ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, March 1, 1996 TAG: 9603010047
SECTION: EDITORIAL PAGE: A-6 EDITION: METRO
A $460,000 grant from the Governor's Opportunity Fund, for site development, wasn't the biggest item in the package luring R.R. Donnelley & Sons Co. to the Roanoke Valley. But, say state and regional economic-development officials, it was an important ingredient, meeting the deal-closing purpose for which the fund is designed.
The size of the Donnelley project is unusual: The Chicago-based printing company is expected to employ at least 175 in new jobs, and eventually perhaps as many as 750, and to invest $102 million in the first two phases of plant construction. But there's nothing unusual about the success of Opportunity Fund grants in closing a deal by supplementing local efforts. The point should be kept in mind by General Assembly budgeteers, as a conference committee hammers out final details of the state's 1996-98 budget.
The fund was established late in the administration of former Gov. Douglas Wilder; most of the activity has occurred under George Allen, who has invested more effort in economic development. In all, some $25 million in Opportunity Fund grants has helped close deals statewide involving $2 billion in private investment and 18,500 new jobs. Some of that - $8 million in grants linked to 17 projects involving more than $450 million in private investment and 3,600 new jobs - has been spent in the New River and Roanoke valleys and Allegheny Highlands.
This year's budget contained $16.6 million for the fund. Gov. Allen's budget proposed an increase to $18 million in 1996-97 and $20 million in 1997-98, or $38 million for the biennium. The Senate agreed to $35.5 million, but the House of Delegates wants to cut the two-year figure to $18 million.
The Allen administration is pressing for an Opportunity Fund appropriation closer to its request than is in the House budget, and with justification. The grants are a tool that helps Virginia compete with other states for new jobs, yet stay within Virginia's appropriate policy of using job-recruitment money for infrastructure improvement and worker training rather than direct payments to corporate coffers.
Generally speaking, incentives are overrated in their effectiveness, often unfair to existing businesses, and easily subject to abuse. The major part of economic development is still the indirect part: building and maintaining an attractive quality of life, good schools, efficient delivery of public services, a stable and skilled work force, a ready supply of available sites.
Even so, in the current competitive environment, Virginia can't afford to skimp on the nuts and bolts of working with specific prospects on specific deals - including, when appropriate, a judicious use of Opportunity Fund grants to close deals.
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