Virginia Small Businesses Shortchanged by Government

Date: November 18, 2015

While politicians often pay lip service to small businesses for their job creation and economy boosting, big businesses are the ones who are awarded most of the state-level economic development incentives, according to a new study by Good Jobs First.

The study, funded by the Surdna Foundation and Ewing Marion Kauffman Foundation, looked at more than 4,200 economic development incentive awards in 14 states—including Virginia—and found that 70 percent of the awards and 90 percent of the dollars went to large companies.

In Virginia, the study analyzed the Virginia Jobs Investment Program between 2011 and 2014, which covered 339 deals totaling $36.7 million (after removing two deals for lack of data). Big businesses (Tyson Farms, DuPont and Home Depot), the study says, received 75 percent of the deals and 91 percent of the dollars. VJIP is geared toward manufacturing facilities, regional distribution centers, corporate headquarters for companies with multiple facilities, information technology services for businesses, and research and development facilities. Under VJIP, businesses with fewer than 250 employees must create five new jobs and make a minimum investment of $100,000 to be eligible. Businesses with more than 250 employees must create 25 new jobs and make a minimum investment of $1 million.

“Given small businesses’ important role in the economy—and their still-lingering credit access problems coming out of the Great Recession—this massive allocation of tax breaks to big businesses is wasteful and ineffective economic development policy,” the study said.

Good Jobs First also recommended that states reform their incentive rules by narrowing eligibility to exclude large recipients.

Related Content: Small Business News | Virginia

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