[Ed Note: This article originally appeared in print in Bearing Drift’s January 2011 issue. To subscribe, join our mailing list and get a first peek in print every month.]
By Lieutenant Governor Bill Bolling
During the 2009 statewide campaigns, Governor McDonnell and I made clear that our top priority was getting Virginia’s economy growing again and creating jobs. “Bobs For Jobs” was more than a campaign slogan – we meant it, and since taking office we have worked hard to keep that promise.
Shortly after taking the oath of office on January 16th, Governor McDonnell signed Executive Order #1, which designated the Lieutenant Governor as Virginia’s Chief Jobs Creation Officer. In this role, I am responsible for overseeing our state’s economic development efforts and coordinating those efforts across numerous state agencies.
During the past year, I have worked closely with the Governor and our economic development team to shepherd our Jobs and Opportunity Agenda through the General Assembly, met with dozens of CEOs to talk about what we can do to help their businesses grow and expand, helped negotiate economic development deals to bring new business and industry to our state, and visited with countless business groups to talk about our economic development efforts.
Serving as Virginia’s Chief Jobs Creation Officer has been one of the most rewarding experiences of my political or professional career. Given the impact that the recession has had on families and businesses, nothing could be more rewarding than helping create jobs, and we have made a great deal of progress over the past year.
Our job creation efforts are based on a clear understanding that it is the private sector that creates jobs, not the government. It is the role of government to pursue policies that help the private sector create jobs.
First and foremost, we have worked to make certain that Virginia remains a great place to do business. By keeping taxes low, eliminating overly burdensome regulations, maintaining a favorable litigation environment and protecting our right to work law, we can position Virginia to take full advantage of the future economic recovery.
Earlier this year we asked the General Assembly to join us in promoting economic development by passing our Jobs and Opportunity Agenda, which was designed to give us more tools to recruit new business and industry to our state and help existing businesses grow and expand; and more resources to help us tell the Virginia story domestically and internationally.
The General Assembly accepted our challenge, approving 36 of our 39 legislative initiatives. As a result, we now have more tax credits for businesses creating jobs in Virginia, more flexibility in administering important programs like the Governor’s Opportunity Fund and a more competitive workforce training program.
In addition, the General Assembly invested $57M in new funding for proven economic development and job creation programs. With this new funding, we have significantly expanded our domestic and international marketing programs, and we will be opening new economic development and trade offices in China, India and the United Kingdom.
Armed with these new tools and resources, we have been very aggressive with our business recruitment and business development efforts. It is safe to say that we are doing everything we can to send the message far and wide that Virginia is open for business!
I’m pleased to report that our efforts to date have been very successful. Here are a few of the accomplishments we have achieved during our first year in office:
• Since January 16, 2010 Virginia has closed 240 economic development deals, which will result in 15,886 new jobs and over $2.4B in capital investment.
• Since February 1, 2010 Virginia has added 67,900 net new jobs. This is the 3rd highest number of new jobs in the nation. (Source: Federal Bureau of Labor Statistic)
• By contrast, during the Kaine Administration Virginia ranked 35th nationally in net new jobs created.
• Of Virginia’s 67,900 net new jobs, only 11% (or 7,600) are government positions, 89% of these new jobs have been created in the private sector.
• We have seen significant job growth in every region of our state. In fact, about 33% of the economic development deals we have closed have been in rural parts of Virginia.
• We have reduced Virginia’s unemployment rate from a high of 7.6% to 6.8%, the 3rd lowest unemployment rate east of Mississippi River.
• The number of economic development prospects we are working with has increased by 24% over the past year.
• Virginia was ranked as the #1 or #2 state for business by Forbes.com, CNBC and Pollina Corporate Real Estate.
While we are very pleased with the progress we have made to date, we have a lot of work to do to restore economic opportunity for every Virginian. More than 280,000 Virginians are still without a job, and we are committed to do everything we can to get these families back to work.
On December 17th, Governor McDonnell and I announced an additional $54M in new investments that will help advance our economic development efforts. These new investments, which are part of our Opportunity At Work agenda, will build on the successes of last year’s Jobs and Opportunity Agenda. These strategic investments include the following initiatives.
GROWING VIRGINIA’S INNOVATION ECONOMY
In the 1990s, Virginia distinguished itself as the nation’s leader in attracting technology related businesses. As a result of a focused effort on technology related economic development, we became known as the Silicon Dominion and computer chips replaced tobacco as our leading export.
