McDonnell, Deeds propose plans to revamp the state

With high unemployment throughout Southside, it’s no surprise gubernatorial candidates Bob McDonnell and Creigh Deeds have launched economic plans focusing heavily on Virginia’s rural areas in recent weeks.

From increasing the Governor’s Opportunity Fund to encouraging alternative energy development to helping small businesses, both candidates have pledged to jumpstart the economy — though they sometimes differ on how.

Rural economic development

McDonnell, a Republican and the former attorney general, pledged to designate a deputy secretary of commerce and trade to focus solely on rural economic development — someone from rural Virginia with experience in job creation — as well as appointing the lieutenant governor as the chief job creation officer.

He said the deputy secretary and governor or lieutenant governor would visit rural and struggling areas once a month to meet with local leaders.

“It’s important for Richmond to pay attention to what’s going on in Southside Virginia,” McDonnell said during his visit to Danville on Monday.

McDonnell supports expanding the major business facility job tax credit, created by former Republican Gov. George Allen and reauthorized this year by the General Assembly through 2020. The legislation currently offers $1,000 tax credits per job to companies that create at least 100 new full-time jobs, or at least 50 in an economically distressed area.

Under his plan, McDonnell proposed decreasing the 100-job threshold to 50 and from 50 to 25 in areas that are hurting.

In 1995 — under Allen — Deeds, then a member of the House of Delegates, authored failed legislation to do just that: provide tax credits to companies creating more than 50 jobs, or more than 25 jobs in economically distressed areas.

“That’s simple,” Deeds said during his visit to Danville earlier this month. “Create a job, you get a tax break. That’s good for small business, and that’s good for all businesses, because it’s revenue-neutral; it pays for itself.”

Under Deeds’ plan, he pledged to create a rural business fund to help small businesses grow in struggling areas, as well as expand nurse job training and broadband access in depressed regions of the state. Deeds also said he would pursue new markets tax credits — established by Congress in 2000 and which he said are severely underutilized in Virginia — to attract new investments to rural areas.

Governor’s Opportunity Fund

The Governor’s Opportunity Fund — a discretionary fund used to help seal the deal in attracting new businesses to Virginia — has received a fair amount of attention from both campaigns thus far.

Both candidates have pledged to double the fund, although Deeds has criticized McDonnell for only recently supporting the fund after voting in 2002 and 2004 to cut $16 million from the it. House Minority Leader Ward Armstrong, D-10th District, has also been vocal in criticizing McDonnell’s past votes against the economic development tool.

“Three times, while Mark Warner was governor, he (McDonnell) voted to decimate that fund,” Deeds said while in Danville. “He voted to slash $16 million from that fund, so it’s a little hollow to say, in an election year, that he’s for it.”

Deeds proposed to double the $20 million fund and add an additional $10 million specifically for job training.

During McDonnell’s town hall meeting in Danville last Monday night, a member of the audience asked him to defend his past votes.

“There were some votes in the early part of this decade to increase the Governors Opportunity Fund,” McDonnell said. “We seemed to be doing a pretty good job overall of competing with other states in economic development. I did vote that way (against the increase); that is a correct statement … Those votes were a long time ago and I think a lot has changed.”

McDonnell has proposed to double the fund to about $40 million every two years and relax the regulations, allowing more businesses to qualify for funding.

Encouraging entrepreneurship

McDonnell has been vocal about alleviating the regulations and taxes that small businesses face and has proposed streamlining the current paperwork and application processes for business startups online. During his town hall meeting, he noted that 75 percent of all new jobs are created by small business people.

“I’d love to see the next Bill Gates come from Danville, Virginia,” he said.

McDonnell also supports employing the federal Historically Underutilized Business Zones program, which encourages economic development in economically depressed areas, and proposed mandating that at least 15 percent of all contracts go to small businesses.

Deeds also proposed simplifying the process for small business owners and entrepreneurs through making all applications available online at the existing Business One Stop Web site. He pledged to establish an office within the Department of Business Assistance with the sole function of assisting small business startups.

“If you start a business,” Deeds said on a tour of downtown Danville, “if you take a chance, you build wealth, you feed your family, you start a foundation to build generational growth. Change — that’s what it’s all about.”

Going green

Both candidates have pledged to make Virginia a leader in green energy jobs and research. Businesses like Piedmont BioProducts in Gretna are already on the forefront of alternative energy research, while revitalizing Southside’s economy at the same time.

Despite impressive research at universities across the state, Deeds’ plan states “Virginia lacks a coordinated research and development strategy for supporting technology start-ups that create high-paying jobs in high-growth industries.” He has pledged to create an energy-based association to secure federal grants, build three new biomass facilities and create a national marketing program.

Deeds will also offer grants to green energy companies that invest at least $50 million and create at least 200 jobs.

McDonnell pledged to transform Southside and southwest Virginia into “America’s Energy Corridor,” with the help of funding from the Tobacco Commission, by attracting private investment and coordinating grant opportunities. He wants to establish a Virginia Energy Institute to manage academic research under one umbrella, as well as a Center for Energy, part of the Virginia Economic Development Partnership.

McDonnell also fully supports drilling for oil and gas off the coast, and using 80 percent of the tax revenue for transportation and 20 percent toward green and alternative energy tax credits and research.