, I would like to still be known
for that. I think I’ll probably be more remembered
as the guy that tried to fix Virginia’s finances.
And hopefully, I’ll be remembered a little bit
as somebody who tried to do it in a bipartisan “put-Virginia-first”
way rather than a partisan way. That kind of political
posturing could quickly return, but I’m still
hopeful that the level of rancor is going to decrease
and that this sensible center… may hang together.
But I’m an optimist. You’ve got to be in
this business.
Virginia Business: What’s next for you
politically?
Warner: Honestly, I have no idea. If
you look back, again, over the last number of governors,
traditionally Virginia governors do not have a good
last year. The best way I can maximize my political
possibilities is to have a good last year as governor,
and that means stay focused. The only thing I’m
going to be focused on other than being governor this
last year is this role I’ve got as chairman of
the National Governors Association. I really think that
Congress will probably get back to its dysfunctional
ways. And I think there are a host of issues where the
nation’s governors in a bipartisan way can be
heard. I mean, Medicaid is one, long-term transportation
funding is another. Trying to align federal education
policy. 2005 could be the perfect storm on federal education
policy. Every federal education bill is up for reauthorization
— Head Start, No Child Left Behind, Vocational
Education Act, Higher Ed Act. Wouldn’t it be cool
if we could actually get the feds to get their education
act together so that the funding streams and the policy
goals actually are coherent? …Governors are much
more pragmatic; they know much more about getting the
job done. They don’t have the luxury the senators
and congressmen have about political posturing. I would
argue that just as welfare reform didn’t start
in Washington — it really started with states
and governors — bipartisan governors led that
effort. There’s a chance for bipartisan governors
to lead the effort on health care, transportation, education.
And, you know, I’ve got a great partner in Mike
Huckaby, who is the Republican governor of Arkansas.
And we have a very ambitious agenda.
Virginia Business: We saw your name
on a short list as a possible Democratic candidate for
the presidency in 2008. That was in Newsweek. Could
you shed any light on what you would consider a dream
job, a good job after this one?
Warner: You don’t rule out anything.
But one thing I specifically wouldn’t rule out,
I wouldn’t rule out coming back in 2009. It’s
flattering but …political history is filled with
the litter of people who got ahead of themselves and
started thinking about the next job as opposed to doing
the job they were hired for.
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