Share

Virginia appreciates business...with lots of welfare

|
Opinion Zone,Norman Leahy

Mark your calendars, Virginia, because Gov. McDonnell has decreed that May 2-6 will be “business appreciation week” the commonwealth.  While this special week has been set aside for years, the press release touting this year’s announcement contained some information that was rather eye-popping.

Consider this section from the release:

The Virginia Department of Business Assistance (VDBA), created by the Virginia General Assembly in 1996, provides a one-stop-service for technical assistance related to business formation, access to capital, and workforce development. VDBA works with existing businesses as they grow their workforce and mentors entrepreneurs from ideas to launching their first business venture. To accomplish the objectives set forth in Governor McDonnell's Economic Development and Jobs Creation agenda, VDBA has provided $1.37 billion in financing for Virginia businesses, provided technical assistance to over 16,250 businesses and will host over 60 Entrepreneurial Workshops statewide this year.

How can such a relatively small agency provide such outsized financing to businesses? Through an in-house finance shop that provides loans, loan guarantees and a bond program, for starters.  While not unique to Virginia, it is quite an operation.

But that’s just part of the financial wizardry underway at the VDBA.  Some of it is old fashioned grant making, as a look at the agency’s “grants to nongovernmental agencies” makes clear.

Through the second quarter of this fiscal year, the VDBA has handed out over $4.5 million worth of grants to companies like Sara Lee,  Kraft Foods, Capital One, General Dynamics, cable television shopping channel QVC (for a distribution center), Hilton Hotels, Rolls Royce and more.  

Ostensibly, all these grants are to help businesses recruit and train workers for their operations. Multiple press releases from the Governor’s office have told us that much. But here was never a dollar figure attached to those vague promises of assistance. Now we get some answers.

It is interesting to note, though, that earlier this year, the Attorney General’s office issued an advisory opinion stating that the General Assembly could not issue grants to non-state agencies (meaning private nonprofit groups).  The reasoning was simple: the state constitution barred such grants because it could lead to all sorts of mischief.

The mischief continues, but for the benefit of businesses, rather than nonprofits.

Regrettably, there is no constitutional provision to prevent it. Just remember that as you celebrate business appreciation week.

View article comments Leave a comment