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Political roundtable predicts budget shortfall will dominate legislative session

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Editor’s note: For the second consecutive year, Virginia Business invited four state political observers to share their thoughts on the upcoming General Assembly session. The panel included: Ben Dendy, a former gubernatorial cabinet member who now is president of Richmond-based lobbying firm Venture Corp.; Hugh Keogh, president and CEO of the Virginia Chamber of Commerce; Christina Nuckols, an editorial writer for The Virginian-Pilot; and Jeff Schapiro, a Richmond Times-Dispatch political reporter and columnist. The discussion occurred before Gov. Timothy M. Kaine presented his budget proposals on Dec. 17. A video of the roundtable discussion can be viewed online at http://www.virginiabusiness.com

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Virginia Business: 2009 is an election year.  Do you expect anything significant to happen other than the major budget cuts that are going to be taking place this year?

Nuckols:  Probably not. The legislature has a mind of its own, so you never know. But I would say that there’s probably going to be pretty broad agreement that they want to get a very ugly, budget-cutting year out of the way and get out of Richmond as quickly as possible. Gov. [Timothy M.] Kaine has learned that many of his issues don’t fare very well in the General Assembly, which still has a Republican majority in the House of Delegates. There’s no sign that’s going to change this year. Many of his final efforts are going to be efforts that he can achieve without going through the legislature, or he’s going to seek issues where there’s pretty broad bipartisan support. He’s not itching for a fight with these guys this year.  I think both the Republicans and Democrats, who are facing election in the House of Delegates this year, plus a couple of prominent legislators who are running for governor, are going to want to be wrapping up quickly so they can start raising money … 
And also, Virginia has a pretty lean, spare budget. There are only so many things you can do when you have to cut. And when you’re dealing with $2.5 to $3 billion there are not going to be that many options. They’re just going to have to make some quick and tough decisions and move on.

VB: Do you think the legislature will follow Kaine’s budget plan? What about the effects on economic development and education?

Schapiro: Well, keep in mind that this hole that needs to be filled is actually a hole on top of a hole. It’s $2.5 to $3 billion, on top of $2.2 billion in cuts that have already been made. So the opportunities for substantial savings are very limited. Traditionally, the legislature, even in this divided government, tends to work around the edges of what the governor puts on the table. And I suspect that that will pretty much be the case, though watch the Republican-controlled House of Delegates, trying to make some bright-line distinctions on possible savings.  One of them might be in education. For a number of years now, and now much more loudly, the Republicans in the House have talked about the state’s contribution to local public schools, and whether Virginia is really getting its money’s worth, and whether it is merely subsidizing, in many cases, wealthier school districts.  If the formula by which Virginia provides these dollars is altered, even modestly — and it’s unlikely that it would occur — it could generate billions, over the long term, of dollars that Republicans could plug into other things. 

Keogh: Economic development marketing and tourism marketing have been under-funded in Virginia since the first year of the Warner administration. That’s not going to be added back this year … But I think it’s noteworthy that, regardless of our number one ranking in the nation for business, we operate in a very competitive environment, and we’re losing our competitiveness and our edge by not funding marketing efforts properly.

VB: What business issues do you expect to come up? Will there be any nod to transportation, and with the national number one ranking from Forbes.com for three years running, will there be any incentive for the legislators to protect funding for business development or marketing at all?

Keogh:  I don’t think so. I think the ranking is a true badge of honor, and we can all feel very proud of that. That’s a monumental achievement in a very competitive environment.  But it also is part of the problem.  There is an atmosphere in the General Assembly that if we’re that darn good then we don’t have to worry about stepping up with the bucks. And there is some truth to that. The product Virginia presents in the marketplace is extremely strong, but nevertheless it’s a competitive and negotiable field. And we have to step up with our incentives and with our best foot forward. And we run the risk of letting that wither on the vine by letting the funding deteriorate as it has.

VB: How is Virginia’s status as a blue state in this last presidential election likely to affect the 2009 election?

Dendy:  I think that if you look historically, since the state became a competitive state among the two parties, the ‘70s was a Republican decade, the ‘80s was a Democratic decade, the ‘90s was a Republican decade, and now the first decade of this century has been a Democratic decade.  I guess the real question is whether the shift comes in, or whether the trend of this decade continues. Virginia, since 1976, whoever won the presidential election … that party’s not won the following year’s gubernatorial election. So I think that there are certainly indications that there might be a shift. 
However, there were districts that voted overwhelmingly for [President-elect Barack] Obama that are represented by Republican members of the General Assembly. Turnout will be a big issue and a big question as to whether the Democrats will be able to turn those same voters out in a state election. 
   
Schapiro: And the legislative elections at stake will be control of the House of Delegates, which is the last redoubt of Republican power in the Capitol. Only six seats stand between the Republicans and a return to the minority. So, clearly the Democrats are already pulling out the stops, but I think the election could very well be the kind of last test of the artful redistricting of 2001. The turnout in these elections tends to drop precipitously from these highs in presidential years. Those sorts of things, coupled with this friends-and-neighbors-like characteristics of legislative politics could allow the Republicans to retain their majority, though it’s a slim one in the House of Delegates.

