Home Budget, Economy Nick Rathod: Thinking Long Term During Virginia’s Special Session

Nick Rathod: Thinking Long Term During Virginia’s Special Session

The crises we're in require broad and deep reforms

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by Nick Rathod

Next week, the Virginia General Assembly convenes for a special session to respond to both the budget crisis caused by the COVID-19 pandemic and the recent demonstrations in the wake of George Floyd’s murder. This special session could not have come too soon: While the federal response to these crises remains at best inadequate and at worst counterproductive, it is up to state and local governments to lead the way in addressing the moment.

However, there remains a concern based on the recently announced agenda, that during the session, Virginia lawmakers may simply “address the moment” and move on, satisfied with a sound budget and some important changes to police protocol and oversight. But, to keep the focus so narrow would be unfortunate. The moment we are in as a result of the ongoing pandemic, and the demand for racial and social justice is unique and reflective of moments of change in our past that provides an opportunity to set a new coarse and change the direction of Virginia in a way that can address the demons of our past and build for a more inclusive and hopeful future. That’s why Virginia lawmakers should use the special session to not only respond to the short-term crises, but also to begin the process of long-term structural reform to address deeper issues that the events of the past months have magnified.

First, the General Assembly should address what may become the longest-lasting result of the pandemic: what some are calling “the small business apocalypse.” As revenue dries up while overhead bills come due, tens of thousands of Virginia’s community businesses — already under threat from a decades-long wave of corporate consolidation and monopolistic bullying — now face an existential threat. Even after a vaccine is found, even after the cities and states recover, and even after the unemployment rate dips back to normal levels, we may still — if we do not act — come out the other end of this crisis to a hyper-concentrated economy fundamentally transformed for the worse.

To counter this, the Commonwealth needs to begin building a much more robust infrastructure of support for community enterprises. We should take a page out of North Dakota’s book and charter a state-wide public bank to leverage state funds and federal stimulus resources, such as the Federal Reserve’s Municipal Liquidity Facility and federal funds market, to invest in Virginia’s small businesses. We can also better use the Commonwealth’s procurement power — purchasing by government agencies and public universities — to buy from local enterprises, rather than distant monopolies. Additionally, the Commonwealth can set up regional “Community Venture Centers,” modeled after Germany’s Mittelstand Competence Centers, to help Virginia’s community enterprises better seize technological, financial, and government opportunities. A recent study by the National Bureau of Economic Research, for example, found that the federal government’s Paycheck Protection Program resources were skewed toward larger businesses because small businesses were both less aware of the program and less likely to apply. This is where a Commonwealth-sponsored effort could have stepped in — to better disseminate information about and resources for applying to the loan program.

Second, the General Assembly should address the widespread economic insecurity in our Commonwealth that the pandemic has revealed. We need to not only stock food banks, care for COVID-19 patients, and halt evictions in the short-term — we also need to begin the long-term process of addressing the root causes of why millions of Virginia families were only a few missed paychecks away from food, health, and housing crises in the first place.

To protect vulnerable Virginians, we should work to fight unnecessary precarity before the next crisis hits. For unemployed Virginians, we should expand and modernize our unemployment insurance system, by increasing benefits, widening eligibility, and establishing a digital public payments platform to more quickly and easily transfer resources between the government, citizens, and businesses. For Virginia’s workers, we should expand labor protections by repealing Virginia’s anti-worker “right to work” law, cracking down on wage theft, and establishing a commission within Virginia’s Department of Labor and Industry to investigate how best to protect the increasing number of “gig workers” in Virginia’s economy. In addition, we should build from the historic Virginia Clean Economy Act and begin setting the direction to shift towards a green economy that can serve as an economic engine, create jobs and revenue while addressing impact of climate change.  Finally, our Commonwealth’s tenant protections are a national embarrassment and our eviction crisis is horribly under addressed. The proposed ban on evictions during public health emergencies is a good start however the General Assembly should also strongly consider addressing the eviction crisis more holistically including: promoting mixed-use and dense social housing; incubating community land trusts and land banks to make more land permanently affordable; experimenting with giving tenants the right of first refusal to purchase their homes at fair market value; and bulking up Virginia’s tenant protection laws while guaranteeing a right to counsel in housing court to enforce those laws.