While technology has continued to be an important part of Virginia’s economy, in recent years many other states have been more aggressive than Virginia in implementing economic development strategies that are specifically targeted toward new and emerging technology companies.
As a result, many new businesses in promising fields such as biotechnology and life sciences, nanotechnology and other new and emerging technologies have migrated to other states. We must reverse this trend and reassert Virginia as a leading location for the innovation businesses of the 21st century.
To accomplish this goal we have propose an investment of $25M to establish the Virginia Research and Technology Innovation Program (VRTIP). This program will:
1. Help new and emerging technology companies gain access to needed gap funding.
2. Assist established companies with commercialization of promising technology products.
3. Enable Virginia’s research universities to assist businesses with technology related research and development activities.
4. Develop an eminent scholars program to help us attract the best and brightest technology researchers to our universities.
VRTIP will enable us to effectively compete for established technology businesses, as well as new and emerging technology companies in important fields like information technology, biotechnology and life sciences, nanotechnology, energy, advanced manufacturing and more.
The message behind this initiative is clear – just like Virginia emerged as a technology leader in the last decade of the 20th century, we intend to reassert Virginia as a technology leader in the second decade of the 21st century.
SUPPORTING VIRGINIA’S SMALL BUSINESSES
Small businesses are the backbone of our economy, but they have been particularly hard hit by the recession over the past three years. Small business development and expansion will continue to be at the forefront of our efforts to grow Virginia’s economy.
Last year we took steps to support small businesses in Virginia by expanding and modernizing our Business One Stop program, streamlining processes and reinvesting in the Department of Business Assistance, our lead small business agency. Those steps have had a positive impact, but we can do more to support Virginia’s small businesses.
As I have traveled around our state over the past year and talked with small business owners, the major challenge they continue to face is an inability to obtain access to capital to help grow their businesses. New federal bank regulations have made it very difficult for small businesses to obtain loans or credit. This makes it very difficult for them to grow and, in some cases, even stay in business.
To address this issue, we have proposed a $5M investment of in the Virginia Small Business Financing Authority (VSFBA). The VSBFA operates a loan guaranty fund and a direct loan program for small businesses in Virginia, but they have very little money to do their job effectively. This investment – which will build on similar investments made last year – will enable VSBFA to expand their programs and do more to help support the creation and expansion of small businesses.
SUPPORTING VIRGINIA’S TOURISM INDUSTRY
Tourism is big business in Virginia. It is an $18B industry that employs more than 200,000 people. Last year, we made significant investments in the Virginia Tourism Corporation and the Virginia Film Office which are already generating positive results.
We also know that there are tremendous tourism opportunities on the horizon, such as the commemoration of the 150th anniversary of the Civil War and Emancipation and the upcoming 200th anniversary of the War of 1812. Now is the time to make further investments in Virginia’s tourism industry and we have proposed additional investments in three proven programs:
1. We are proposing $2M in additional funding for the Governor’s Motion Picture Opportunity Fund. This deal closing fund enables us to support Virginia’s film industry by having major motion pictures and other films made in Virginia, such as the recent Sony Television production Unanswered Prayers, which was filmed in Richmond and Ashland.
2. We are proposing $2M to establish a Tourism Development Micro Loan Fund in Virginia. This Fund will help provide low interest loans to qualified tourism related economic development projects throughout our state.
3. We are proposing $1M to expand the Tourism Marketing Partnership Grant Program, which provides state matching funds to help support local tourism initiatives. This successful program historically leverages 3:1 in private sector matching funding and is a great way to help promote tourism on the local level.
By making these strategic investments, we will make certain that Virginia remains a great place for people to visit and vacation.
REVITILIZING OUR COMMUNITIES
We have a number of programs in Virginia that are designed to help promote revitalization and redevelopment of communities and properties in urban centers, abandoned industrial sites or economically distress communities. These are great programs which can help support our job creation efforts, but in recent years these programs have not had sufficient funding. We have identified three such programs that will receive special attention this year:
1. We are proposing $1M in additional funding to help support job creation efforts in those areas of our state that have received Enterprise Zone designations. Some of these Enterprise Zones are in urban centers, while others are in rural communities. By providing additional funding to this program we will be better equipped to fully fund economic development and job creation programs in these communities.
2. We are proposing $500,000 in additional funding to Virginia’s Main Street Program, which supports efforts to revitalize downtown areas in small towns all across our state. This program requires significant matching funds from local governments, private businesses and other organizations. Accordingly, this modest investment will generate a much larger financial benefit to assist with the revitalization of Main Street corridors all across Virginia.
