NVTC's 2016 General Assembly Session Wrap-up

On March 11, the Virginia General Assembly adjourned sine die concluding the 2016 legislative session.

During the 60-day long session, the General Assembly tackled more than 2,000 bills related to a broad array of issues and policies. The General Assembly is scheduled to convene for a one-day Veto Session on April 20. In the interim, Gov. McAuliffe will be reviewing legislation and resolutions that were approved by the General Assembly. When the Veto Session convenes, legislators will have an opportunity to act on bills that may be vetoed or amended by the Governor.

NVTC's specific legislative priorities for the 2016 Legislative Session were outlined in a letter to policymakers before the session began. NVTC maintained a full-time presence in Richmond throughout the session to actively advocate on behalf of the technology community.

Specific legislation of interest to the technology community included:

Data Centers: Extending Virginia's Sales & Use Tax Exemption

NVTC led an effort this year to enhance Virginia's statewide competitiveness in attracting data center investment and jobs by extending the sunset on Virginia's data center sales tax exemption. This exemption, which helped make Virginia the largest data center market in the U.S., was scheduled to end in 2020. Legislation sponsored by Sen. Frank Ruff (SB64) and Del. Tim Hugo (HB872) extends Virginia's sales tax exemption for qualified data centers until 2035. The legislation was approved by the General Assembly and has been signed into law by Governor McAuliffe.

As part of this advocacy effort, NVTC released a research report, The Economic and Fiscal Contribution that Data Centers Make to Virginia, earlier this year, which was produced by Richmond-based Mangum Economics and which demonstrates the positive economic impact of data centers on Virginia's economy.

Separately, NVTC opposed legislation sponsored by Del. Bob Marshall (HB1297), which would have required local zoning ordinances across Virginia to provide that proposed data centers be located only in areas that are zoned for industrial use or that data centers not in industrial zoned parcels incur the costs for any utilities or other infrastructure that may be required. HB1297 was tabled in committee and did not move forward this session.

Research & Development Tax Credit

NVTC led the effort in 2011 to establish Virginia's refundable R&D tax credit for small businesses and in 2014 NVTC successfully led an effort to strengthen it.

NVTC worked this year with a coalition led by NVTC member company Raytheon to pass legislation sponsored by Sens. Ryan McDougle, Janet Howell, Frank Ruff (SB58) and Del. Tim Hugo (HB884), and supported by Governor McAuliffe, which establishes a new $20 million R&D tax credit for larger businesses with Virginia research and development expenses in excess of $5 million, and increases funding and the per company cap on the R&D tax credit for small businesses. Both of these credits are important tools in enhancing Virginia's competitiveness as a preferred location for research investment and activity. The legislation passed the General Assembly and has been signed into law by the Governor. Del. Eileen Filler-Corn also sponsored a similar bill (HB1100), which did not move forward.

Additionally, NVTC opposed legislation sponsored by Del. Peter Farrell (HB1355), which would have eliminated the refundable aspect of Virginia's R&D tax credit for small businesses, significantly diminishing its utility for smaller technology businesses. Delegate Farrell struck the legislation and it did not move forward this session.

Angel Investor Tax Credit

NVTC has worked over the years to support a strong Angel Investor Tax Credit in Virginia to encourage technology investment and job growth across the Commonwealth. Virginia's current credit has a cap of $5 million and it is oversubscribed. In FY2014, investors submitted applications for $9 million in tax credits resulting in each investor receiving approval for a prorated credit (55.38 cents on the dollar). To address oversubscription and keep the credit viable, NVTC supported legislation championed by Governor McAuliffe this year, which would have increased funding for the credit from $5 million to $9 million. The legislation was sponsored by Sen. Janet Howell (SB200), Sen. Ryan McDougle (SB749) and Del. Eileen Filler-Corn (HB660). At the same time, NVTC opposed legislation sponsored by Del. Peter Farrell (HB28), which sought to eliminate the credit altogether due to concerns about its efficacy and effectiveness.

