Will Virginia end up killing the goose that has laid its golden egg?
With apologies to Aesop, it’s the most pressing economic question the Old Dominion faces. The golden egg, of course, is the federal government, which provides the jobs that continually prop up the state work rolls and help the flow of state and local taxes.
Chockablock with military bases from Virginia Beach to the Pentagon, the CIA, civil servants galore and the headquarters of the Federal Aviation Administration, Virginia ranks No. 3 after the District of Columbia and Alaska in the percentage of workers who get their paychecks from government. That’s just direct employment. The state also is No. 2 in defense contractors after California. Newport News Shipbuilding, the only shipyard capable of building nuclear-powered surface vessels, is a big Navy contractor, employing 19,000 workers, the most of any company in the state. Northern Virginia is dotted with information technology companies feeding off the federal government that helped give us such useful things as the Internet.
Taken together, federal jobs have helped the state weather the worst recession since the 1930s. Federal work is the biggest factor in helping the state maintain an unemployment rate of 6.1 percent, far better than its Southern sisters and among the top 10 lowest in the United States.
There’s one big problem with this miraculous goose and its golden egg, however. Some folks want to kill it in the name of fiscal austerity, which is the tea party-driven fad of the moment. Pushed by this faction, the state’s top Republicans, such as U.S. Rep. Eric Cantor, are on a cutting spree. They love the attention they get playing a perilous game of chicken over the adoption of federal budget ceilings, which played a key role in the country losing its pristine credit rating from a major ratings agency.
Gov. Robert F. McDonnell also wants to get on board with federal job cuts. He’s already sliced the state budget by increasing school class sizes and stopping payments to hospitals, nursing homes and assistants who help sick people on Medicaid. By also deferring payments to the state pension fund, McDonnell has claimed a budget surplus in horrific times, setting himself up for a possible run as a Republican vice presidential candidate in 2012. The new chairman of the Republican Governors Association now is lecturing President Barack Obama to follow his lead.
“The Governor does believe we must cut spending in Washington, D.C. and we need to do it in a significant and serious manner,” says McDonnell spokesman J. Tucker Martin, adding that McDonnell knows that such cuts could “have a significant impact” on the state. To ease the pain, McDonnell proposes putting $30 million from his upcoming so-called budget surplus into a special fund that could be used to replace some of the lost state tax revenue if federal jobs take hits. Another step is to expand the role of Lt. Gov. Bill Bolling and his employment commission to create even more jobs to make up for federal cuts.
There are a few problems with the approach. For one, $30 million is chicken feed to replace a golden egg. It’s pin money in an $80 billion budget and a $545 million surplus — a point even McDonnell acknowledges. Secondly, there are serious questions about how successful McDonnell has been in creating jobs.
The McDonnell administration claims it has created 45,600 net new jobs since it took office in 2010. The state Democratic Party has claimed that the actual number of jobs in the state — 3.6 million or so — is the same as it was when the recession supposedly ended in June 2009. Brian Coy, a Democratic Party spokesman, has said that the number of Virginians with jobs was 3.8 million. In June of this year, it was 3.9 million, but when population growth in the state is factored, the percentage of its working population employed, 64.3 percent, is about the same as when McDonnell took office. Also problematic is that the state lost 14,600 jobs in June, according to the U.S. Department of Labor, and 47,800 jobs in July, according to the Virginia Employment Commission.
Such data tripwires make McDonnell’s job growth claims more modest than he wants you to believe. Even if the administration’s claims are true that it saw an overall increase of 53,784 jobs since taking office, that’s far shy of the nearly 1 million jobs directly related to government work in the state. It doesn’t include the labor forces of private companies under government contract that could be cut, especially in defense.
Even Bolling’s magic can’t come anywhere close to replacing such numbers. The bitter truth is that if the budget hawks get their way, Virginia is in for a much rougher time, and will be a much tougher place to live in, than any politician is willing to admit. S
Peter Galuszka is a contributing editor to Style Weekly and blogs for the Washington Post.
Opinions expressed are those of the writer and not necessarily those of Style.