RICHMOND — Some of Virginia’s most powerful business people, college presidents and elected officials want to use nearly $40 million in taxpayer dollars to create a grant program that they say will grow the economy through regional collaboration.
Sponsors of legislation filed Tuesday in the General Assembly establishing the initiative say it will combat Virginia’s slowing economic growth and a decline in federal defense contracts that had sustained jobs and manufacturing industries for decades.
But good-government groups and strict conservatives questioned the wisdom of elected officials shifting decisions to handpicked business and education leaders who are not held accountable by voters.
One part of the grant program, GO Virginia, would set up a state board to establish regional councils that can apply for money to create jobs, training programs and other economic development projects. The state board and the regional councils would be led by business people who would have wide-ranging authority to set grant guidelines, choose the grant winners and shut down projects that don’t perform as expected.
A second program would give cities and counties that work together a large chunk of the income tax revenue from new jobs they had a hand in creating.
House Majority Leader M. Kirkland Cox (R-Colonial Heights), who filed the GO Virginia grants bill with Del. Luke E. Torian (D-Prince William), said the effort is unlike existing boards, departments and councils also devoted to economic growth.
“There’s never been a proposal before where we’ve tried to bring all the various people together. It’s not just new infrastructure per se, it’s also them trying to come up with innovative cost-saving strategies and rewarding them for that,” he said.
Anna Scholl, executive director of the left-leaning ProgressVA, said the program raises questions about how much authority lawmakers are giving corporations to disburse public funds and whether the board has representation from true mom-and-pop’s or only large corporate interests.
“Is this corporate welfare or is this about new employers that will create good-paying jobs in the commonwealth? Those are questions that need to be answered before this sails through the General Assembly,” she said.
Two dozen power brokers and influential Virginians trumpeted GO Virginia in a polished nine-minute video. Boosters include Dominion chief executive Thomas F. Farrell II and John O. “Dubby” Wynne, chairman of the Hampton Roads Community Foundation and former chief executive of Landmark Communications.
Gov. Terry McAuliffe (D) is on board, too — his two-year budget includes $38 million to fund the effort and pay for two new state employees.
Despite support among Democrats and Republicans and groups from across the state, the concept could raise the ire of those wary of government intervention in the free market.
Del. Robert G. Marshall (R-Prince William) questioned the program before the bills were released, saying that instead of “goodies for friends of those in power,” the money would be better used to fix roads. “Some conservative claim they want hands off of business. Well, it looks like GO Virginia is a handout to business,” he said.
Cox countered that business people — not government — will lead what he called a “bottom up” effort using firsthand experience in what has worked for their companies.
“We applaud GO Virginia for offering a Reaganesque prescription for our stagnant Virginia economy — one that relies on the creative ingenuity of free people and the productive potential of free enterprise,” Cox and Sen. Mark D. Obenshain (R-Rockingham) wrote in a op-ed that appeared in the Richmond Times-Dispatch last week.
The Virginia Business Higher Education Council, whose board members include Farrell and Wynne, hired the lobbying giant McGuireWoods to craft the bills, with input from lawmakers and business using models from Michigan, Georgia, Indiana and Colorado.
“If there is anything that can begin to change the paradigm so that what government spends on job training, research and economic development actually matches what job-creating businesses need and the marketplace is demanding, it is this initiative,” said Frank Atkinson, chairman of McGuireWoodsConsulting.
Cox’s bill sets up a 23-member Virginia Growth and Opportunity Board, including 12 business people, eight lawmakers and the state secretaries of commerce and trade, education and finance. The House, the Senate and the governor can each appoint four business people. Senate Majority Leader Thomas K. Norment (R-James City) and Sen. Janet D. Howell (D-Fairfax) filed a slightly different Senate version of the bill.
The board will create eight to 10 regional councils made up of 11 to 21 members, including some small-business representation. Each council will receive $500,000 in start-up money to figure out the region’s needs. Then they can apply for grants from a pool of money divvied up by population and a separate pool of competitive dollars.
Grant applications will be public, with an exception carved out for the “discussion or development” of potential grants at the regional council level.
A second grant program, Virginia Collaborative Economic Development Act, rewards cities and counties that team up to promote economic development.
Localities that create at least 200 new jobs and an economic impact of at least $25 million will receive a grant equal to about half of the income tax withholding from the new jobs. The Virginia Economic Development Partnership will get a cut as well.
Senate Majority Leader Richard L. Saslaw (D-Fairfax) and Sen. Frank M. Ruff Jr. (R-Mecklenburg) filed one version, Del. Timothy D. Hugo (R-Fairfax), Del. J. Randall Minchew (R-Loudoun) and Del. Matthew James (D-Portsmouth) filed another.
Ruff said he’ll offer an amendment to lower the threshold to 25 jobs and $1 million for communities with above average unemployment rates. That would apply to his Southside district that has suffered huge losses with the erosion of tobacco and textile industries.
“Anything that we can do on the state level to increase employment should be our goal and this works toward that process,” he said.