Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, April 9, 1993 TAG: 9304090210
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: WARREN FISKE STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium
VA. NEEDS INCENTIVES, STUDY SAYS
Virginia must expand its economic development effort - including offering financial incentives to prospective businesses - or risk falling behind other states, a study released Thursday concludes."Virginia needs to reassess how it wants to be positioned for attracting new industry and for retaining the healthy and growing businesses in place," according a consultant's report by the National Association of State Development Agencies.
The study, commissioned by the Virginia Chamber of Commerce, was released to about 300 business and government officials attending a daylong Virginia Economic Summit.
The conclusions were based largely on a survey of 25 state government corporate leaders by the national association.
Virginia received high marks for creating a "pro-business" climate because of its transportation network, laws barring compulsory union membership, relatively low taxes and honest government.
But those surveyed reported a growing concern about Virginia's lack of a "long-term, comprehensive" economic development plan, its slowness for issuing environmental permits and inability to lure prospective businesses with financial incentives such as tax breaks, favorable interest rates on loans or help with start-up costs.
The study noted that other states increasingly are offering incentives to get an edge in the competition for new industry. It questioned whether Virginia can continue to succeed with its "minimalist approach."
The study said "Virginia is competing with mid-Atlantic and Northeastern states who boast a wide array of well-financed incentive plans. Virtually all of the states in the traditional area of competition are now actively engaged in the financing business."
In reply, Virginia Secretary of Economic Development Cathleen Magennis described incentives as "a buzzword that people cling to as a panacea."
Magennis said many states are offering open-ended incentives "with no firm idea what it's going to cost them in the long run."
She noted, for example, that South Carolina recently attracted a BMW automotive plant by offering incentives that could cost the state $150 million to $300 million.
Some states, she added, even have bought computers for new businesses. "Unless they're offered across the board to all businesses, it gives one company a competitive advantage," she said.
Magennis said Virginia's best tools for recruiting business are to continue and improve programs to build infrastructure and educate the work force.
She predicted that Virginia will continue to be an attractive business site because of its low corporate tax rate and history of fiscal prudence. `These are the things that speak volumes to companies looking for stability,` she said.