On a JLARC: The Latest Data on Virginia Casinos, More Progressive Tax Brackets, and Affordable Housing Struggles
IN THE NEWS: Place Your Bets: Virginia may soon have four casinos up and running by 2025. Last week, members of the Joint Legislative Audit and Review Commission received a report titled “Oversight and Administration of Gaming in the Commonwealth" which details the pros, cons, and recommendations for Virginia casinos going forward. Another new report from JLARC maps out ways to reduce the tax burden on low-income people while leaning more on wealthy people to balance the books--primarily, fixing the tax brackets that were set more than 30 years ago and adjusting them for the modern day. Zoning for the Missing Middle: When the JLARC outlined ways lawmakers in Richmond could increase the stock of affordable housing last year, hopes were high. But then the General Assembly failed to take action. Now JLARC director Hal Greer listed last year's recommendations on affordable housing as unimplemented but important recommendations for the 1 in 3 Virginians who are considered "cost burdened" by housing.
Episode Transcript
Janet Howell
It's likely to be a brawl, and it's likely to have every lobbyist in Richmond involved, as we can see from the audience.
Michael Pope
On this episode of Pod Virginia,
Aaryan Balu
We go JLARC crazy.
Michael Pope
Yes, we're going to look at all those new JLARC reports, including the one on casinos.
Aaryan Balu
And the new JLARC report on making the income tax more progressive.
Michael Pope
Plus, we'll look at recommendations that have not been implemented on affordable housing.
Aaryan Balu
You are listening to Pod Virginia stick around.
Michael Pope
I'm Michael Pope.
Aaryan Balu
I'm Aaryan Balu.
Michael Pope
And this is Pod Virginia, a podcast that's going to be so brief. We might actually have a new Prime Minister by the time we finish this episode, Aryan; what's going on here with the PM?
Aaryan Balu
I will tell you what it is. It's so funny to watch the whole thing going on with Liz truss. At the same time. It is sort of wild to watch a world where a remarkably unpopular politician who pulls off some remarkably unpopular policy decides to resign because nobody likes them, like what a world to live in.
Michael Pope
What a world indeed, yeah. Hey, listen, Aryan. I appreciate you coming out to my book launch last week. It was good to see you in person; what do you make of the crowd that we had there and the event at the Athenaeum and Old Town,
Aaryan Balu
I had a great time. It is such a refined, not just like the Old Town Alexandria, but the Athenaeum, and then the crowd is all dressed up in a crowd that I don't usually hang out with. But it was really great to hear a lot of what we talked about on the show last week; there were some pictures that we got to see in the presentation, some back and forth with the audience about the Bryd machine and the history of Virginia politics. I had a lot of fun.
Michael Pope
Great. Well, it was good to see you. And it was great to see so many of our listeners. I had so many people there coming up to me that said they were longtime listeners of this podcast and that they knew about the book launch because of the podcast. So thank you to all of our listeners, many of whom have been around for a long time. You know, Aaryn, several of the people there talked about the Readjuster's episode that we did. That was in 2020. That was a very long time.
Aaryan Balu
That was well before my time.
Michael Pope
Our listeners are longtime dedicated listeners. So thank you for listening. Thank you for showing up. And thank you for buying a copy of the Bryd machine. Alright, enough of that. Let's move on to our first story.
Michael Pope
Place your bets; in recent years, Virginia has slowly allowed more and more legalized gambling. First, there were slot machines at convenience stores, and then there was betting on historic horse racing, then you could play the lottery online. Now lawmakers might be moving into uncharted territory.
Aaryan Balu
Virginia may soon have four casinos up and running by 2025. Last week, members of the Joint Legislative Audit and Review Commission received a report titled oversight and administration of gaming in the Commonwealth as members of the commission were formally receiving this report. Senator Janet Howell said this.
Janet Howell
It's pretty obvious this is going to be a major issue this coming session, and it's likely to be a brawl, and it's likely to have every lobbyist in Richmond involved, as we can see from the audience.
Michael Pope
Yes, so the video feed from that JLARC meeting shows a room at the Pocahontas building totally packed with lobbyists. So this was a joke that landed in a room full of people who are known to provide a laugh track when needed. Or even sometimes when not needed. You know, all the committee rooms in the Pocahontas building have this kind of lobbyist laugh track where even the slight slightest hint at a joke gets this huge outsized response. This particular joke also landed because there is so much at stake here for so many stakeholders hoping to strike it rich. You know, Aryan, one of the biggest takeaways of this JLARC report to me was the tension between Petersburg and Richmond. So Petersburg gets a casino and makes a lot of money until a casino opens in Richmond. And so, the more casinos you have, the less profitable the existing casinos are. And so there's lots of data and reports and charts and graphs. That really just made this put this in stark relief, that there is this tension between people who want to make a lot of money in one place versus people who want to make a lot of money somewhere else.