While NVTC was able to maintain the credit by successfully opposing HB28 in committee, the House of Delegates was sensitive to concerns about the effectiveness of the credit and the legislation to increase funding did not move forward. The legislature will be studying the Angel Investor Tax Credit over the next year and NVTC will continue to advocate for a strong credit.

Unmanned Aerial Vehicles/Systems (UAVs/UAS)

NVTC supported legislation introduced by Del. Terry Kilgore (HB412), which establishes a 3 year moratorium to prevent Virginia localities from regulating the use of privately owned UAS and to prevent a patchwork of local restrictions and regulations. The legislation passed the General Assembly and has been sent to the Governor for review and action.

Separately, NVTC shared concerns related to several bills that sought to create new UAS-specific criminal and civil laws, primarily related to privacy. While well-intentioned, the bills proved problematic and unworkable and did not move forward in the House or Senate. These bills included: SB584 (McEachin), SB729 (Stuart), HB89 (Cole), HB269 (Cole), HB538 (Minchew), HB561 (Lingamfelter), HB737 (Orrock), HB878 (Hugo), HB1141 (Fariss), and HB1248 (Albo). NVTC will continue to provide a voice for the technology community on this issue over the coming year as the Virginia Crime Commission studies UAS-related issues and legislation.

GO Virginia

NVTC supports the GO Virginia initiative, which is a bipartisan and business-led effort focused on creating economic incentives for localities and regions to collaborate together to make meaningful progress on infrastructure and other regional investments. Specifically, Go Virginia will incentivize localities and public and private sector entities to collaborate and act together, and money from the state would only go to those localities or projects where there is significant public sector and/or private sector collaboration. The Go Virginia legislation was sponsored by Sens. Frank Ruff and Dick Saslaw (SB459), Tommy Norment and Janet Howell (SB449), Dels. Tim Hugo, Matthew James and Randy Minchew (HB846) and Dels. Kirk Cox Cox and Luke Torian (HB834). The bills were approved by the legislature and sent to the Governor for review and action. The legislature included $36 million in funding for GO Virginia in the budget sent to the Governor.

Virginia Research, Development, and Commercialization Fund

NVTC supported legislation sponsored by Delegate Chris Jones (HB1343), which establishes the Virginia Research, Development, and Commercialization Fund to promote research, commercialization and recruitment of eminent scholars at Virginia colleges and universities. Areas of focus include cyber security, data analytics, biosciences, and personalized medicine. The legislature approved HB1343 and sent it to Governor McAuliffe for his review and action. Additionally, the budget approved by the legislature includes $22.0 million in funding to support the initiative and an additional $29.0 million in bond proceeds for the acquisition of research equipment and renovations in support of the effort. Additionally, the legislature approved the eventual sale of the CIT Building with proceeds dedicated to the fund.

Workforce Credentials in High Demand Fields

NVTC was part of a coalition in support of legislation sponsored by Sen. Frank Ruff (SB576) and Del. Kathy Byron (HB66), which establishes the "New Economy Workforce Credentials Grant Fund" with the aim of focusing the alignment of workforce training programs with the needs of business and industry. This legislation is the first pay-for-performance program for award of workforce credentials in the country where the state will pay up to $3,000 per student who receives a credential in a high demand field (including cybersecurity and other technology areas). There were several additional House workforce bills HB792 (James), HB793 (James), HB1206 (Greason), which have been incorporated in this legislation. HB66 and SB576 passed the General Assembly and have been signed into law by Governor McAuliffe. Additionally, the budget approved by the General Assembly and sent to the Governor includes $12.5 million to support the workforce credentials initiative, $6 million for equipment needed by career and technical training programs, and $1.5 million for a veterans' portal to strengthen outreach to this key population.

Student IP Policies

In an effort to encourage more student innovation and entrepreneurship, NVTC supported legislation initiated by Governor McAuliffe and sponsored by Del. Charniele Herring (HB1230), which requires the boards of visitors of state-supported institutions of higher education to adopt policies that are supportive of the intellectual property rights of matriculated students who are not employed by the institution. The bill passed the General Assembly and is awaiting the Governor's signature.

