Issue Stew From managing growth to cleaning graffiti, Virginia's business agenda is substantial in this year's General Assembly.

Illustration by Chris Obrion

By George Lyle
Since 1619, Virginia politics have been more about geography than ideology. For 350 years, it was east vs. west. Then it was big cities vs. rural counties. And now it seems to be every region for itself.

Sectional battles are stewing again in this year’s General Assembly over growth management, transportation funding and tobacco settlement money. But there are a few critical concerns — such as work-force development — that should unite the statewide business community.

Here are some of the issues before the General Assembly that could have a huge impact on businesses across the commonwealth:

Growth Management
In Northern Virginia, where hundreds of thousands of commuters fight for limited lane miles, tempers are flaring — both at the toll booths and in the voter booths. (See related story on Page GA12.)

This past election, real estate developers contributed generously to the General Assembly campaigns, hoping to fend off what they consider anti-growth legislation. On the other side of the debate is a somewhat odd coupling of financially strapped local governments and feisty environmental groups. They site statistics on traffic gridlock, crowded schools and the growing spread of subdivisions as evidence that suburban sprawl needs to be better regulated.

"I don’t think there is a more important issue today facing the broad-based business community than the no-growth movement that has taken hold in some of our rapidly growing communities," says Mike Toalson, executive vice president of the Home Builders Association of Virginia.

Last year, the Coalition of High Growth Communities asked the General Assembly for more tools to help them manage growth. They sought the power to increase impact fees and the ability to regulate the number of building permits. But Toalson says these "quick fixes" have a poor track record in other states.

Loudoun County already charges proffers — money paid by developers to obtain permits for new houses — of about $21,000 per home. And Prince William County is not far behind, Toalson says. Those fees are passed on to home buyers, making it more costly for newcomers and first-time buyers to stake out their homesteads.

The localities insist that they need more money to keep up with the rapid growth. Schools, roads, police and fire protection are becoming inadequate, they say.

But "facilities never (come before) the rooftops," Toalson counters. "You don’t build schools and fire stations first and have them sit empty waiting for people to come. That’s just not the way it works."

The Home Builders Association, with 4,600 members, will be bolstered this session by an organization formed to take on the lobbyists from the high-growth localities. Virginians for Economic Prosperity is a coalition of 19 construction, real estate and road-building groups that is opposed to impact fees, monetary proffers and caps on building permits.

"We support comprehensive planning. We want localities to recognize the need for an adequate housing supply with a wide range of housing options and the need to allow for higher densities near transportation hubs," Toalson says.

Better planning would help, but the issue may boil down to tax reform, says Fairfax lawyer John McGeehan, who lobbies for the Central Fairfax Chamber of Commerce. McGeehan says the General Assembly has to acknowledge that the localities will not be able to accommodate growth without a major reworking of the local tax structure. "The bottom line is the tax base for county government is not tied to the areas where we are seeing growth in our economies," he says. "In Virginia we have gone from an agricultural-based economy to a manufacturing economy to a service-based economy, but our tax structure has not changed."

Work-force Development
A critical shortage of skilled, educated workers is hindering Virginia’s economic growth, particularly in Northern Virginia, where unemployment has dipped to 0.6 percent in some communities.

"When it’s 0.6 percent unemployment, I like to tell people that the 0.6 percent is just the people who are stuck in traffic on the Beltway trying to get to a job," jokes McGeehan. "The ability to provide a skilled labor pool is just as important as an area’s ability to provide good transportation. The successful companies we have here will not be able to expand, and we will not be able to attract new business if jobs" cannot be filled with skilled people.

Increased funding for George Mason University and Northern Virginia Community College will be high on this region’s legislative agenda.

Meanwhile, unfilled jobs are not a problem in Southside Virginia, where the North American Free Trade Agreement has siphoned off thousands of textile jobs. To make matters worse, tobacco growers and brokers are threatened by the anti-smoking movement.

"We need to do a better job communicating with Northern Virginia that they can have the same solution to their problem as we have to our problem," says Delegate Ward Armstrong, D-Collinsville. "The problem in Virginia is not that we have too much growth, it’s just that it is not evenly distributed."

Sandy Bowen, senior vice president of the Virginia Chamber of Commerce, says technology training would help Southside and Southwest Virginia attract some of the info-com jobs clustered in Northern Virginia. "It’s frustrating," Bowen says. "You want to turn (Virginia) upside down and shake some of those jobs down." It’s not that simple, but work-force training could raise some interesting possibilities. "You don’t have to be in Northern Virginia to have one of these information technology jobs, you can be sitting in Wytheville or Danville," Bowen insists. "Helping the workers make that transition is something we need to be looking at."

Environmental Protection
A storm is brewing on the environmental front.

Proposals for comprehensive state-wide wetland regulations, an area previously covered almost exclusively by federal regulators, are in the works. A recent court decision restricted the authority of the Environmental Protection Agency and the Army Corps of Engineers to regulate the excavation of wetlands. Previously those agencies had required permits to dig in wetlands.

While filling wetlands is still closely regulated by the EPA and the Army Corps, environmentalists fear that real estate developers will now be able to drain wetlands by digging ditches. Once the water is gone, they could build on the dry land that remains.