Aaryan Balu
I mean, it's a zero-sum kind of game here, right? Bold Dominion, our short of cousin show, did an episode on these casinos back in 2020, where they, you know, kind of spelled it out pretty well of, yeah, this is a kind of a zero-sum game where, you know, if you're looking to increase economic activity, which is what these casinos tend to be sold on, you need to draw consumers, customers, from more than just your local area. Right. So if there's a casino in Petersburg, and they only get people who are local to Petersburg, that money is going it's staying in the community, it's not going anywhere, it's not increasing. So the only way that they make money is if they get folks from Richmond from nearby. So the more of these that you have, it seems like, you know, that competition is much more direct than there is for a lot of other businesses.
Michael Pope
And it's the same market too. I mean, like Petersburg and Richmond are so close to each other that you're sharing the same market of people in a way that you don't, with a casino and like Bristol, for example. So I mean, that just sort of geographic proximity, here between Petersburg and Richmond is worth thinking about because, you know, where I live up in Northern Virginia. MGM has a casino that's a mile from my house. And so nobody's talking about a casino in Fairfax County. Right. So look there, it is really interesting. The market here, the Petersburg, Richmond market, might have this competition currently, I guess, kind of has this competition that you don't really see in Northern Virginia with MGM.
Aaryan Balu
Yeah, I mean that, and I guess that's what makes me a little bit skeptical when it comes to when it comes to all the talk about these casinos. He talked about the number of stakeholders who are hoping to strike it rich here. And I am I'm skeptical about how much, you know, that will actually help the folks in the local area of where these casinos are possibly gonna get put up. That's kind of what they're sold on. Right. But you know, I worry about it because they can be something of an economic drain; there's a potential for things to go kind of really wrong with building these casinos.
Michael Pope
Well, one person who is asking some questions about the potential drain is Senator Lionel Spruill during that Jay Clark meeting. He has Tracy Smith, who's one of the JLARC staffers, asked a very pointed question, what would happen to a Petersburg Casino? If another casino were to open in Richmond, here's part of that exchange,
Lionel Spruill
Without Richmond, Petersburg would be on a larger scale. So I'm trying to figure out why would we want to downscale the Petersburg market if they have a Richmond.
Tracy Smith
Again, Senator, I think that is probably a policy call. I think, you know, both Richmond and Petersburg would have smaller casinos and kind of the combination scenario than if they were to have their own casino and not another one within that market.
Michael Pope
So yeah, that's a policy call. It's also a call for voters. You know, like a vote, local voters have to approve a referendum in favor of a casino. Voters in Richmond have already rejected a casino. And there's already another effort to have another referendum. So I mean, there, you also have to go over the hurdle of getting the voter's approval for this also. But in addition to that, it's a policy call. So even if you assume that voters approve casinos in Richmond and Petersburg, then you still have the policy call of do you actually want to have both of those casinos in Virginia. So yeah, I think this is obviously something that's going to receive a whole lot of discussion in the upcoming General Assembly session. Okay, well, with that in mind, let's dig into some tax policy. Tax the rich. That might be one way to make Virginia's income tax more progressive. According to another new report from JLARC. This is the second JLARC report we're going to talk about today, and it maps out ways to reduce the burden on low-income people. While leaning more heavily on wealthy people to balance the books, Justin Brown led the team at J Lark that looked at Virginia's antiquated tax brackets. Those tax brackets were fun 30 years ago, but now people earn more, and the brackets are still the same.
Justin Brown
Experts call this bracket creep.
Michael Pope
Bracket creep means low-income people are forced to bear a disproportionate share of the burden.
Justin Brown
The income brackets in Virginia have been the same in dollar terms since 1990. And for a year or two, that's not a big issue. But over the long term, it has a pretty big impact incomes go up over time, but the brackets haven't.
Michael Pope
Yeah, so the last time those brackets were updated was a time when Thunderstruck by ACDC was topping the charts, you know, Aaryan, but now those brackets might be shifting because next year, lawmakers are poised to take a hard look at those income brackets, and the commission is mapping out a ton of options for them to make the income tax, more progressive.
