A Good Defense is the Best (Economic) Offense

By Mike Signer | March 7, 2011 | No Comments

Interesting article in today’s RTD about a new mechanism to increase economic development in embattled areas.  These are “defense production zones,” which give Virginia’s localities new rights to attract businesses.

Incentives could include reduced business and professional license taxes, reduced machinery and tool taxes, and easing up permitting requirements for relocating companies.

The bill passed unanimously in the Senate.  Its patrons were Sens. A. Donald McEachin and Walter A. Stosch and Del. Christopher K. Peace.

This is a great development for Virginia’s economic development.  The article cites Henrico County specifically.  I sit on Virginia’s Board of Medicine.  We meet in the abandoned Circuit City campus, which includes several huge office buildings in Henrico County.  There are thousands of square feet of space, ready to be occupied by new businesses and new jobs.

That office park is a symptom of a bigger problem.  In addition to Circuit City, Henrico County lost employers Qimonda and LandAmerica over the last three years. 2/3 of all the jobs lost in the Richmond metropolitan region were in Henrico.

But the county still has the infrastructure and skilled, hard-working employers to make any defense company happy and successful.

To clear up one question about this promising development:  An alien visiting from Mars might ask why a Virginia city has to ask the General Assembly for permission to pass a tax incentive to draw, say, a company that designs technology for the Army to counter Improvised Explosive Devices (IEDs).

The alien is right to be confused — Virginia has an extreme version of something called “Dillon’s Rule,” a traditional judicial and statutory rule where judges usually strike down any local action unless it’s explicitly authorized by Richmond.

Just think of the development that could happen if localities didn’t have to go on bended knee to Richmond to unleash their economic potential.  Reform has been proposed for decades (check out this 1982 law review article for an example).  Real reform would be a lot of tough sledding — but that doesn’t mean we shouldn’t keep the conversation going.

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