Sunday, October 18, 2009
Hopefuls tout economic plans
Both candidates for governor vow to position the state to flourish when the economy recovers. Here's how they plan to do it.
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roanoke.com/politics
RICHMOND -- With concerns about job losses and financial pressures ringing in their ears, the two men running to be Virginia's next governor are touting competing plans to create and protect jobs and revive the state's recession-battered economy.
Republican Bob McDonnell and Democrat Creigh Deeds are promising tax credits to reward job creation, more spending on incentives to draw businesses to the state and greater focus on the economic needs of rural and distressed areas.
"The top claim on my time as governor will be job creation," McDonnell said Monday during a televised debate with Deeds.
Not to be outdone, Deeds said he wants "to create opportunity, prosperity and hope in every part of Virginia."
Virginia had the nation's fifth-lowest unemployment rate in August at 6.5 percent, well below the national average of 9.6 percent. Even though Virginia's unemployment rate has dropped since June, its August rate was more than 2 percentage points higher than it was in the same month last year. And parts of Southwest and Southside Virginia continue to struggle with double-digit unemployment rates in the aftermath of major layoffs
Despite its struggles, Virginia continues to get recognition as one of the nation's most business-friendly states. Just last month, Forbes.com put Virginia at the top of its "Best States for Business" for the fourth consecutive year, one of several such accolades the state has received for its business climate in recent years.
Both candidates said they would work to preserve that reputation while positioning the state to flourish as the economy rebounds.
McDonnell has won endorsements from an array of Virginia business groups, including the Hampton Roads Chamber of Commerce, the Fairfax County Chamber of Commerce and the Virginia arm of the National Federation of Independent Business. He espouses the conservative principles of low taxes and limited regulation and said he would streamline permitting processes for small businesses, but he also has called for some government action to encourage growth.
McDonnell has said he would expand eligibility for the state's major business facility job tax credit, an incentive typically awarded to businesses that create at least 100 new jobs. McDonnell's plan would lower the threshold so that employers could get a $1,000 credit for each worker hired after creating 50 jobs, or after creating 25 jobs in economically distressed areas.
Deeds has proposed a state tax credit that would refund businesses for any increase in federal payroll taxes tied to creating new jobs or boosting wages. He also has proposed a tax credit of up to 30 percent for small businesses on certain equipment purchases.
State business leaders said tax incentives for job creation are especially helpful to Virginia businesses at a time when they are facing significant increases in unemployment insurance tax rates to shore up the state's trust fund.
"Job tax credits -- especially in this climate --that's a strong one, especially if it includes small businesses," said Joyce Waugh, president of the Roanoke Regional Chamber of Commerce.
Ira Agricola, senior vice president of the Hampton Roads Chamber of Commerce, said businesses are "going to need some additional government incentives to create jobs in the coming year."
"The cost of doing business and the cost of employing an individual is going up, so I think we have to do everything we can from a state incentive standpoint to get employers to add employees," Agricola said.
Both candidates have pledged to double the size of the Governor's Opportunity Fund, a discretionary account that is used to offer deal-closing incentives to companies looking to relocate or expand in Virginia. The current two-year budget has nearly $20 million allocated for the fund.
Hugh Keogh, president of the Virginia Chamber of Commerce, said the fund "should be at least 50 percent higher than it is right now" to help Virginia compete with other states in the Southeast.
Grants from the incentive fund have been used to assist localities with major projects such as a joint manufacturing venture between Areva and Northrop Grumman in Newport News, and the relocation of Hilton Hotels Corp. to Fairfax County. It also has been used for smaller projects to save jobs in rural areas, such as the expansion of the Vaughan-Bassett furniture plant in Galax.
Deeds sponsored the 1996 bill that created the current structure of the Governor's Opportunity Fund. He said McDonnell's pledge to double the fund rings hollow because the Republican, while serving in the legislature, voted three times to either cut funding or reduce proposed increases to the fund during the term of Democratic Gov. Mark Warner.
Both candidates have outlined plans to address economic concerns in rural areas. McDonnell said he would designate a deputy Cabinet secretary to focus exclusively on rural economic issues and would push to make Southwest and Southside Virginia a hub for traditional and alternative energy research.
Deeds, a state senator from Bath County, said he would establish a rural business fund, similar to North Carolina's Rural Venture Fund, to guarantee financing for businesses that are having trouble accessing credit from traditional sources. He also has vowed to extend affordable broadband access to underserved areas and take steps to train more Virginians for jobs in high-need areas such as health care.
Deeds also wants Virginia to be competitive in emerging energy fields, saying he would establish a research consortium to coordinate research and development in "green energy" industries.
Business leaders and economic development officials said the most effective steps the next governor can take to help the economy are to preserve funding for education and come up with a long-term plan to solve the state's transportation funding crisis.
"I think a lot of our economic problems take care of themselves if our work force is highly educated and mobile," said Aric Bopp, executive director of the New River Valley Economic Development Alliance.
McDonnell has outlined a transportation plan that would draw money from an array of existing and proposed funding sources without raising taxes. Deeds has not produced a specific plan to generate transportation revenue, but has said he would not divert funds from education or other core services to build roads. McDonnell has sharply criticized Deeds for being open to tax increases for transportation.
"There's no getting around the fact that transportation infrastructure is the biggest chink in the armor for Virginia's attractiveness, and that each day that goes by without additional long-term sustainable revenues for transportation infrastructure improvements, we fall behind and are less competitive," Keogh said.
