Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, April 17, 1993 TAG: 9304200402
SECTION: EDITORIAL PAGE: A7 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
GEARING UP FOR ECONOMIC GROWTH
IF A stable tax structure and competent management of the state government's fiscal affairs were the only criteria for success, recruiters of new business would have no cause to complain about Gov. Doug Wilder's efforts to enhance economic development in Virginia.Unfortunately, Wilder's determination not to raise taxes during his administration, and his handling of fiscal hard times (which won Financial World's ranking of Virginia as the best-managed state in the nation), do not equate with an aggressive economic-development program.
Business leaders and industrial recruiters have cause to complain that Wilder has been too complacent about economic development - and that, as a result, the state is losing ground to competitors.
This needs to be corrected. As was noted by participants at a Virginia Economic Summit in Richmond earlier this month, the state can't afford passively to assume that traditional assets - location on the Atlantic seaboard, the right-to-work law, and so forth - will be enough to stay competitive. Not when other states are beefing up their economic-development efforts and providing more incentives for companies to locate within their borders.
The governor is right to insist that Virginia avoid the game of "throwing money at companies," in the form of tax breaks and lavish giveaways to entice them here. For one thing, this wouldn't be fair to businesses already in the state. For another, Virginia's Constitution prohibits special incentives benefiting only one company.
In any case, some states that have gotten into this game have discovered it's not such a winning proposition. Employers have whisked in to take advantage of tax incentives only to whisk out again when the incentives run out or a better deal appears elsewhere.
Even so, Virginia could do more to build on incentive programs it already has, and to develop new incentives that address particular areas of businesses' concerns. It would not be giving away the store, for instance, to expand training efforts, or to shore up a $4.5 million Governor's Opportunity Fund that the General Assembly created in 1992.
This fund permits the governor to sweeten the pot and close a deal when a Virginia locality is bidding against an area outside the state for new business investments. Loans or grants from the fund can be used by the locality to, say, spruce up infrastructure that would serve the business.
Thus was Altavista, to take a recent example, able to close a deal on a $20 million plant expansion at Ross Laboratories with the help of a $250,000 grant from the state fund to expand a sewage-pumping station. Government giveaway? No, a practical decision to make a capital investment benefiting not just Ross'sparent company, Abbott Laboratories in Illinois, but the entire community of Altavista, and Virginia's tax coffers as well.
A study done for the Virginia Chamber by the National Association of State Development Agencies also makes this point: Virginia's position, vis a vis other states competing to attract new business, is weakened by its lack of a long-term comprehensive economic-development plan.
"Virginia needs to reassess how it wants to be positioned for attracting new industry and for retaining the healthy and growing businesses in place," the study said. While it's generally agreed that the state has done well in the past to recruit new firms and retain existing ones, it is "falling behind the pack" in strategic planning for economic growth.
We would add that Virginia needs also to do a better job recognizing the diverse needs and strengths of various regions within the state, helping each to develop and implement a distinct strategy. In this regard, take a page from North Carolina's successful economic-development playbook. Virginia needs to do more, as well, to promote export opportunities across the state.
Perhaps the most important task, though, is to prevent the erosion of Virginia's traditional economic-development assets. These include, prominently, its system of higher education, its public schools, its transportation network - business lures that have not kept pace, in part because of Wilder's budgeting decisions.
The challenge of retooling the state's economic-development program will fall before long to a new governor. He or she will need to approach the endeavor with a sense of urgency that, unfortunately, has not been evident under Wilder.