Third, and probably most pressingly, we must act to protect our children, teachers, administrators, custodians, cafeteria workers, and so many others who are a part of our public education system.  It is immoral to ask our Commonwealth’s teachers — who we can’t even provide adequate resources to educate our children and who we have already asked to be human shields against gunmen — to now also be unprotected on the front lines of this global pandemic. At a baseline, our educators deserve a significant-increase in pay and a serious commitment of resources, allocated to not only assure adequate tools for learning but to protect especially those most vulnerable. To pay for it, the General Assembly should consider an increase to Virginia’s recently-established products tax on liquid nicotine and legalize and tax recreational marijuana sales, In the short term, as schools districts grapple with how to safely reopen we can use the additional resources to standardize safety measures that have been proven effective in keeping schools safe in other countries, like: conducting temperature checks, assuring sanitation of hands and devices, distributing masks, pivoting to grab-and-go meals, renting larger venues and outdoor spaces for educational purposes, staggering classrooms to limit size, and adequately funding full-time nurses in every school.

In addition, as remote instruction becomes normalized, lawmakers should partner with local school districts to set some guiding standards around learning, achievement, live instruction, tracking of engagement, academic progress and feedback amongst other things. To address the digital divide and access to the necessary space, equipment and tools for many students we should consider: public-private partnerships across our robust tech-community, leveraging existing public infrastructure to provide safe spaces to access technology and the internet, distribution of tech tools for all students and establishment of network hotspots especially in rural and other marginalized communities. And, to ensure that teachers, school staff members, and parents are better involved in the tough decisions affecting schools during crises like the ones we are facing today, we should better incorporate multi-stakeholder representation into Virginia’s Board of Education.

Finally, the General Assembly should go beyond responding to the problem of police training and accountability to also focus on the disempowerment and disenfranchisement of those historically marginalized in the Commonwealth. Monument Avenue is not the only thing that needs reimagining in Richmond these days — the whole way Virginia’s government operates needs to be rethought, too. The old Virginia way was designed by a small group of people for a small group of people. Now that Virginians of all backgrounds are finally securing their rightful seat at the table, we need to re-design the table so that it works for everybody.

To do so, we need to reconstruct Virginia’s government so that it raises up the voices of the many, not the few. We should quickly establish an ad hoc Office of a Just Recovery to watchdog pandemic recovery efforts for both corruption and issues of racial equity. We also need to expand the model of Citizen Oversight Boards — elected bodies of citizens to watchdog, advise, and, if necessary, intervene in different areas of government — to not only police, but various government institutions, including jails, prisons, courts, utilities, transportation planners, environmental regulators, public universities, and more. And we need to increase legislative staffing in the General Assembly to ensure that elected officials have the resources to hear more from the voices of ordinary citizens back home, rather than corporate lobbyists in Richmond, when making legislative decisions.

A state government cannot always control what crises it faces, but it can control how it responds to those crises. Next week, Virginia lawmakers have a choice: to see the pandemic and demonstrations as an acute emergency requiring a narrow response or to see the events of the past months as arising out of long-term crises that require broader and deeper reforms. I would encourage them to take the latter view, using this special session as an opportunity to set the stage and launch a long-term structural reform effort that our Commonwealth desperately requires.

Nick Rathod is a nationally recognized state policy expert and recently contributed a chapter on “the States” for the book “Democracy Unchained: How to Rebuild Government for the People”. He founded and established the State Innovation Exchange (SiX) to provide lawmakers best practices, policy ideas and training. He served as President Obama’s liaison to state and local governments in the White House and has been an advisor to Elizabeth Warren, Michael Bloomberg, Beto O’Rourke and numerous other Governors and state lawmakers.