THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Monday, June 12, 1995 TAG: 9506100015
SECTION: FRONT PAGE: A8 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 58 lines
A special task force of legislators and gubernatorial appointees has begun studying the incentives that the state and local governments are offering companies to come here.
The most recent dangled carrot was the $1.8 million in incentives that the Newport News Industrial Development Authority handed ValuJet Airlines Inc., an Atlanta-based discount airline. Beginning July 11, ValuJet will provide flights out of Newport News/Williamsburg International Airport. The company, which calls itself the Wal-Mart of airlines and uses old planes, also received assurances that Virginia will finance a $285,000 passenger loading bridge and was told its landing fees at the airport might be slashed by a third.
In April, Motorola received $85.6 million in state incentives as part of an agreement to build a $3 billion high-tech factory in Goochland County providing 5,000 jobs.
Recently James River Corp. chairman Robert C. Williams let it be known that ``a Motorola-type package'' would help persuade his Fortune 500 company to stay in Richmond.
Tax money is flowing into private hands. Deals are flying. What's happening?
``We have a game with no rules,'' says Sen. Charles Hawkins, R-Chatham, a member of the state task force, ``and it's difficult to understand what the limitations are on what we can do. What we have may be working fine, but no one knows for sure yet.''
A year ago, Volvo GM Heavy Truck Corp. negotiated a $30 million incentives package in return for a $200 million expansion in Pulaski County. The sweetness of that deal led to a push for tighter controls on Virginia's incentives.
But before there can be controls, the task force must determine ways to measure the right quantity of incentives for different deals.
The incentives take the form of free roads, parking lots, sewer lines, cut-rate land, money with which to train employees and other subsidies that reduce a company's costs of doing business.
Mark Warner, state Democratic chair and likely 1996 candidate for the U.S. Senate, said recently that the Motorola incentives, pushed by Governor Allen, were justified, because the high-tech plant will lead to high-tech spin-off companies, in addition to the 5,000 high-paying jobs promised.
But when Newport News offers incentives to get airlines there, rather than in Richmond or Norfolk, the state hardly wins. And when Hampton Roads governments bid against each other, the region loses. Must Norfolk now offer an airline $3 million?
Secretary of Commerce and Trade Robert Skunda said, ``We're moving toward a much more disciplined process for looking not only at giving out incentives and whether they are justified or not but what kind of payback are we going to get and how soon.''
Good. by CNB