by Bernie Niemeier
“If it weren’t for Northern Virginia, the rest of the state would look like Mississippi or Arkansas!” This kind of sentiment tends to be expressed frequently north of the Rappahannock River. It comes across kind of like a high school girl who thinks her shiny new car is proof that she’s prettier or smarter than everyone else, rather than simply the result of daddy’s money.
Such comparisons usually are followed by complaints about state tax collections and funding formulas that take the wealth of Northern Virginia (NOVA) and redistribute it to the rest of Virginia (ROVA) while Fairfax roads go unpaved.
Recent reports estimate that $35 billion in defense contracts flow to Virginia, with 70 percent of that total going to Northern Virginia. When it comes to the redistribution of wealth, NOVA arguably receives more than its share of tax dollars collected across the entire U.S.
Maybe it’s not a matter of being prettier or smarter. Maybe, it’s just being closer to the spigot of federal spending.
On the other hand, does it really matter?
Defense Secretary Robert Gates plans to cut spending on defense contractors by 10 percent in each of the next three years and eliminate the Norfolk-based Joint Forces Command (JFCOM) at a cost of more than 6,000 Virginia-based jobs. This situation makes the NOVA versus ROVA rivalry seem pretty trivial.
Virginia’s unemployment rate has been lower than the national average during the recession, a fact largely attributed to federal spending.
Moreover, the commonwealth’s better–than-average economic statistics are regionally driven. Job creation has occurred primarily in Northern Virginia and Hampton Roads. This is not a new phenomenon; it has been going on since the New Deal expansion of government spending in the 1930s. More recently, the post-9/11 emphasis on global intelligence and homeland security has been an accelerating factor.
Even before the recession, job growth in ROVA was largely nonexistent, with Richmond up only slightly and other regions down during the past decade.
Despite concerns being voiced by Gov. Bob McDonnell, Sen. Jim Webb, Sen. Mark Warner and other Virginia politicians, the Defense Department does not need congressional approval to proceed with Gates’ proposed changes.
But we should note that Virginia fared well overall in the Base Realignment and Closing Commission (BRAC) process, which resulted in significant investments in the Petersburg and Fredericksburg regions.
Furthermore, Gates suggests that his cutbacks could allow additional spending in other areas, such as shipbuilding, that could benefit Hampton Roads. It is also important to point out that not all government contract spending is defense-related. A significant portion of Northern Virginia’s IT infrastructure works on non-defense projects.
If this sounds like a game of Whack-a-Mole, that’s the nature of government spending. You push it down in one area and it pops right back up in another. Virginia’s government contractors know this game and play it efficiently.
As the nation heads toward economic recovery, we support smart spending by both government and business. While the effect on our regional economies remains uncertain, let’s keep steady hands on the wheel.
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