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Virginia spending more on development deals, GOP scrutinizes

February 1, 2016

RICHMOND, Va. (AP) — It’s a key part of being Virginia’s governor: using cash, tax breaks or other incentives to lure companies to expand or relocate in the Old Dominion.

But now some Republican lawmakers, in the wake of a high-profile deal gone sour in the Lynchburg area, say the ever-increasing amount of money the state gives to companies through various programs needs a closer look.

A new report released Monday by the House Appropriations Committee shows that ongoing incentive programs have grown 84 percent since fiscal 2010 and have totaled $463 million.

“The big picture here is that over the last two governors, coinciding with the Great Recession, we have an explosion or a mushrooming” of spending on economic development programs, said GOP Del. John O’Bannon. “It is time for us to do a much better job of evaluating these.”

Both Democratic Gov. Terry McAuliffe and his GOP predecessor, Gov. Bob McDonnell, worked to develop new incentive programs and made economic development cornerstones of their administration. McAuliffe is asking for $140 million in new spending related to economic development incentives in his proposed $109 billion biennial budget, according to House Appropriations Committee Chairman Del. S. Chris Jones.

Some Republicans have been critical of the McAuliffe administration for its handling of a failed deal in the Lynchburg area. An investigation by The Roanoke Times discovered lax vetting of a Chinese company’s rosy pitch that secured $1.4 million from one of the governor’s incentive funds. The state is now seeking the return of the incentive to Lindenburg Industry LLC.

Jones said his concerns about the rising cost of economic development incentives predates the Lindenburg deal, but that it underscores the need for greater diligence of how public funds are spent.

“It just reaffirms the fact that I thought we need to have better oversight,” Jones said, adding that he plans to include language in the budget directing the state’s watchdog agency do a comprehensive study of the state’s economic development incentives.

Brian Coy, a spokesman for McAuliffe, said economic development incentives have a strong rate of return for taxpayers and the governor is “looking forward” to discussing how to improve programs with GOP lawmakers.

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