In closing the Volkswagen USA deal, which will bring 400 jobs and a $100 million investment to Fairfax County, the Kaine administration committed $6 million in state funds to grease the skids — more than the state/regional funds invested in all other economic development projects across the state combined so far this year.
The VW subsidies include $1.5 million from the Governor’s Opportunity Fund to assist Fairfax County with the project and $4.5 million in funds from the Virginia Economic Development Incentive Grant (VEDIG).
That compares to $5.265 million for all other economic development projects across the state combined, including monies invested by the Virginia Tobacco Indemnification and Community Revitalization Commission. (I tallied these numbers from press releases posted at the Virginia Economic Development Partnership website.) The other, non-VW, economic development projects accounted for $724 million in total investment and 2,300 new jobs.
As I’ve always maintained, corporate recruitment is an effective economic development strategy in parts of the state where a significant percentage of the workforce is either unemployed or underemployed, and where job creation is not overwhelming the ability of state/local governments to provide roads, infrastructure and public services. But, as argued in “The Bug in the Ointment,” it makes less sense for the state to subsidize job creation in Northern Virginia, where infrastructure is overloaded.
I’m not blaming anyone in particular for this mismatch. Everyone is just doing their job. But that’s the problem: It’s time to re-think economic development priorities. Of all gubernatorial administrations in my memory, the Kaine administration is more acutely aware of the trade-offs between the traditional model of economic development and growth management issues. I’m surprised that the Governor signed off on the VW subsidy.
Update: As I go through the deals announced in 2006, I see that the state made significant investments in a number of downstate projects: $19 million for SRI Inc., in Rockingham County, $5.9 million for Swedwood North America in Danville, and $6.6 million for ABB in Halifax and Bland Counties. I mention this because it would be unfair to imply that the Kaine administration is neglecting the interests of downstate Virginia.