WEYERS CAVE — Multiple rankings indicate that Virginia’s status as a business-friendly state continues to slip, a panel of lawmakers representing the Shenandoah Valley acknowledged Wednesday.
Though some of the slide can be attributed to the loss of jobs from federal spending curbs, the delegates said during the fourth annual Valley Business Summit that Virginia could become better for business owners by reducing their tax burden and eliminating unnecessary regulations.
Del. Steve Landes, R-Weyers Cave, told dozens of business leaders at Blue Ridge Community College’s Robert E. Plecker Workforce Center that he learned Monday that Virginia faces a $268 million budget shortfall this fiscal year.
Revenues aren’t meeting projections because its economy is growing at between 2 and 3 percent, he said, about half the normal post-recession growth rate.
“That means,” he said, “the economy in Virginia is underperforming.”
Some employers, Landes continued, are having trouble finding employees to fill skilled-trade positions. Others note that many millennials fail drug tests, which they view as a signal that the potential employee might not be reliable
Del. Ben Cline, R-Rockbridge, said Virginia generally has had Republicans or moderate Democrats as governor during Democratic presidencies, and they’ve shunned some of the more liberal ideas flowing from Washington, D.C.
However, in Gov. Terry McAuliffe, Cline said, Virginia for the first time has a governor who’s “working in tandem” with President Barack Obama’s administration, and that’s leading to the declining view of Virginia in the business world.
“For the first time, we’re seeing the impact on Virginia business,” he said, “of the aligning of those two administrations.”
Tax, Regulation Cuts
Cline, vice chairman of the House Finance Committee, said the panel is reviewing tax credit and incentive programs to determine which ones are helping business growth and which ones aren’t effective. Their hope is that they eliminate programs that aren’t working and use the cost savings to provide a tax break for businesses.
He also thinks it would be wise to repeal some regulations, eliminating a few hoops business owners must jump through.
The best way the state can help businesses, Cline said, “is by getting out of the way.”
To help businesses, Landes said he thinks the state should look more to infrastructure investments as opposed to incentive grants because having pad sites ready for large industrial users is vital to landing major manufacturers. Virginia also must have broadband access statewide and a well-educated workforce.
The state is looking at overhauling its education system, and Landes said he supports a proposal to have high school students spend time in area businesses in their junior or senior years to learn about the expectations in a business environment. Students interested in skilled trades could shadow workers in those industries, while college-bound students could help out in occupations in which they’re interested.
Keynote speaker Beth Milito, an attorney with the nonprofit National Federation of Independent Business, told the business leaders that lawsuits the organization and others have filed have halted the implementation of two environmental regulations deemed bad for business. They are the Waters of the United States rule, which she said could affect many farmers and ranchers negatively, and the Clean Power Plan. The court system will decide the fate of those regulations.
But NFIB, which represents 325,000 small and independent businesses, hasn’t acted to block a new federal overtime rule from going into effect and questions whether such efforts would be successful, so she advised business owners to comply as of Dec. 1.
The rule boosts the salary many employees must be paid to be exempt from federal overtime rules to $47,476 from $23,660.
Del. Tony Wilt, R-Broadway, said the rule is going to increase the cost of doing business for his company, Superior Concrete, and that expense will be passed on to customers.
“I cannot absorb the increases,” he said. “At the end of the day, it’s going to increase inflation, adding costs to businesses.”
Milito said the Obama administration also has taken actions to reduce the number of people who work for businesses as independent contractors. Such contractors aren’t covered by many federal regulations, such as unemployment and worker’s compensation, and the administration’s stance is that many contractors really act as employees.
“He wants to ensure more workers are covered by labor and employment laws,” she said.
One of the problems, she said, is that the Internal Revenue Service and Department of Labor have different tests to discern whether a worker is an employee or independent contractor. The difference leads to confusion among some business owners.