The biggest hurdle for the state’s next governor will be to find a way to reenergize Virginia’s economic momentum. The candidates recognize the challenge, but their plans for confronting it diverge: Terry McAuliffe (D) wants to enhance grants, tax breaks and other incentives to attract businesses, while Ken Cuccinelli II (R) says such programs are not as effective in creating jobs as just cutting taxes.
For McAuliffe, a former Democratic National Committee chairman, the question of business incentives has a personal connection. After his failed 2009 gubernatorial bid, he started work on building GreenTech, an electric car company he founded before resigning as chairman last year.
In deciding where to put the firm’s manufacturing plant, government incentives were among the items on his shopping list. While Virginia officials were still considering his plans, the company received millions of dollars in incentives from Mississippi and began operations there. As McAuliffe sees it, business incentives can be pivotal.
“Incentives play a critical role in making Virginia a competitive state in which to grow or locate your business,” McAuliffe said in response to a questionnaire from the Virginia Economic Developers Association. “For many years, Virginia was able to get by without having a robust incentive program by virtue of our proximity to the federal capital and the tremendous amount of military spending in Virginia.”
McAuliffe has promised to expand Virginia’s already broad array of incentive programs to better target growing industries, including biotechnology.
Cuccinelli, the state’s attorney general, is more circumspect. He says incentives have value, but he worries that they put too much power in the hands of state officials to pick economic winners and losers.
Cuccinelli has promised to analyze the long list of the state’s incentive programs — which range from tax breaks for businesses that establish on-site day-care facilities to grants for firms that create more than four jobs in a year.
“Incentives have a place,” Cuccinelli told the nonpartisan Virginia Prosperity Project. But, he added, “my measure of success of a good tax incentive is one that helps beyond the business that is targeted, so that it helps the rest of the community that is paying for it.”
He said the best job-creation tool is to lower taxes across the board, which he said would enhance Virginia’s business environment for all companies.
McAuliffe, who has said he would not raise taxes, called Cuccinelli’s tax-cut proposal “fiscally irresponsible” because it would drain badly needed revenue, leaving the state unable to make needed investments that also help the job market, including transportation and education.