Virginia Gov. Bob McDonnell sides with business over conservatives


Virginia Governor Bob McDonnell speaks at the Conservative Political Action Conference (CPAC) during their annual meeting in Washington, February 19, 2010.

Article Highlights

  • "Conservative” does not mean the same thing as “pro-business,” as Va. Gov. Bob McDonnell has shown.

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  • Gov. Bob McDonnell won the largest tax hike in Virginia state history and a package of new spending on transportation.

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  • McDonnell, who cut spending and shrunk government as governor, agreed to hike taxes when business needed it.

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"Conservative" does not mean the same thing as "pro-business," as Virginia Gov. Bob McDonnell has demonstrated.

McDonnell -- whose three-year record is mostly characterized by conservative policies -- this week won the largest tax hike in state history and a package of new spending on transportation. Cheering him on was Virginia's business lobby.

The tax-hike-and-roads package fits well into a pattern of McDonnell veering from his conservative principles when the business lobby wants more government. McDonnell, for instance, has subsidized favored businesses and industries through tax credits and special incentives. Also, Virginia's dependence on the military-industrial complex and the "Beltway Bandit" federal contractors has made McDonnell a leading critic of the sequester, which would reduce the federal deficit through spending cuts.

The transportation bill McDonnell supports would hike sales taxes to 6 percent in Northern Virginia (up from 5 percent), rejigger the gas tax and index it to inflation and increase taxes on home sales. This tax revenue, along with more money from the general fund, will provide what the Fairfax Chamber of Commerce calls a "sustainable fund" for transportation, with the hope of alleviating traffic congestion.

McDonnell's office, to defend the tax-and-pave plan, kept a list of businesses supporting it. The least surprising businesses on the list were the ones who will do the actual paving: The American Concrete Pavement Association, Heavy Construction Contractors Association, Richmond Area Municipal Contractors Association, Precast Concrete Association of Virginia, Virginia Asphalt Association and the Virginia Ready-Mixed Concrete Association.

I think their interest in more taxes for more roads is fairly obvious, and their support for the bill ought not be very persuasive to Virginia's public servants.

If you think all this new pavement will mean less congestion, consider these other supporters of McDonnell's plan. The Virginia Automobile Dealers Association signed on, presumably expecting more people to buy cars if there are more lanes. The Home Builders Association and the Virginia Association of Realtors back the bill, too, foreseeing more homes in Loudoun and Fauquier counties. So you get more lanes, but also more commuters and more drivers. The result could be the same amount of congestion.

Business support for the transportation plan was widespread, though. The Virginia Chamber of Commerce and the Virginia Business Council supported the bill, as did nine other local chambers.

The biggest champion of the tax-and-pave package might be the Fairfax County Chamber of Commerce. This organization has advocated higher taxes for transportation since at least 1999. In 2002, the Fairfax Chamber backed a ballot measure to hike sales taxes in order to pay for new roads. In 2004, the Fairfax Chamber rallied behind Democratic Gov. Mark Warner's tax-and-pave plan.

This broad business support was a big reason so many Republicans in Richmond went along with McDonnell's plan. Sensitivity to business concerns was clearly a driving force for McDonnell.

McDonnell and his spokesman, Tucker Martin, separately cited a 2012 CNBC report on the best states in which to do business. Virginia had fallen from No. 1 to No. 3. "The main reason," McDonnell told me, "was transportation problems."

So McDonnell, who has cut spending and shrunk government as governor and opposed tax hikes his entire career in Virginia politics, agreed to hike taxes when he thought business needed it. Most conservatives in Virginia thought there were better ways to fund roads: Many wanted to cut nontransportation funding more than McDonnell; Attorney General and 2013 GOP governor nominee Ken Cuccinelli wanted to put the burden on drivers through the gas tax, leaving the sales tax alone.

In the end, though, McDonnell sided with business over conservatives. "My job is to solve problems," McDonnell told me. He said he exhausted all the conservative means he could to fund roads, including tolls and spending cuts.

McDonnell's other breaks from conservatism have put him on the pro-business side, too. He's used subsidies from the Governor's Opportunity Fund to lure favored businesses to the commonwealth. He has subsidized Northrup Grumman and the Redskins' training facility. "I understand the philosophical discussion," he said when I asked him why a conservative governor thought the state should pick winners and losers. "I would tell you pragmatically, most of the governors do it."

Nowadays, along with Maryland's liberal Democratic Gov. Martin O'Malley, McDonnell is a leading critic of federal sequestration. You can hardly blame McDonnell when so much of his state's industry is the federal government and its contractors.

McDonnell is conservative when he feels he can be. The other times, he's pro-business.

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Timothy P.
  • Timothy P. Carney helps direct AEI’s Culture of Competition Project, which examines barriers to competition in all areas of American life, from the economy to the world of ideas. Carney has over a decade of experience as a journalist covering the intersection of politics and economics. His work at AEI focuses on how to reinvigorate a competitive culture in America in which all can reap the benefits of a fair economy.


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