Virginia aims for diversity with new economic plan
According to a recently released report, the Virginia economy will have to diversify and be less reliant on public sector jobs on the federal, state and local levels to maintain a steady economy for years to come.
The New Virginia Economic Strategic Plan, a report commissioned by Gov. Terry McAuliffe in August, was released to the public this month. The report stated Virginia’s assets for attracting and growing businesses, the state’s economic risks and five strategies and goals the state will have to adopt moving forward.
Maurice Jones, secretary of commerce and trade, chaired the report’s steering committee. He said he is very satisfied with how the report turned out.
“I feel very good about the assets Virginia has and the state’s ability to use those assets,” Jones said. “I believe the plan is a good framework for us to work with and the five priorities listed in the report will resonate with what we already do well.”
One of Virginia’s assets, the document stated, is the commonwealth’s “pro business climate” with a corporate tax rate of 6 percent for more than 40 years and .75 percent below the national median. Also mentioned in the report is the Commonwealth’s AAA bond rating, which it has maintained since 1938, longer than any other state.
“These assets show two things, namely, that Virginia has a really resilient pro-business climate and is very stable for businesses,” Jones said. “Maintaining that climate over the past forty years has been a priority no matter what party is in charge.”
“The AAA bond rating adds emphasis to that fact that Virginia is not only great for enterprise, but that our own enterprise, as a state government, is run in a fiscally sound manner,” Jones said.
Another asset listed in the report is the state’s workforce. The report stated Virginia’s higher education system is the 11th largest in the nation, with 80,000 students graduating with associate’s, bachelor’s, master’s and doctoral degrees a year. There are more than 500,000 students enrolled in more than 90 in-state institutions, as well as 800,000 veterans in the state. Also, the report noted Virginia has the highest concentration of private sector high tech workers in the country.
“The workforce is the state’s most important asset and the quality of talent found in Virginia is world class,” Jones said. “Even in areas where people might not have bachelor’s degrees, we have an experienced workforce who is ready to lead the way with a 21st century renaissance in manufacturing.”
In 2013, Virginia totaled $34 billion in exports around the world, with Canada being the largest recipient. The report stated Virginia exported $15.2 billion in manufacturing goods, $16 billion in services and $2.5 billion in agricultural goods. Infrastructure was cited as a major asset, due to the state’s six maintained interstate highways and 50-foot deep channels at the Port of Virginia, the deepest on the Atlantic Coast, as well as the state’s 14 commercial airports.
“The quality of our goods, combined with the fact we are a gateway for the world market, is great for positioning Virginia as an export leader,” Jones said. “With 80 percent of the world’s purchasing power outside the U.S., we anticipate seeing more exports.”
However, the report also noted Virginia’s risks, which are mainly tied to the state’s reliance on federal and public sector spending. The report stated 13 out of Virginia’s top 20 largest employers are public sector or contractors dependent on the public sector, with the Defense Department being the largest employer. With 30 percent of Virginia’s economy tied to federal spending, the 15.2 percent decrease in federal spending between 2011-2014 and the $9.8 billion cut by the Department of Defense has resulted in a loss of nearly 22,000 Virginia jobs. The gross state product in 2012-2013 was .06 percent for Virginia, a 1.78 below the national average, ranking the commonwealth 48th in the union for growth.
“We anticipate public sector expenditures to be flat or even decline in the foreseeable future,” Jones said. “What we’re doing is trying to sound the alarm across the commonwealth that we need to take our great assets and use them to diversify the economy.”
The report recommended Virginia try to balance its reliance on the public sector by diversifying the economy. The report identified five key components for diversifying the economy, including identifying high-growth industries such as advanced manufacturing, cyber security and tourism, maintaining the state’s pro business climate providing, support for start up companies and small firms, improving the Virginia workforce and creating project ready sites for firms interested in Virginia.
“We need to take a multi-disciplinary approach to diversifying the economy by taking what we’re not doing good and remedying that and taking what we’re great at and making it even better,” Jones said.
Contact staff writer Henry Culvyhouse at 540-465-5137 ext. 184, or email@example.com