Procurement/Limitations of Liability

NVTC, working with the Greater Richmond Technology Council, supported legislation sponsored by Sen. Bryce Reeves (SB150) and Del. Glenn Davis (HB930), which prohibits a public body from requiring that an offeror state any exception to liability provisions in responding to a Request for Proposal for IT goods and services. Instead, the bill allows for liability exceptions to be stated during the negotiation phase of a procurement. SB150 and HB930 have been approved by the General Assembly and signed into law by Governor McAuliffe.

Tax Incentives for Solar Energy Projects

NVTC supported a Technology Leaders for Renewable Energy Coalition in advocating for legislation sponsored by Del. Jackson Miller (HB1305) seeking to make Virginia a more competitive location for solar energy development. The legislation allows for an 80% tax exemption on machinery, tools, and equipment for future solar projects starting January 1, 2017 and sunsetting in 2024. In addition, the bill grandfathers the current 100% exemption for small solar developers. Under current law, the exemption is only for projects equaling 20 megawatts or less. HB1305 was approved by the General Assembly and is awaiting action by the Governor.

Employment Nondiscrimination

Over the past several years, NVTC has worked to support legislation that would prohibit public sector employment discrimination on the basis of sexual orientation. This legislation fosters fair treatment in the workplace, benefits technology employers by promoting employment and retention of a critical talent pool and benefits higher education institutions in their recruitment and retention of faculty and researchers who train the workforce and help drive our innovation economy. This session, there were several pieces of legislation related to employment nondiscrimination sponsored by Sens. Adam Ebbin and Don McEachin (SB12) and Dels. Ron Villanueva (HB429), Kaye Kory (HB179), David Toscano (HB913), and Mark Levine (HB1005). All of these measures were defeated in the House of Delegates.

Airbnb/Limited Residential Lodging Act

NVTC supported legislation sponsored by Sen. Jill Vogel (SB416) and Del. Christopher Peace (HB812) to establish the Limited Residential Lodging Act. This legislation aimed to protect the ability of Virginians to share the use of their primary residence to earn extra money through hosting platforms such as Airbnb. Specifically, the legislation prevents local government prohibition while establishing an innovative and efficient mechanism for the collection and remission of applicable taxes on short-term rentals. While supported by NVTC and the Virginia Chamber of Commerce, the legislation was opposed by the hotel and hospitality industry, the Northern Virginia Chamber of Commerce, and other hospitality-related business associations. The legislature approved the legislation and sent it to Governor McAuliffe for his review after adding a re-enactment clause requiring that the legislature approve it again next year before it becomes law. The Virginia Housing Commission will study the issue in the interim.

Computer Trespass Laws

NVTC spent the past year working with the Virginia Attorney General's office and the Governor's Cyber Security Commission to help develop legislation to update Virginia's computer crimes laws. The legislation, which was sponsored by Del. Monty Mason (HB923), would lower the standard of intent in Virginia's computer crimes laws from "maliciously" to "knowingly". It also includes a safe harbor provision in the bill to clarify that the prohibitions under Virginia's computer trespass laws are not intended to proscribe legitimate commercial activity. Several delegates were concerned that the bill was too broadly crafted and the legislation was tabled in committee and did not move forward.

Coding Included in Standards of Learning

NVTC supported legislation sponsored by Del. Tag Greason (HB831) and championed by CodeVA and Microsoft, which would require the Standards of Learning established by Virginia's Board of Education to include computer science and computational thinking, including computer coding. HB831 passed the General Assembly and has been sent to the Governor for review and action.

H1B Visas/ Disparate Tax Treatment for Businesses

NVTC strongly opposed HB110, sponsored by Del. Mark Cole, which would have disqualified businesses that hire H1B workers from deducting wages, salaries, and other benefits paid or incurred on behalf of those employees. HB110 was tabled in House committee.

