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Proposals Aim to Attract Renewable Energy Companies to Virginia

January 07, 2009

Last month, Gov. Tim Kaine unveiled proposed amendments to the fiscal year 2008-10 biennial budget and announced a new initiative aimed at creating jobs by attracting renewable energy companies to Virginia. The governor will seek legislative support for both proposals in the coming months.

The Renew Virginia Initiative is the governor's plan to boost job creation and position the state as a leader in alternative energy generation and R&D. Gov. Kaine created a new Interagency Task Force for Energy Project Recruitment that consists of state agencies, university research centers and federal labs. The Virginia Economic Development Partnership is charged with assembling a marketing plan for promoting the state.

The FY09 executive budget includes new funding proposals, outlines the October reductions approved by Gov. Kaine, and recommends further reductions for the remainder of the biennium. Virginia is facing a projected budget deficit of $973.6 million in FY09 and $1.5 billion in FY10, according to estimates reported by the state to the National Conference of State Legislatures. Gov. Kaine recommends withdrawing $490 million from the Revenue Stabilization Fund to help balance the FY09 shortfall.

To stimulate the state's economy during the national downturn, Gov. Kaine recommends smaller reductions and adding new investments for economic development agencies and programs. This includes a $5 million increase in the Governor's Opportunity Fund, which provides grants and loans to assist in job creation. Gov. Kaine also has proposed a new income tax credit and a sales tax exemption designed to attract green industries. The proposed Renewable Energy Income Tax credit provides both individual and corporate tax breaks for installation of renewable energy property and the Energy Efficient Systems Sales and Use Tax Exemption applies to renewable energy systems installed on residential property.

Funding for the Virginia Economic Development Partnership was cut by $1 million in FY09 as part of the approved budget reduction plan. Gov. Kaine recommends an additional reduction of $1.43 million in FY10 for a total budget of $16.1 million in FY09 and $16 million in FY10.

The combined reduction for the Innovative Technology Authority - the governing body of the Center for Innovative Technology - is $1.5 million over the biennium. The budget reduction plan approved by the governor in October reduced by 30 percent the number of companies supported by the Growth Acceleration Program and reduced by $250,000 funding to the Virginia Electronic Commerce Technology Center. Gov. Kaine recommends consolidating the Innovation Technology Authority board with the research and development board and replacing general fund appropriations with lease revenue related to a newly proposed public-private partnership for a cost savings of $458,003 in FY10.

Higher education funding would be cut by 15 percent in the second year of the proposed budget and funding to community colleges would be reduced by 10 percent.

The FY 2009 Executive Budget is available at: http://dpb.virginia.gov/budget/buddoc09/index.cfm.

A press release outlining the Renew Virginia Initiative is available at: http://www.governor.virginia.gov/MediaRelations/NewsReleases/viewRelease.cfm?id=832.