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Election Results: 2009 Are Changes in Store for TBED in NJ, VA?

November 04, 2009

Tuesday’s Republican victories in the gubernatorial races for New Jersey and Virginia mean a shift in political power for both states. With current fiscal conditions continuing to press state revenues lower and unemployment rolls higher, much of the new governors’ attentions could pass over tech-based economic development policies. Alternately, increased investments in TBED may be exactly what are needed right now to help create high-wage jobs in both states.

A look at the posted campaign platforms for the two successful gubernatorial candidates suggests changes are afoot in both states, if actions follow the campaign rhetoric when they take office in January. Highlights for both states follow (energy-related policies will be covered in next week’s Digest).

The website for the campaign of Bob McDonnell, a 55- year-old former state attorney general, states the governor-elect will focus heavily on traditional business recruitment/retention strategies, regionalization of job training and university research investments, and increasing higher education graduation rates.

McDonnell promises to appoint the new Lieutenant Governor as the state’s Chief Job Creation Officer, overseeing all economic development programs in the state, and to create the new position of Deputy Secretary for Commerce, who will concentrate on business recruitment in rural Virginia.

The campaign proposed doubling the state’s business inducement account, the Governor’s Opportunity Fund, to $20 million annually. The new administration also plans to re-evaluate the state’s current portfolio of tax credits and bond funding programs to determine those offering the best return on investment for the state. It will assess “whether it makes sense to have so many different incentive grants and whether we should streamline the process and consolidate these various grant programs.”

McDonnell wants to broaden the purpose of the Governor’s Opportunity Fund so it can support expansion of existing firms’ operations in the commonwealth to “allow companies that generate significant additional state and local tax revenue to qualify” even if there is not significant job creation or capital investment associated with the project. Local matching requirements also would be lowered for large projects or strategically located deals.

To reward job creation across the state, regardless of wage level or type, the threshold for the state’s $1,000 job creation tax credit would be cut in half temporarily for most of the state, to 50 new jobs instead of 100, and to only 25 jobs in economically distressed areas.

The governor-elect proposes integrating job training, economic development and advanced research funding based on intergovernmental regional strategic plans developed through public-private partnerships and new performance metrics. “It will allow us to better align university-based research and development activities with the regional potential for private sector investment and commercialization,” the website explains.

His website indicates strong support of university research. “Research and development, especially commercially viable research, is a crucial part of this initiative because it produces an especially large return on the state’s investment.” Singled out is the Commonwealth Research Initiative, a state fund that supported university-research. McDonnell would like to develop sustained support for the initiative, which has been defunded for several years, but added that it needs to include “innovative incentives for commercially viable R&D activities on a regional basis.”

Continuing on the higher education front, critical for an innovation economy, McDonnell promises to award 100,000 additional two-year and four-year degrees over the next 15 years (Virginia governors are limited to a single four-year term, it should be noted). His ultimate goal is to put the state “on track to have 55 percent of Virginians between ages 25 and 64 with college degrees.” To do this, the governor wants to institutionalize increased state support for higher education. “Higher education ought to be among our top priorities for investment,” McDonnell is quoted as saying on the campaign website.

The governor-elect also would like to increase the number of students graduating with degrees in high-demand, high-income fields such as science, technology, engineering and math.  Proposals suggested include tying state support and incentives to progress in STEM graduation rates, encouraging more K-12 students to take STEM-related studies, and recruiting and supporting more STEM educators.

More on the McDonnell campaign platform is available at: http://www.bobmcdonnell.com.

New Jersey
Chris Christie, a 47-year-old former federal prosecutor, proposes to rely predominantly on broad tax reductions – from across-the-board cuts to the income tax and corporate business tax rates to eliminating the investment taxes on NJ-based companies. He also would like to consolidate all state economic development activities into a new public-private agency called the New Jersey Partnership for Action “utilizing the resources of the current Economic Development Authority” and chaired by the Lieutenant Governor.

TBED keywords such as innovation, commercialization, research, and entrepreneurship, are not evident in the governor-elect’s campaign issues. Nor are many specific ideas, perhaps reflecting the tight fiscal constraints under which his administration will assume office. The only specific proposal to encourage economic development within the state’s urban areas is a proposal for Garden State Growth Zones, which would serve as “super zones” consolidating all the existing economic zones, incentives and loan/grant programs into one program.

For higher education, Christie plans to have the Executive Director of the New Jersey Commission on Higher Education to serve as his education advisor and to have a seat at all Cabinet meetings. Two college presidents would serve on the New Jersey Partnership for Action. He also would like to establish an outstanding scholars program to keep high-achieving NJ high school graduates in state at public and private institutions of higher education.

More information on the Christie campaign platform is available at: http://christiefornj.com

New Jersey, Virginiastate tbed