(This article appeared in the Virginian-Pilot on Sunday, July 7, 2014)
The month has been a wild one with far reaching implications for Virginia politics.
The defeat of Representative Cantor in a June primary was shocking; who would have thought that he was not conservative enough for Virginia?
More troubling are the circumstances surrounding the resignation of a sitting Virginia senator. It is baffling and has prompted many of us to ask many questions. What kind of deal was made? Was it an implicit offer? Explicit? Who was involved? We know it involved the promise of a judgeship to his daughter. But what about a job for him? We know the job was discussed and we know there was a “private session” of the Tobacco Commission scheduled to discuss the appointment of a Deputy Director, which was then canceled after the Senator said he would not take the job. Pretty odd, huh? These circumstances require an investigation of what went on, and who made promises to whom.
Beyond that, the incident raises new questions about the operations of the Virginia Tobacco Indemnification and Community Revitalization Commission (“Tobacco Commission”).
The Tobacco Commission was established in 1999 from funds generated by the Tobacco Master Settlement Agreement. It was capitalized with over $1 billion. It has a 31-member board. Right now, of the elected officials, there are no Democrats on this Board. It is charged with helping tobacco farmers and with revitalizing formerly tobacco-dependent communities.
Over the years, it funded a wide variety of projects, but unlike our state budget process, it is not always clear why certain things get funded. Millions of dollars are awarded, but without much evaluation of their effectiveness.
These issues have been raised before. A Blue Ribbon Commission chaired by former Governor Gerald Baliles recommended the Tobacco Commission use a more business oriented approach in making grants with measurable outcomes and goals, and suggested that localities contribute match monies before grants are made.
A 2011 review by our legislative watchdog, the Joint Legislative Audit and Review Commission (JLARC), found that 89 percent of all Tobacco Commission awards were not linked with any outcome metrics. JLARC made 26 recommendations; to date, only 9 have been fully or partially implemented.
Lastly, a report by the Office of the Inspector General (OIG) released this January, 2014, cited concerns about the Tobacco Commission’s failure to use economic analyses before awarding grants. Six of the thirteen projects examined by the OIG did not involve any matching funds from localities.
So let’s get specific – here are some examples that raise questions:
- The Tobacco Commission has extended to date $978,288 for a proposed medical school (King School) in Southwest Virginia, and no building has yet to be built, even though $62,439 was paid to the school’s CEO.
- The Tobacco Commission spent $20 million – yes, $20,000,000 – to create new Medical School at Liberty University. Do we need another medical school? Would we be better off expanding residencies at our teaching hospitals? It is not clear that this was discussed. Our state budget process does not work that way; any proposal like this would involve full vetting by House and Senate committees, and administration staff.
- The Tobacco Commission spent several hundred thousand dollars on a sewer line to help construction of a private prison in Farmville run by “Immigration Centers of America,” which houses between 500-1000 largely undocumented persons scheduled for deportation. And it is a private facility.
- Finally, there were a series of grants made to the now-defunct Virginia Intermont College. These included $169,000 for a Tourism Degree that never emerged and $1.38 million for a science building that may never be used.
There are other points to consider as well. The Tobacco Commission employs fewer than fifteen persons with a personnel budget of $1.3 million. It is spending its endowment very fast; something that should concern citizens of southside and southwest Virginia. On July 1, 2008, it had $741,690,000 in the bank. As of June 1, 2014, they projected $313 million. The Tobacco Commission has been burning the endowment at over 10 percent per year for the last six years.
To its credit, the Tobacco Commission has done some good things. Recently, it worked with the state economic development office, VEDP, to help fund Microsoft expansion in Mecklenburg County. They used projected rates of return to justify the investment, a good model. They need to do more projects like this.
But the recent events with Senator Puckett demand an independent inquiry be done, not just of facts and circumstances of the Senator’s resignation, but the operation of the Tobacco Commission itself. The Tobacco Commission looks increasingly like a private Appropriations Committee controlled by a small group of individuals, where millions of dollars are spent without the scrutiny that taxpayers deserve.