Cyber Security Research Fund

NVTC supported legislation sponsored by Sen. Frank Wagner (SB747) and Del. Glenn Davis (HB929), which originated as a recommendation from Governor McAuliffe's Cyber Security Commission and the General Assembly's Joint Commission on Technology and Science. The legislation would have created a new dedicated fund to provide matching funds for businesses that engage in collaborative cyber research with Virginia universities. The McAuliffe Administration opposed this legislation in favor of alternative research priorities and initiatives and it did not move forward.

Specific budget actions of interest to the technology community include:

  • Global Genomics and Bioinformatics Research Institute
    NVTC supported an initiative to provide targeted investment in life sciences and personalized medicine by launching the Global Genomics and Bioinformatics Research Institute at the new Inova Center for Personalized Health to leverage Virginia's life sciences and health assets, the data analytics and cyber capabilities of our technology sector, and the strengths of our universities. The legislature included $28 million in support of the initiative in the budget they sent to the Governor.

  • CIT/MACH37
    NVTC advocated for budget amendments sponsored by Sen. Jill Vogel and Del. Tag Greason to provide $1 million in additional funding to sustain and grow Virginia's MACH37 Cybersecurity Accelerator. The legislature included an additional $500,000 in the budget sent to Governor McAuliffe. The legislature did not increase increase funding for the CIT GAP Funds and the Commonwealth Research Commercialization Fund (CRCF).

  • Commonwealth Advanced Data Analytics Alliance (CADAA)
    NVTC enlisted the support of seven other Virginia technology Councils in advocating for a Commonwealth Advanced Data Analytics Alliance (CADAA), which was proposed in Governor McAuliffe's introduced budget. CADAA aimed to help leverage Virginia's strong capabilities in data analytics by making strategic investments to bring together universities, the private sector, and government around core data analytics capabilities in core sectors. Read the Tech Councils letter here. While this initiative was not funded in the General Assembly's budget, the new Virginia Research, Development, and Commercialization Fund includes data analytics as an area of emphasis and provides a potential funding source.

  • Cyber-security
    NVTC supported $15 million in funding included in the Governor's budget proposal for several of the workforce and education recommendations forwarded by the Virginia Cyber Security Commission including a Scholarships for Service tuition program, a new cyber apprenticeship program, funding to increase the number of Virginia colleges and universities certified as Centers for Academic Excellence that meet national standards for cybersecurity training, and the launch of a new, virtual cyber range. The budget approved by the legislature included $4.0 million in funding to support a cyber-range and $800,000 for George Mason University to develop a pathway program to attract and train veterans for cyber security careers.

    Additionally, the legislature included in their budget $750,000 to support the development of an Information Sharing and Analysis Organization (ISAO) under the Secretary of Technology to facilitate the sharing of cyber threat information between public and private sector organizations and $17.4 million to increase IT security architecture capacity, support the creation on IT Shared Cyber Security Center within state government and support a web-based one stop for cyber security related jobs, degrees and certifications across the Commonwealth.

  • Funding for Dulles International Airport
    NVTC is part of a coalition of business associations and chambers of commerce in support of Governor McAuliffe's budget proposal to make a one-time investment of $50 million over two years to improve the competitiveness of Dulles International Airport by reducing the cost per passenger enplanement. Read the Coalition letter here. The General Assembly included $50 million in funding in the budget sent to Governor McAuliffe.

  • Unmanned Systems
    The legislature included $1.4 million to support Virginia's unmanned systems industry for development of commercial centers of excellence and ground support facilities for Wallops Island.

  • Virginia Biosciences Health Research Corporation
    Governor McAuliffe had included $17.5 million over the biennium in his introduced budget in support of the Virginia Biosciences Health Research Corporation as part of his biosciences initiative. The legislature approved $7.5 million over the biennium.

  • Broadband
    The legislature provided $1.3 million per year for planning and implementation grants to expand broadband in unserved areas.

For more information about NVTC's advocacy efforts, please visit us online at www.nvtc.org/advocacy.