VB: What does the Republican Party need to do to win back Northern Virginia voters?

Schapiro: The Republican Party is clearly wrestling with that issue. I wonder if part of it is the Republican office holders, particularly in the House of Delegates. There is this kind of club mentality very much under siege that has made it difficult, if not impossible, to consider something that looked like a general tax increase.  If there were some opportunities for some of these legislators to really find a middle ground, to stake it out, that might be a first step. The problem, of course, is it blows apart the caucus …Within the Republican Party, one will occasionally hear that people were defeated because they weren’t sufficiently conservative. The Republican Party apparatus is very much controlled by single-issue people: people who are worried about taxation, people who are worried about abortion restrictions, people who are worried about an encroachment of firearms rights. They’re the ones who bother to show up at these caucuses and conventions … And until the Republicans can come up with some way to get more moderate people involved in the process, they will be stranded on the right.  And redistricting has complicated this.  It has just kind of pushed them off in a direction that means now the only real challenges within the party are from the right.

Dendy: I think that in Northern Virginia, to be successful, that any party has got to recognize the changing face of Virginia. I was astonished to read in The Washington Post the weekend before the election that 47 percent of the citizens of Prince William County are a minority. And how you pursue that county in a successful manner with a very strong anti-immigrant message, I think is questionable. I think it’s not just the illegal immigrants that have been concerned about some of these legislative initiatives, but it’s really all of the immigrants. If you look at groups like the Vietnamese and the Koreans, traditionally they had been very Republican-oriented in Northern Virginia, because they came to this country very anti-communist. But a lot of that vote has shifted just because of the concerns about some of these initiatives. So I think you’ve got to recognize the demography.  And then these people talk about the “real Virginia,” Northern Virginia being “communist.” I think they need to somehow muzzle them because that’s where the votes are today. VB:  Virginia is the only state in the union that doesn’t allow governors to succeed themselves. Is this ever going to change?

Dendy: I think it’s something that definitely needs to be changed. It puts us at a tremendous disadvantage to other states, particularly in terms of economic development. 
I remember when I worked in the governor’s office, and a Japanese executive said, “We really don’t need to worry about meeting Virginia governors because they’re only there for four years.” … It is really a creature of Virginia’s past because the reason for having it was that we were a one-party state and supposedly the governors were insulated from politics. 
But now that you’re a two-party state, you have to worry about whether your party controls the General Assembly. A governor is evaluated by whether his party wins the U.S. Senate seat that comes out. There’s no insulation from politics.

VB: Virginia has lost Republican Sen. John Warner but gained a second Democratic senator in Sen.-elect Mark Warner, in a Democratic Congress.  Is this a net gain or a net loss for the state?

Nuckols: That’s a hard question. I think that Virginia really has had the best of both worlds here in the last couple of years. You have a very respected, moderate Republican who has really thought through issues on his own and has the ear of people in both parties when he makes a decision on an important issue. …And we’ve had a new Democrat [Sen. Jim Webb] who also carried a lot of good will into Washington with him because he helped to change the control of the Senate with his election. And to have two senators who got along well and could work from two different parties on issues was wonderful for Virginia. We do lose something by having two Democrats. On the other hand, that’s kind of softened by a couple of things. Number one:  Democrats control the White House and Congress right now. It won’t be a huge problem right away. And we have a centrist Democrat in Mark Warner, who has promised to come into Washington and be a “radical centrist,” a term that he uses all of the time.

Dendy:  I do think that they’re likely to work well together because I think they have different interests. I think you will see Sen. Webb take the lead on Armed Services. A little bit of a disadvantage to some extent for Virginia is that all of our focus has been on Armed Services. And I think you’ll see Sen. Warner take a larger interest in economic issues, maybe seeking a seat on the Senate Commerce Committee, eventually the Senate Finance Committee. 

VB: Virginia business leaders are very proud that it’s a “right to work” state. What do you think the effect of the passage of the federal Employee Free Choice Act would be for Virginia?

Keogh: It would be onerous. It would cast not just Virginia, but the management relation dynamic across the country in great doubt. There’s no secret to the fact that under the current structure with the current process, including the secret ballot, that the unions have won about 50 percent of the elections over the last 20 years. 
The playing field is level. The argument that’s made by organized labor and those who would support the act is that the playing field has tilted in favor of management.  The facts don’t support that. This bill is an onerous one to the business community, and it would be my hope that in some fashion it would be defeated, although I don’t know that I see that happening as a practical matter given the makeup of both bodies. We have put, as an institution, the Virginia Chamber, a lot of pressure on then-candidate [Mark] Warner and now Sen.-elect Warner, who has been at best wishy-washy in terms of where he is on the matter …We have organized representation of about 4 percent of our labor force, which is the second lowest in the country, second only to North Carolina. So both of our states have resisted union pressures over the years. And when you’re the number one state in the nation for business, I think you point to that as one of the factors that has made us that competitive.


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