According to CNBC’s rankings, Virginia continues to slide down the list of the best places to do business. Last year, Virginia was ranked 8th. Now, we are ranked 12th. This is consistent with a trend noted in this column in April.
In 2013, Governor McAulliffe campaigned on the platform that he could take his successful business acumen and transfer it to the Governor’s mansion. At the time, many of us disputed McAuliffe’s claims that he was successful in building any businesses, though he always ended up making money for himself. The voters disagreed and sent him to Richmond.
Unfortunately for our economy, the latest business rankings come on top of the recent report that 2014 showed zero GDP growth in the Commonwealth. Last year, Virginia ranked 48th in economic growth according to the Commerce Department, just ahead of Alaska and Mississippi.
Governor McAuliffe may be trying, but it is clear the path we are on is heading the wrong way.
Here in Arlington, it was reported this week that our new Director of Economic Development Victor Hoskins has a plan to effectively cut our office vacancy rate in half over the next 75 months.
Arlington’s leaders should not act surprised at the 21% office vacancy rate today. It is no secret that we are never going to return to spending at 2009 federal government stimulus levels, nor should we. Federal deficits are still running nearly half a trillion dollars every year, and they are projected to rise to nearly a trillion over the next decade despite taking in record levels of your tax dollars. Arlington will also not get back the federal occupants of office space lost to BRAC.
The Board has been aware of this changing federal presence for years and has seemingly done little to stem the tide. While the details of the new plan were not reported in the Washington Business Journal, it was described as ” A mix of much more aggressive marketing efforts, incentives and other government aid, and the help of “frenemies” in competing local governments such as the District and Alexandria.”
Use of the word “frenemies” aside, nowhere does it appear that Hoskins is proposing that the County Board change policies to make Arlington more competitive. For example, abolishing the BPOL tax is not under consideration.
Arlington remains some of the most valuable real estate in the United States. The federal government will continue to provide us with a foundation of economic support, but location is not enough. And to be competitive for businesses, you cannot just throw some marketing plans, incentives and other shiny objects around.
Arlington is learning the hard way that if you are not improving your overall business climate, you are going to lose out to neighboring jurisdictions. Like our elected officials in Richmond, we must create a more favorable tax climate and a regulatory structure that is consistent and not overly burdensome. Whether at the state or local level, the fundamentals count.
With my final Modern Mobility column I’d like to look back at the last few years and look ahead to the next few.
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