Getting Virginia to Work
It'll take investment.

Friday, September 4, 2009

VIRGINIA'S gubernatorial candidates, Democrat R. Creigh Deeds and Republican Robert F. McDonnell, are engaged in a frenzy of promise-making focused on improving the economy and creating jobs. So exquisitely detailed are their platforms to revive, reinvigorate, reform, renew, replenish, kick-start, streamline, boost, promote and expand the state's anemic business climate that a voter could get double-vision combing through it all -- in which case he could claim workers' comp and call it a day.

Both candidates would provide tax incentives for businesses that create jobs; focus on job creation in rural and distressed communities; boost the tourism sector; and stress training and education in science and technology. Mr. McDonnell makes a point of his commitment to efficient government, noting that before he resigned as attorney general a few months ago, he cut his own salary and returned his official vehicle to the state. Not to be outdone, Mr. Deeds, a state senator, says that as governor he would require every one of the commonwealth's scores of agencies to undergo a top-to-bottom efficiency review once a decade and in the meantime mandate that they justify and explain every last nickel of spending.

In such a haze of claims and pledges, it's better to set aside the verbiage and examine what the candidates have actually done in the way of job creation. A case in point is their respective votes on the Governor's Opportunity Fund.

The GOF, created in the early 1990s, has been a useful tool in Virginia's kit when it comes to encouraging firms to expand and attracting new companies, sometimes in the face of stiff competition from neighboring states. Used at the governor's discretion, it sweetens the deal for companies by helping to pay for land, roads, sewers and other infrastructure. Virginia officials say that the 188 projects that benefited from the fund in the seven years ending last December have netted the state $1 billion in revenue, mostly in income taxes. Even allowing for some creative accounting, that looks like a decent return on a relatively modest investment of $72 million from the fund during the same period, or $188 million if you include other incentives provided by Richmond.

Both candidates say they'd double the state's allocation to the GOF, which now stands at about $10 million a year, down by a third from its peak a decade ago. But while Mr. Deeds has generally been an advocate for the fund, Mr. McDonnell's enthusiasm for it -- and more broadly for economic and job-creating policies -- is newfound. In 2002, as a member of the Republican majority in the House of Delegates, he backed bills to slash the GOF's funding even as tens of thousands of Virginians lost their jobs in the dot-com bust. Two years later, he voted to eliminate most of a $5 million increase that had been proposed for the fund, which by then was already diminished.

Mr. McDonnell's campaign says his recent change of heart was prompted by severe job losses in the current downturn and stiffer competition from other states. But it's hard to avoid the conclusion that his conversion is a political convenience. At crucial moments he has tended to regard public investment -- in education as well as in transportation and other infrastructure -- as profligate government spending. In 2004, for example, he voted against Gov. Mark Warner's tax package, which pumped badly needed new revenue into public schools and preserved Virginia's triple-A bond rating, thereby saving the state millions of dollars in interest payments. Whatever the benefits of corporate incentives like the GOF, they pale in comparison to the lure of good roads, schools and higher education.

Given the state's current travails -- a jobless rate that has tripled to about 7 percent and that is much higher in distressed pockets of the south and southwest -- we hope Mr. McDonnell is prepared to invest in Virginia's future should he become governor. But there is little in his record to suggest that he would.

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