3. We are proposing $4M to help support Virginia’s Industrial Site Revitalization program, which helps revitalize abandoned industrial sites and enhance the ability of local communities to attract new business and industry to these sites. We believe that this is our most important and effective revitalization and redevelopment program and we want to give it a much needed shot in the arm.
TRAINING WORKERS FOR VIRGINIA’S BUSINESSES
There is nothing more important to our economic development efforts than making certain that we have a skilled workforce to meet the needs of Virginia’s employers.
The Governor has recently announced proposals to begin the process of reinvesting in Virginia colleges and universities and increasing the number of Virginia students that receive a four year college degree.
Those investments are important, but we must also make certain that students are receiving access to training in other important areas and that they have a real chance to follow other important career pathways.
To further advance our workforce training efforts in other skill based disciplines, we are proposing two important initiatives this year:
1. By federal law, every public school system in Virginia must develop a Career Pathways Program to help promote skill based training by 2012. We are requesting a modest budget appropriation of $100,000 to help promote the Career Pathways Program in our public school system.
2. Current state law requires the Commonwealth to fund 30% of the cost of non-credit education at our community colleges. These courses help existing and prospective businesses train workers with the skills they need to support their businesses. Unfortunately, the Commonwealth is currently only funding 5% of these costs and the remainder of these costs are passed on to employers. To remain competitive in the economic development marketplace, significantly expand workforce training opportunities and fulfill our legal obligations to our community colleges, we have proposed an increase of $3M in state funding for non-credit education.
PROMOTING REGIONAL ECONOMIC DEVELOPMENT COOPERATION
Our economic development efforts are more effective when our local partners work together. Many regions currently have effective regional economic development organizations, but there is more we can do to assist them in accomplishing their goals. And in some parts of our state we need to do more to help promote regional cooperation.
This year we implemented a very successful regional economic development strategy in Southern Virginia. The Commonwealth put up $200,000 to encourage six localities – Patrick, Martinsville, Henry, Danville, Pittsylvania and Halifax – to develop a regional economic development marketing strategy. The six localities agreed to match this contribution and subsequently formed the Southern Virginia Regional Economic Development Alliance. We are currently asking the Tobacco Commission to provide a similar match, which will enable us to launch a $600,000 marketing program to help promote Southern Virginia as a great place to do business.
We have proposed $400,000 to expand this model and provide additional opportunities for regional collaboration to other parts of Virginia. These funds will assist more localities with developing a regional economic development program or enhance the effectiveness of existing regional programs or organizations.
The bottom line is simple – when we work together we can get more done and we want to incentivize that kind of positive economic development approach in more regions of Virginia.
JOB CREATING TAX REFORM
Our 2010 Jobs and Opportunity Agenda included a number of job creating tax reform measures. For example, we doubled the effective application of our Major Business Facilities Tax Credit program and we implemented a new Green Energy Jobs Tax Credit program. This year, we proposed three additional tax reforms that will help improve Virginia’s overall economic competitiveness:
1. Virginia Port Tax Incentive – we have proposed a tax credit for businesses utilizing the Port of Virginia for important import and export activities to enable the Port of Virginia to more effectively compete against other ports who have already implemented tax credit programs like this. The Port of Virginia is a major economic driver for the Commonwealth and we must do everything we can to support the Port’s continued growth and success. This tax credit will be capped at $5M per year.
2. Virginia Winery and Vineyard Development Tax Credit – Virginia’s wine industry is a rapidly growing sector of our agribusiness community. In the past year, wine sales in Virginia have increased by 13%. To support this growing industry, we have proposed the creation of a tax credit to assist with the establishment and expansion of wineries and vineyards in Virginia. This tax credit will be capped at $250,000 per year.
3. Refundable Research and Development Tax Credit – To help Virginia’s compete for 21st century technology related businesses, we have proposed a tax credit of 15% of qualified research and development expenses incurred by advanced technology companies in the Commonwealth. The tax credit would increase to 20% if such research is conducted in partnership with a public college or university in Virginia. Virginia is one of only twelve states that do not offer a state R&D tax credit, and if we are going to be competitive with other states we must adopt this legislation. This tax credit will be capped at $5M per year.
These additional investments in proven economic development and job creation programs are an important next step in our efforts to get Virginia’s economy growing again and create jobs. We hope that they will be well received by the members of the General Assembly. We have used the resources they gave us last year wisely and the results speak for themselves. By making these additional investments, we can build on the progress we have made and help restore economic prosperity for more of Virginia’s families.
