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Cuccinelli’s opportunity to end Virginia’s corporate welfare programs

Over the weekend, the New York Times discovered that state and local governments, in their pursuit of jobs and economic growth, were lavishing billions of dollars of taxpayer money on corporations large and small. For some of us, this was hardly news. But the Times, to its credit, did what few others have been able to do, namely, create a corporate welfare database and break it down by state.

How does Virginia rate?

The commonwealth is not as generous as some states (Texas hands out cash like it owned a printing press), but we’re hardly slouches [1]. According to the Times, Virginia gives companies $1.29 billion per year — $161 per capita, or eight cents out of every dollar in the state budget.

Looking down the list of welfare recipients, one sees some of the world’s largest companies…Microsoft, Rolls Royce, Northrop Grumman, Alpha Natural Resources. Even Steven Spielberg’s DreamWorks made the list as an LLC. That’s a neat trick.

The argument from economic development officials and from politicians is that such financial favors are an essential part of doing business with businesses these days. Without a nominal grant, a tax break, a loan guarantee, or all three, companies will take their capital investment, jobs, and the tax revenues they will generate over time to other states and localities eager to make a deal.

A JLARC report [2] on Virginia’s incentive grant system notes that these monies “…appear to have a positive but small impact on the site selection decisions of businesses.” So the grants may be a deciding factor in some cases. Or they may have been no factor at all. Not exactly a resounding endorsement.

But in a state where a gas tax hike could take center stage in the next General Assembly session — one that, if implemented, would raise almost half of what state and local governments transfer to private corporations — and also where the Governor has called for further, modest reductions in state spending, one is forced to wonder how long the corporate welfare train can continue to roll before someone has the decency to say “enough.”

I had hopes that de facto GOP gubernatorial nominee Ken Cuccinelli would bring his considerable affinity for liberty and free markets to bear on the corporate welfare issue. I still do, if this portion of his remarks at the Republican Advance this past weekend are any indication:

Preserving Life, Liberty and the opportunity for every Virginian to pursue happiness continue to be the purposes of government. These principles are timeless and universal. They apply as much today as they did on July 4th, 1776.

They are alive and well in the 21st century, and it’s incumbent upon all of us to communicate and connect America’s first principles to real policies, policies that affect the lives of Virginians, in areas like taxation, transportation and economic development.

These are the issues that will determine our ability to provide for future generations the opportunities that we have enjoyed.

Universal opportunity means state government takes its checkbook and favors out of the market and competition decides who wins and who loses.

It would be a radical policy departure. It might also ding Virginia’s reputation as being “business friendly.” But in return, Virginia would become the first truly market friendly state in the nation.

Even more, if Cuccinelli is able to bring an end to Virginia’s billion dollar corporate welfare program, the state might find itself in a position to fully address other issues like transportation. Or, heaven forbid, it might even be able to give that money back to taxpayers.