Virginia Economic Development

Policy Update – The 2017 Virginia

General Assembly

Chesapeake Economic Development CouncilMarch 10, 2017

Christopher D. LloydSenior Vice President, Infrastructure and Economic Development

Challenges Facing Virginia’s Economy

• Shift from high paying jobs to lower paying jobs

• Stagnant retail sales

• Declining federal and military spending

• Insufficient funds to meet infrastructure needs

• Underinvestment in universities, particularly research

Setting the Stage – 2017 Session

• Virginia facing $1.5 billion budget gap

• Uncertainty about federal spending and policy

• Less money than expected for transportation

• New lease deal on Virginia’s Ports

• JLARC study recommends significant changes at VEDP on operations, planning, incentives management

• Growing distrust between executive and legislative branches

• It’s an election year!

What Happened?• Commonwealth Opportunity Fund survives at

historically high levels (~$20 million/year)• 2016 VEDP funding increase maintained• Reorganization of VEDP, greater collaboration

with localities and GO Virginia required• Heightened scrutiny of state incentives• New site development funding erased• New incentive tools for localities created• No change in corporate income tax (but tax

reform could emerge as election issue)• GO Virginia funding

Issues to Watch for 2017/2018

• Reorganization of VEDP

• Contrasting visions for Virginia’s future likely to be top issue in gubernatorial race

• Redistricting uncertainty

• Military resurgence?

• Impact of Trump trade and regulatory policies

• GO Virginia implementation

A BUSINESS-LED STATEWIDE INITIATIVE

TO GROW AND DIVERSIFY THE PRIVATE SECTOR

IN EACH VIRGINIA REGION

“Create more higher paying jobs through incentivized collaboration, primarily through out-of-state revenue, which diversifies and strengthens the

economy in every region”

7

GO Virginia Purpose Statement

Virginia Payroll Job Change: Private SectorThe Great Recession and Recovery To Aug 2016

-2

-19

-12

-9

-75

-18

-6

-69

-19

-35

-4

-25

-100 -80 -60 -40 -20 0

Mining & Logging

Information Svcs

Wholesale Trade

Transp. & Utilities

Construction

Financial Svcs

Other Services

Manufacturing

Leisure & Hospitality

Retail Trade

Educ & Health Svcs

Prof. & Bus. Svcs

(000s)

Source: Bureau of Labor Statistics (Seasonally Adjusted), GMU Center for Regional Analysis

4

21

10

23

20

1

54

37

77

88

- 20 40 60 80 100

To Aug '15

Aug '15-Aug '16

(~2007 - ~2010)

Total -293(~2010 - Aug ’16)

Total 335Ranked by Size in 2015

Commonwealth of Virginia

Average Job Contribution to Gross State ProductBy Private Sector in 2015 $s

Sector Average Job Contribution to GSP

Leisure & Hospitality Services $38,000

Retail Trade $61,637

Education & Health Services $66,868

State and Local Government $69,804

Construction $83,100

Transport/Warehousing $109,136

Military $125,215

Professional & Business Service $145,211

Wholesale Trade $158,875

Federal Government $163,125

Manufacturing $186,311

Information Services $336,162

Financial Services $491,636

All Private Sectors Average $127,630

All Government Average $117,432

Source: IHS Economics, GMU Center for Regional Analysis

The GSP* Effects of Private Sector Job Change

in the Commonwealth of Virginia,

March 2008-August 2016 (in 2015$s) __________________________________

Job Average Total

Change GSP* Value GSP* Value

-293,300 $152,807 - $44,818,293,100

+335,400 $114,793 38,501,572,200

+ 42,100 - $6,316,720,900

Source: GMU Center for Regional Analysis *Gross State Product

• Governor reduced budget to $20,450,000

• General Assembly recommending restoration of $7.5 million

• Conference report provides up to $650,000 per region for growth and diversification plan, $20 million + for project grants

11

General Assembly Budget Action - 2017

• March 14, 2017 – Certify Regional Councils and Support Organization, adopt growth and diversification plan guidelines

• April and June 2017 Board Meetings – Review work plans and provide initial funding for growth and diversification plans

• April 2017 – Statewide orientation session

• April – September 2017 – complete guidelines process

• June and September 2017 Board Meetings – Accept regional plans, solicit project ideas 12

Next Steps

Questions or Comments?

www.mcguirewoodsconsulting.com

/McGuireWoodsConsulting

@chrislloyd_mwc

© McGuireWoodsConsultingLLC