Virginia has achieved very high rankings as the best place for business and to educate a child. In order to sustain an economically competitive Virginia, strong economic development, fiscal management and investments in key infrastructure must be pursued.
In the midst of serious economic challenges a top priority should be strengthening the business climate, creating the opportunity for new commerce and very importantly, new jobs. Strengthening the business climate will provide economic opportunity for Virginians and increased revenue to our state and local governments for necessary services. Strategic budget reductions should be utilized to address revenue shortfalls. Any tax increase should be broad based and not unfairly target one industry or segment of the economy, and should be applied to achieve strategic goals in education, energy, or transportation. Virginia's AAA bond rating should be protected. The rating is a hallmark of good fiscal management and provides the lowest cost for borrowing.
A "best for business" campaign that leverages Virginia's consistent ranking as the best place for business should be created and launched to aggressively seek corporate relocations to Virginia.
Governor McDonnell's first Executive Order was to establish the position of Chief Job Creation Officer and the Governor's Economic Development and Job Creation Commission. He announced the members of the Commission on April 19.
Significant new financial incentives from the Governor's Opportunity Fund and other sources as well as tax credits for job creation should be pursued.
The General Assembly and Governor McDonnell agreed to changes that increase flexibility in the use of the Governor's Opportunity Fund, the Major Jobs Facilities Tax Credit and Enterprise Zones. Also agreed to were new initiatives to establish a Major Employment Project Site Planning Grant Fund, a Green Jobs Tax Credit, an Income Tax Exemption on Capital Gains for Science Based or Bio-tech Start-ups, and a Bio-tech Research Performance Grant Program.
Budget priorities and efficiencies can best be found when budgets are lean and dollars must be stretched.
Governor McDonnell signed legislation that directs him to engage a private sector firm to conduct an operational and programmatic performance review of (i) the agencies under the Secretary of Health and Human Resources and the Secretary of Public Safety, (ii) the Department of Education, including primary and secondary education funded by the Commonwealth, and (iii) any other department, agency, or program of the Commonwealth in the executive branch of state government that the Governor deems necessary to effect savings in expenditures.
Each of the core areas of measurement under Virginia Performs should be evaluated to determine if the right areas are being measured properly to ensure that maximum performance on current objectives is pursued.
No known action on Virginia Performs at this time.
The General Assembly and Governor McDonnell agreed to a balanced budget through strategic reductions to programs/services, borrowing approximately $849 million from the Virginia Retirement System (VRS), and instituting about $95.4 million in higher user fees. There were no new or increased general taxes.
K-12 funding was reduced by $250 million with additional flexibility on SOQ requirements provided to localities. Higher Education funds were reduced by $40.5 million, including some capital outlay funds. Health and Human Resources Medicaid funding was reduced by $360 million with directives to restore most of the cuts if anticipated FMAP/ ARRA federal funds are received. New emphasis was placed on economic development through new investments and tax credits totaling $43.8 million.
A successful education system is a critical component of Virginia's economic future. A major factor in the relocation or formation of a business is the quality of education offered, the level of education of the workforce, and the opportunities for collaboration on research and development in a particular location. Additional investments in Virginia's higher education system are essential to maintaining and improving the qualities and opportunities that the private sector seeks. These investments should support economic growth and opportunity in Virginia.
A plan for how to implement the investments envisioned in the Grow by Degrees campaign, that would graduate 70,000 more students over the next 10 years, should be identified and specific commitments of the Commonwealth to achieve this goal should be made over the next four years and beyond.
Governor McDonnell signed Executive Order Number 9, establishing the Governor's Commission on Higher Education Reform, Innovation and Investment. It is anticipated that he will announce the members of the Commission within the next several days.
A top priority should be identifying and implementing policy initiatives to ensure that Virginian's have a robust energy infrastructure that provides reliable and affordable energy now and in the future. The Virginia Energy Plan identifies a significant and growing gap between the amount of energy consumed and the amount produced in Virginia. Energy must be imported in order to meet Virginia's current and near term future energy needs. Significant new investments in energy production, transportation and efficiency would help provide reliable and affordable energy for Virginians, and strengthen Virginia's economy through new jobs and new tax revenue.
Significant new government grant support for energy R&D will create new jobs, new products and services, and strengthen Virginia’s research capabilities and institutions of higher education.
Governor McDonnell signed legislation that creates the Virginia Offshore Wind Development Authority to facilitate and support the development of the offshore wind industry and wind-powered electric energy facilities located off the coast of the Commonwealth and beyond the Commonwealth's three-mile jurisdictional limit.
Virginia may have the largest deposit of uranium in the United States, which could be used to fuel nuclear power plants. If the National Academy of Sciences study determines that the uranium can be mined safely, Virginia should allow this resource to be utilized. The Federal government should continue the planned lease program for Virginia offshore oil and gas exploration in 2011. The production and sale of natural gas and oil off Virginia’s coast would provide financial benefits to Virginia and lessen demand for foreign gas and oil.