Aaryan Balu
I'm unabashedly a fan of this, this move you talk about, you know, Thunderstruck was this what like 1991. That was such a long time ago, not just in terms of, you know, flat straight out, inflation is a huge part of it. Right. Incomes have also just gone up in the last 30 years. It's also, you know, our view of what economic policies, you know, work has shifted so much from the way it was, right as Clinton was being elected, right?
Michael Pope
It was actually before Clinton was elected. So old-timey Bush was president.
Aaryan Balu
Yeah, so, so much of what we understand about economics and what is the best way to tax our people has changed in those 30 years, we've lived through not just one financial crash but a pandemic and a second one, and so I'm, you know, unabashedly fan of more progressive income tax brackets, at the very least, bare minimum just because of inflation.
Michael Pope
Yeah, and it's, I mean, so, at one end of the story, this is about laziness. You know, lawmakers could have handled this problem a long time ago, they're lazy, and they didn't do anything about it. So they just let these things fester, the bracket creep got bigger and bigger and bigger and bigger. And so, you know, part of this is just not doing their job. The other part of this is that it harms low-income people. So who gets slammed when you haven't updated your income tax bracket, low-income people end up sharing a huge, disproportionate share of the burden, while wealthy people, you know, get these benefits from wealthy people. So the laziness of lawmakers here benefited the rich.
Aaryan Balu
It's funny how that works out. It just happens to work out in a way that.
Michael Pope
It happened to work out that way. Although I will say this JLARC report is opening, you know, setting the path for finally fixing this problem. So I think we're going to see that on the horizon.
Aaryan Balu
I think what ends up being the case is that inertia and the status quo tend to always favor those with power and money. And you know, and this JLARC report is an important start and important step to, you know, fight that inertia and create a more progressive income tax bracket. But that's an uphill climb, right? Because every time something, you know, there's a million reasons why the policy will not go somewhere in Richmond, right? There are a million places for things to get shut down. And I mean, I would just love to see these recommendations get put into motion. I know there's been a motion on it these last few years. But have we seen actual policy in this direction?
Michael Pope
That's a great segue to our next topic of conversation, Aryan, which is the lack of action on a particular topic. So moving on to our final story today.
Zoning for the missing middle does your local zoning ordinance stand in the way of affordable housing many people think so. So when JLARC outlined ways that lawmakers in Richmond could increase the stock of affordable housing last year, hopes were high.
Aaryan Balu
But then the General Assembly failed to take action. Now JLARC director Hal Greer listed last year's recommendations on affordable housing as unimplemented. But important recommendations
Hal Greer
One of the biggest challenges to developing more affordable housing is restrictive local zoning ordinances. The report has a recommendation for the General Assembly to direct the ACD to develop an incentive program to incentivize localities to develop zoning policies that facilitate the development of more affordable housing.
Michael Pope
Next year. Lawmakers are poised to consider the latest recommendations from JLARC to make the income tax more progressive. But Sheila Herlihy at the Virginia Interfaith Center for Public Policy says the time for action on affordable housing is now.
Sheila Herlihy
The General Assembly is likely to talk about increasing tax relief. But more important and more key to people on the ground is housing relief. We don't need to study. We know that one in three Virginia families are struggling to pay for housing. And so we need to allocate resources to support them.
Michael Pope
Yeah, so local governments across Virginia are really facing the squeeze here on housing. And a lot of people will say there's a housing crisis. There's not enough housing. There's an affordable housing crisis. And then you got people on the other end of that debate that doesn't want zoning policies to change. You know, we have seen lots of tension in the region that I live in between local governments and neighborhood groups. You know, Arlington has a program where they're many people considering getting rid of single-family zoning altogether. Alexandria is considering plans that would allow developers to increase height limits in order to receive affordable housing units like dedicated affordable housing units. So there's clearly a crunch going on. And people are thinking more creatively about the kind of authority that local governments have, but then you run into something Aryan that you're really familiar with.
Aaryan Balu
The Dillon rule? Yes, our good friend.
Michael Pope
Here comes the Dillon role, which says to all of your local governments, no, you can't actually require a developer to hand over affordable housing. That's illegal. You can't do that.
Aaryan Balu
Well, more specifically, that, you know, you got to the state for that kind of authority first.
Michael Pope
You gotta go to the state because of the deliverable. So what the mayor of Alexandria recently told me, I reported about this for the Alexandria Gazette, that he wants to see the General Assembly give local governments like Alexandria the authority to require developers to hand over affordable housing. Should they have that power? I mean, I don't know; that's actually a that's a very controversial proposition. I actually don't think it would pass the General Assembly anytime soon.