"Any statewide program at this point might be unnecessary," says Ron Williams, head of the Norfolk division of the Hampton Roads Chamber of Commerce. In coastal Virginia, where wetlands are common and development has been steady, the impact of a new wetlands permitting program would be widely felt, he says.

But a citizen commission recently recommended just such a program, and Delegate Preston Bryant, R-Lynchburg, is leading a bipartisan group of legislators who have drafted a bill designed to follow that recommendation.

"What we don’t need is to panic and pass some broad-based wetlands permit act that creates another costly layer of bureaucracy," says the Home Builders’ Toalson. "Nobody in the development community and nobody in the business community questions the importance of our traditional, environmentally important, wetlands. But the last thing we need is ... a very strict, onerous permitting process."

That comment falls on unsympathetic ears with environmentalists like Sierra Club Executive Director Glen Besa. "That is completely hypocritical to the point of being comical," he responds. "These are the same developers who are always telling the federal government that we don’t need federal regulations — that states should be left to regulate their land and wetlands. For them to now say that the state should leave it to the federal government is completely hypocritical. ... This is an important issue about preserving our nontidal wetlands throughout the state. This is not just an issue for Tidewater or environmentalists. This is an issue that effects every citizen who values clean drinking water, whose home has ever been flooded."

Toalson counters that his group is sensitive to concerns about the environment. He points out that federal regulations and permits already govern a lot of building activity in wetlands, and he speculates that what might be needed on the state level is merely a narrowly tailored permit for digging ditches in well-defined wetlands.

One thing that both sides agree on is that this issue could have enormous ramifications across the commonwealth. "Depending upon how this is done," Toalson says, "it could affect every real estate development in Virginia."

Health Care Mandates
A recurring theme in many 1999 General Assembly campaigns was "taking on the HMOs" and the so-called "Patient’s Bill of Rights."

Railing against insurance companies is popular politics, concedes Mark Pratt, executive director of the Virginia Association of Managed Health Plans. His association looks out for the interests of 13 HMOs and other health care plans that provide insurance for about 2.7 million Virginians.

Pratt, who used to be a staff member in the General Assembly, says that in recent years, Virginia’s HMOs have been victims of their own success. In the 1990s, after HMOs managed to reign in health care costs, the General Assembly turned its attention to coverage issues, passing 11 new "mandates" in the past two years. Each of these mandates requires health insurers to cover specific procedures, and more mandates could be on the horizon, Pratt says. In the 30 years prior to 1998, a total of 10 mandates were passed.

"The last few years it has been pretty easy to impose these mandates," says Pratt, because health insurance premiums have been relatively flat. But now those premiums are beginning to increase again.

Also on the rise is the number of Virginians with no health insurance. From 1997 to 1998 (the most recent years for which statistics are available), the number of people without health care insurance rose from 12.6 percent to 14.1 percent. Pratt says that increase represents about 100,000 people, bringing the total number of uninsured Virginians to one in seven.

"That’s an alarming number, and I think it is something that is going to have to be looked at. What it represents is the small businesses who can’t afford the higher premiums, and the increases that come from some of these mandates," says Pratt, who admits that some of the medical mandates are backed by patients with very compelling stories.

"Each one of (the mandates) has appeal. Each group has a good reason for wanting these benefits. But at the same time each one of these comes with a cost to all the insured. It’s a tough, tough decision for a legislator to vote against some of these mandates.

"They think that they are just imposing this on the evil insurance company. But the real cost of a mandate is borne, not by the health plan, but by the purchaser, the employer," Pratt says. "And ultimately, one way or the other, it usually comes right back down to the employees."

Another health care issue that is almost certain to resurface in this year’s legislature is creating a statutory right for patients to sue their HMOs for denying services. But the chamber’s Bowen says such a law would drive up the cost of premiums, and put health care insurance out of reach for even more workers.

"We had a huge session last year for health care issues, and I would hope we could sit back and see what some of the impact is going to be," Bowen says. "We just created an external review panel to examine (denials of care by HMOs), so I think we need to see how that process is working before we start talking about giving patients the right to sue."

On the Back Burner
Tobacco
Money from the multistate tobacco settlement has not arrived yet, but legislators are eager to divvy it up.

Suburban delegations want to spend the money on transportation improvements. Others say the settlement proceeds should go toward medical research or other causes related to health care. Then there are legislators from the beleaguered tobacco regions who argue that some of the funds should be used to offset the economic impact of the anti-tobacco movement.

Graffiti
There may be another attempt by localities to obtain authority to charge businesses and landowners for cleaning graffiti off their property.

Currently, local governments can remove graffiti, but they cannot charge the property owner for doing so. The issue looms larger in urban areas, where graffiti often adorns the sides of various buildings.

"I try to keep my business clean and safe," says Anjar Ali Zanfir, who runs an Arlington grocery store. But the kids write on the walls with markers and paint. I clean it off, but it is expensive, and sometimes I can’t. Instead of the county spending money to clean it, they need to spend money to catch the ones who are doing it."

Employer References
The Virginia Chamber of Commerce again will support legislation designed to give some protection to employers who provide references for current and former employees.

"Attorneys are telling [business people] not to give out any information for fear of liability," Bowen says. But that means businesses can’t get meaningful background information about potential employees. "They are afraid they are going to be exposed to what’s been called a negligent-hiring lawsuit," she adds.