The General Assembly passed legislation that adds oil exploration to the Commonwealth's offshore energy exploration policies.
Successfully growing Virginia’s energy economy will require a workforce that is trained to perform services in the areas of research, production, distribution and consumption of new energy technologies.
No known action at this time.
Virginia’s high concentration of nuclear-related industries, technologies, and engineering and production capabilities in Lynchburg and Newport News, should be leveraged to expand the use of nuclear power, a carbon free energy source.
No known action at this time.
The Virginia Energy Plan of 2007 has a strong focus in the areas of energy efficiency and conservation. An increased focus on energy production and transportation should be included in the statutorily required update of the Plan.
In the area of energy technology, the General Assembly passed legislation creating the Universities Clean Energy Development and Economic Stimulus Foundation which is directed to identify, obtain and disperse, and administer funding for research and development and commercialization of alternative fuels, clean energy production, and related technologies.
In the area of infrastructure development, the General Assembly passed legislation which authorizes investor-owned natural gas utilities to petition to implement a separate charge for recovery of costs associated with eligible infrastructure replacement projects that would enhance safety or reliability. Also passed was legislation providing that an investor-owned electric utility will receive triple credit toward meeting the goals of the renewable energy portfolio standard program for energy derived from offshore wind.
Compliance with goals and restrictions that are applied only in Virginia will discourage business investment and hamper economic growth in Virginia.
No known new restrictions unique to Virginia.
A top priority should be identifying and implementing initiatives to ensure that Virginian’s have a functional transportation system that supports a growing economy now and in the future. The failure to make necessary investments in transportation infrastructure over the past two decades has resulted in significant mobility challenges for people, services, products and freight. These challenges cause a significant loss of productivity and pose a direct and serious threat to Virginia’s continued economic growth and competitiveness. Virginia has immediate maintenance, safety and mobility challenges. These challenges should be addressed with additional revenue in the short-term and a transition to a new method of payment for use of Virginia’s transportation infrastructure in the longer term.
Leveraging existing funds to allow the investment of up to $3 billion in Virginia’s transportation system would provide an immediate investment in priority projects to improve safety and mobility.
On April 30, Governor McDonnell approved the sale of nearly $500 million in bonds to advance transportation projects managed by the Virginia Department of Transportation (VDOT) and the Virginia Department of Rail and Public Transportation (DRPT). The bonds are scheduled to be sold in May 2010. In addition, the Governor has directed VDOT to sell $293 million of bonds in fiscal year 2011 and another $300 million in each fiscal year from 2012 through 2016 as part of the commonwealth's Six-Year Improvement Program.
Local jurisdictions could combine these funds within a region and apply them to projects of regional importance which would result in faster delivery of priority projects with a region.*
The transportation funding and land use policies contained in HB3202 achieved wide support within the General Assembly. The legislation should be re-constituted as it originally passed the legislature so that localities are further empowered to address unique local challenges.*
In the short run, an increase in the gasoline tax specifically targeted to capitalize the Highway Maintenance and Operations Fund would stop the ongoing drain of the transportation trust fund for maintenance backlog. In the long run (after 2025), studies have shown that the gas tax will not be a reliable transportation funding source due to the projected increase in hybrid/alternative fuel vehicles. An increase in the gasoline tax could be enacted with a sunset clause after the targeted purposed are addressed.*
In addition to tolls at Virginia’s borders, tolls on other major highways could provide revenue to maintain and expand those roads. A 2005 proposal by former Governor Baliles should be considered.*
Public-private partnership High Occupancy Toll (HOT) lanes under construction on I-495 and planned for I-395/I-95 should be more widely pursued to improve mobility. Federal law and regulation allow for broad use of pilot programs that improve transportation mobility or increase transportation capacity. Virginia should devise pilot projects that reduce transportation demand (congestion pricing) or increase capacity (use of tolls to widen roads).*
A direct road "user fee" is a charge per mile traveled on Virginia roads. Technologies are emerging that allow different types of road use to be charged differently. Virginia should be at the forefront of developing and using this technology.*
Encouraging private entities to propose PPTA projects that would provide high speed rail and expansion of freight rail capabilities could result in infrastructure investments that would provide an alternative to the automobile and would improve Virginia’s economy through greater use of the Port of Virginia.*
On average, it takes thirteen years to deliver a major infrastructure project, delays primarily resulting from federal requirements. A "Project Delivery Czar" who chairs a Cabinet level environmental streamlining committee comprised of VDOT and relevant resource agencies would help ensure that the Commonwealth is advancing projects as expeditiously as possible.*
* It is anticipated that these initiatives will be explored over the coming months with a potential special session of the legislature in September/October for action.