Tuesday, January 26, 2010
Governor shares ideas for economic development
McDonnell outlined a series of incentives designed to help the state rebound financially.
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RICHMOND -- Although Gov. Bob McDonnell has kept particulars of his plans to chop state spending concealed, the ideas he announced Monday evening to subsidize his economic development initiatives provide hints about his overall budget-balancing approach.
The governor identified a series of revenue reduction and redistribution measures to cover the estimated $50 million price tag of his jobs growth package over the next two years. McDonnell shared highlights of his plan during an address to the General Assembly last week.
About half of the funds -- $25 million -- for his plan would come by spreading over two years money the state anticipated spending in the first year of the budget to fund rate increases for pension plan contributions.
That accounting maneuver is separate from former Gov. Tim Kaine's budget proposal to make government workers pick up a share of their retirement contributions that Virginia historically has paid.
Another large chunk -- $21 million -- would come from revenue collected during Virginia's recent tax amnesty program.
The McDonnell administration envisions finding other dollars by leaving positions vacant at the Department of Correctional Education, deferring equipment purchases at the Department of Corrections and freeing up state funds by using additional federal grants for food stamp program administration.
That strategy would pay for a series of economic development incentives designed to help Virginia rebound from what McDonnell called "the toughest economic times in modern history" during a television interview Monday.
Among the ideas announced Monday:
n More than doubling the Governor's Opportunity Fund, an incentive to close deals with expanding companies, in the first year of the budget by adding $12.1 million to it.
n Committing $5 million to a state industrial megasite.
n Spending $2 million to establish economic development offices in China, India and the United Kingdom.
n Adding funding to expand tourism and film production in Virginia; and increasing available funds for a series of tax credits.
n Funding for a series of tax credits for biotechnology industries and to improve the state's business assistance services.
Amendments to the state budget reflecting McDonnell's spending priorities will be carried by senior legislators in both chambers of the General Assembly, according to a statement issued by the McDonnell administration Monday.
House Minority Leader Ward Armstrong, D-Henry County, had little objection to McDonnell's concepts when reached Monday night.
"I think by and large I'm comfortable with what he's trying to do, and Lord knows we've got to have the jobs," he said.
McDonnell has said he doesn't plan to submit his own budget, but rather will offer amendments to the spending plan left by Kaine, which included $2.3 billion in cuts and a repeal of the state car tax subsidy to localities that was to be offset by an individual income tax surcharge.
The governor and other Republicans have said the income tax idea is a nonstarter, and last week the House of Delegates unanimously rejected the proposal. Similar legislation in the Senate remains alive for the moment.
Just one week into the job as Virginia's chief executive, McDonnell said he has "a great appreciation for the difficulty" of crafting a balanced budget during an economic downturn that has robbed the state of billions in revenue.
Additional details on McDonnell's jobs agenda are expected to be unveiled at a news conference this morning in the State Capitol.
