It’s no accident that Virginia ranked No. 1 in Forbes Magazine’s 2006 ranking of the business climates of the 50 states. We are blessed by geography — a central location on the Mid-Atlantic seaboard, and proximity to the federal feeding trough in Washington, D.C. — but the Commonwealth also has consistently pursued business-friendly policies over the decades. In this document, “Rating the States – a Closer Look,” the Senate Finance Committee takes a detailed look at why Virginia compares so favorably.
Among the factors subject to influence by public policy are these:
- Tax burden. Absolute state/local tax burden is one of the lowest in the country; Virginia ranked 41st in 2006. Even more impressively, when ranked as a percentage of personal income, Virginia’s tax burden was the 49th lowest in the country. Virginia state/local taxes claimed 16.1 percent of personal income, versus a national average of 20.3 percent.
- Labor costs. Virginia has a right-to-work law and low workers compensation costs.
- Energy costs. Despite the fact that Virginia is not an energy-rich state, outside of the far Southwest coalfields, the average cost per unit of electricity for industrial customers was 4.04 cents in Virgina vs. 5.02 cents nationally.
- Human capital. Virginia ranks 7th in the nation for percentage of population with a college degree. Additionally, the labor force is growing consistently more rapidly than the national averages. Despite the fact that 60 percent of all newcomers to Virginia come from outside the United States (can you believe that?), more than 70 percent have some college education or degrees.
- Regulatory environment. Virginia’s environmental and workplace regulations rarely exceed federal regulations in severity. The U.S. Chamber of Commerce ranks Virginia among the top four states in the country as far as legal fairness.
- Conservative government. Virginia is one of nine states in the country with a AAA bond rating. The Government Performance Project gave Virginia the second highest grades in the country, ranking behind only Utah, for how well the states manage their money, people, technology and infrastructure.
- Quality of life. Virginia has less poverty and a significantly lower crime rate than the rest of the country. The number of Virginians with medical insurance is a little higher than the national averages.
The report wasn’t all rah-rah. It pointed out several weak spots in Virginia’s business climate — none of which will come as a surprise: increasing traffic congestion, unaffordable housing and regional decifiencies in educational attainment.
Overall, “Rating the States” is very thorough and well worth perusing.