JLARC Report – Economic Development Incentives & Film Incentives
The Joint Legislative Audit & Review Commission have released two draft reports on economic development incentives and film incentives.
Virginia spent $1.5 billion on economic development incentives from FY10 to FY16 (July 1, 2009 – June 30, 2016). Three thousand three hundred and seventy-nine projects received grants. Completed projects created 45,000 jobs and $7.5 billion was spent in capital investment or other spending. Ten localities received 49% of all of the awards.
- City of Newport News, 9.5% of total amounts
- Fairfax County, 6.8%
- Loudoun County, 5.2%
- Greensville County, 5.2%
- Henry County, 5.2%
- City of Richmond, 4.4%
- Brunswick County, 4.3%
- Mecklenburg County, 3.2%
- Chesterfield County, 2.7%
- Pittsylvania County, 2.6%
When analyzed by per capita, southside and southwest Virginia receive the largest share of the incentives. This is due to the resources obtained through the Tobacco Commission. The Tobacco Commission was established to “revitalize tobacco-dependent communities” and the 1998 Master Settlement Agreement with the four largest tobacco companies funded the creation of the Commission. The Tobacco Commission has identified 40 tobacco dependent localities and the Eastern Shore of Virginia is not part of the Commission region.
One of the incentives, the Virginia Spaceport Users Exemption in the FY10-FY16 time frame provided $700,000 in tax exemptions. The Spaceport Exemption is designed to promote spaceport operations at the facility owned by the Virginia Commercial Space Flight Authority which is located on Wallops Island in Accomack County.
JLARC in the Film Incentives report found that the two incentives have a low return, 20 cents for one dollar in one and 30 cents for one dollar in the other. JLARC found that “the film tax exemption has little effect on film location decisions, a negligible benefit to the Virginia economy, and provides a negligible return on the state’s investment. However, the exemption addresses imperfections in the sales and use tax system.” JLARC recommends elimination of the tax exemption and the grant and makes recommendations for the General Assembly, if they choose to offer an incentive.
The full reports can be obtained at JLARC Reports.