Aaryan Balu
The General Assembly has got this authority. And it's, it's, you know, you got to fight tooth and nail if you're going to try and get them to vote to strip themselves that authority. But a lot of states in this country are not under the Dillon Rule. A lot of states in the country, I think is the majority operate by what is called Home Rule, which is effectively, well, we will start with the Dillon Rule, which says that if a power is not explicitly given to a locality, then it belongs to the State, Home Rule flips that if something is not explicitly a power given to the state, then a locality sort of has the freedom to legislate on that. And so you know, having that inertia, as we talked about before, leans toward the General Assembly, that makes it really hard for these localities to get what they want to be done. But this is such an important issue. Like Sheila Herlihy said, you know, one in three Virginia families are struggling to pay for housing. And there's almost nothing more important when it comes to local government, local policy than, you know, where people get to have a roof over their heads and shelter and heat in the winter.
Michael Pope
You know, Aaryan that that thing about the 1/3 of Virginia families that was in this JLARC report, this is a LARC report, actually, from December, that the folks at JLARC are saying, hey, remember that thing that we did in December, you didn't take action on it? And so we're gonna put it in front of you again. It mentioned that 31. You point this out just now, and this is a very salient point that's worth circling back to 1/3 of Virginia families who are cost-burdened. Do they pay too much money, too much of their income goes toward housing expenses. And that's a horrible statistic. I mean, it really shows you how great the need is here.
Aaryan Balu
What is the threshold? Because I know it used to be 1/3, like 30%, right?
Michael Pope
Yeah, it's actually 30%. So really, so they determined that a household was cost burdened if the household spent more than 30% of the income on housing expenses.
Aaryan Balu
Geez, I gotta say that is, that is insane. I'm coming from this coming at this from the perspective that I am currently looking to move to a different part of the state. And I'm in the process of dealing with rent and income calculations and things like that. 30% is quite it's quite the number. I don't know anybody who is who's renting in the circles that I, you know, hang out with and know and talk about these things with. I don't know anybody who's paying less than 30% of their income on rent.
Michael Pope
Well, according to Jay, lark, all of your friends are cost-burdened.
Aaryan Balu
Yeah. And, you know, this is, in part, this is the result of a lot of weird macro things going on in the housing market, just kind of broadly across this country. But it's also something that it seems like the General Assembly that Virginia has the capacity to do some work to potentially help.
Michael Pope
Yeah, and you know, what these recommendations, most of these things are really kind of I would describe them as low hanging fruit and data collection, which is very important. I'm not saying don't do it, but like, things like a needs assessment, develop a plan, have progress updates, and have outcomes that you can measure for rental units at 30% of the average median income and at 50% of the average median income, and at 80% of the average median income. So you create the brackets, and you measure the outcomes. And this is all the data collection which needs to happen in order to solve this problem. And the other half of it is money. I mean, you did hear the audio there from the folks at the Virginia Interface Center for Public Policy, say, Look, you know, the best thing you can do is pump some money into this thing so that we've got affordable housing developers out there right now, that, you know, already have the plans to do this. And so, you know, what they would like to see as an investment. And we did see actually a little bit of investment in this most recent budget cycle of the folks that were advocating for funding for affordable housing got a partial victory. They want more money, of course, to solve this problem.
Aaryan Balu
Yeah. I mean, the things that are necessary for, you know, what we should expect for our populace. A lot of it is not profitable. And a lot of it needs some investment from a government that says no. This is about the value that we hold other than profit, this value of getting our citizens to be in a comfortable well put together shelter. That's one of the things that there is not a lot of room outside of some government intervention to solve what is a serious problem here.
Michael Pope
All right. Hey, that's a good place to leave it. Hey, before we go, I want to do a quick shout-out to Agenda Alexandria, which will be meeting tonight at 6:30 at the Lyceum and Old Town, Alexandria. So Agenda Alexandria is going to have this great panel discussion about affordable housing, the topic that we were just discussing, specifically, the relationship between developers and bonus height. Bonus height is the idea that a developer could exceed the height limits in exchange for delivering dedicated affordable housing units. It's a pretty controversial idea. We've got a great panel to discuss this, including the city manager of Alexandria, James Parish, John is going to be on the panel. We've got a developer who specializes in doing affordable housing. We've also got a head of a neighborhood group that was formed to oppose a specific development. So it's gonna be a great panel discussion. If you are in Old Town, Alexandria tonight. It's Monday night at the Lyceum on South Washington Street. We'd love to see you; the reception starts at 6:30. The panel discussion starts at seven. So I hope to see you there.
