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Preston Bryant is a Republican who has represented Lynchburg and part of Amherst County in the Virginia House of Delgates since 1996.

Investing in economic development

By PRESTON BRYANT
JAN. 5, 2004

In many respects, the legislative success or failure of Gov. Mark Warner’s tax-reform plan depends on who believes what about Virginia’s economic recovery.

Many in the General Assembly believe the state’s inevitable pull from the recession is going to come in sufficient time and strength – and is, in fact, already in swing, they’ll say – to boost tax revenues enough for the government to meet its obligations with increasing ease.

Others in the legislature contend that while there will indeed be a recovery – and they’ll even stipulate that it’s already in play – the state is not likely to return to the chart-topping days of the late 1990s, when the treasury saw double-digit growth stemming from the anomalous dot-com boom. They say the recovery will eventually hit a plateau and settle like a comfortable old shoe into its historic 4-5 percent growth rate. And this, it’s suggested, will still leave us short of money to invest the way we really must.

Quite honestly, both schools of thought are credible. Yes, the current recovery will allow the state to meet its obligations with increasing ease, but we’re also likely to return to revenue growth that’s been the historic norm, thus leaving us struggling for the foreseeable future.

So one pertinent question then becomes, how much more than the historical rate of growth do we need, and over what period of time, to meet not only our minimum obligations but also make prudent new investments in public infrastructure, secondary and higher education, health care, and public safety?

And there’s also this question: Is there any other legitimate way to achieve the revenues that’ll allow us to do more than merely pay our bills, that’ll allow us to build new roads, bridges, and schools as well as go the extra mile to keep our citizens healthy and safe?

Well, the first question is very difficult to answer. How much more we need in tax revenue beyond what we’re likely to get through a naturally expanding economy depends on which ambitious politician you ask. Everyone’s got a wish list of goodies that, in their eyes, is what’s needed to make Virginia an even more enviable place to work and raise a family than it already is.

The second question, however, does have a rather readily apparent answer, at least to those who are looking for one. There is a way, all things being equal, to maybe, just maybe, push the economy beyond its natural expansive tendencies that doesn’t have at its core a tax hike.

It’s called economic development. And it’s maximally achieved when the state invests more in initiatives to lure new businesses to Virginia and help existing ones grow.

As Warner, a Democrat, and the Republican-dominated General Assembly have had to cut deeply into the budget over the past two recession-wracked years, hardly any part of state government has gone unscathed. And this is especially true of the Secretariat of Commerce and Trade, which is the one principally responsible for enacting policies and programs to keep Virginia’s private sector thriving.

We only need to look at three areas within the secretariat to see how state job-creating – and, thus, revenue-producing – initiatives have been hurt. First, there’s the Governor’s Opportunity Fund, known to some as his “deal-closing” fund. The GOF is an account usually full of tens of millions that allows our negotiator-in-chief to offer last-minute incentives – often infrastructure improvements, whether a new access road or water lines – for a new business to relocate to Virginia or an existing one to expand. It’s often the last little thing that’s needed to ink a business deal that’ll end up creating scores or hundreds of new jobs and generating millions in new local and state taxes.

In the last few years, however, the GOF has been cut pretty significantly. In fact, the difference between the $30 million that was in it in FY 2001-02 and the $17.5 million in it in FY 2003-04 represents a 42 percent reduction. What could the governor have done for business growth and job creation with another $12.5 million to induce company relocations and expansions?

There’s also the Department of Business Assistance, which is the state agency whose mission it is to help all kinds of businesses – especially small and medium-size ones and those of minority ownership – with such things as better business practices, workforce training, and access to needed capital for expansions. But what’s happened to DBA’s budget? Well, it’s been cut by 43 percent since 2001. Back then, it had a nearly $45 million biennial budget. Today, it’s down to a little more than $25 million. We can all speculate how this $20 million cut has hurt DBA’s ability to help so many businesses grow and prosper.

And then there’s the Virginia Tourism Authority. These are the good folks who are responsible for making sure the whole world knows that “Virginia is for Lovers,” that we’re the birthplace of Washington, Jefferson, Madison, et al, that we’re a great place for skiing and golfing, and that our mountains and rivers and beaches are second to none for nature enthusiasts. In short, the VTA markets Virginia and lures tourists to the Old Dominion by the millions. Since 2001, however, the VTA has been cut by roughly the same amount as the GOF and DBA, about 42 percent. Three years ago, its two-year budget was about $41 million; now, it’s $23 million. Imagine how we could’ve worked to offset the 9/11 harm done to our tourism industry if the VTA hadn’t lost more than $17 million.

All of this is not to say that if we simply invest in a few economic development initiatives all our ills will be cured and we can chuck tax reform. No, that’s not the case.

But it is to say that economic development is at the heart of the debate going on over the strength of Virginia’s recovery and how far it’ll take us. There should be a certain recognition that the benefits derived from such things as the GOF, business assistance programs, and top-notch tourism marketing just may be that extra bit of oomph needed to push Virginia’s economy beyond heights it otherwise might achieve by default.

And that’s what might make the difference between simply paying our bills and actually investing in those things that make Virginia the special place it is.

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