February 12, 2013

In This Issue

2013 Legislative Session in Richmond Passes Halfway Mark

Stay Connected with NVTC's Advocacy Team in Richmond

2013 Legislative Session Convenes in Richmond

NVTC leaders and staff meet with Gov. Bob McDonnell and Sec. of Technology Jim Duffey on a recent trip to Richmond.
(L-R): NVTC Vice President of Policy Josh Levi, CIT Chair David Lucien, NVTC President and CEO Bobbie Kilberg, Gov. McDonnell,
NVTC Chair Brad Antle, NVTC TechPAC Chair Dendy Young, Sec. of Technology Duffey and NVTC Public Policy Manager Joe Vidulich

Tuesday, Feb. 5 marked crossover at the General Assembly, the deadline for each house to act on its own bills. Crossover not only marks the mid-point of the legislative session, but also gives a clear look at legislation that was approved by at least one house and also legislation that will not move forward this session.

On Feb. 7, the House and the Senate each adopted amendments to the second year of the biennial budget submitted by Gov. Bob McDonnell. Each Chamber has appointed budget conferees to work out the difference between their budget bills.

Technology-related legislation that is moving forward:

Cybersecurity Accelerator
The House budget includes a $2.5 million budget amendment submitted by Gov. McDonnell and Del. Tag Greason to launch a new cybersecurity accelerator at the Center for Innovative Technology. The Senate budget includes $1 million of the $2.5 million budget request made by Gov. McDonnell and Sen. Ryan McDougle. The cyber accelerator is a top NVTC priority and NVTC is strongly advocating for the full $2.5 million as budget conferees begin to meet to reconcile their budget differences.

Angel Investment Tax Credit
The House budget also includes an NVTC priority amendment introduced by Del. Steve Landes which increases funding for Virginia's oversubscribed angel investment tax credit from $4 million to $4.5 million in 2013 and $5 million in 2014. NVTC is strongly advocating that this funding be included in any final budget agreement.

Data Center Incentives
HB1699 (Comstock/Byron) and SB1133 (McDougle) are now identical NVTC priority bills that provide local governments new tools to attract and retain data center jobs and investment by allowing them to adopt a separate personal property tax rate for computers and peripherals used in data centers. The House approved HB1699 and sent it to the Senate while the Senate approved SB1133 and sent it to the House.

HB2313 (Ramadan) creates a $250 income tax credit for employees who telework a minimum of 20 hours per week during at least 45 weeks of the taxable year. This legislation passed the House and will be considered by the Senate's Finance Committee this week.

NVTC supported legislation (HB1872, McClellan) which clarifies that crowdfunding investments will qualify for Virginia's angel investment tax credit and other investment oriented tax incentives. The legislation has passed the House and is now under consideration by the Senate.

Digital Accounts of Deceased Minors
The House and Senate each have approved bills that allow the personal representatives of deceased minors to request and receive the minors' digital account information and assets from online technology and telecommunications businesses. The sponsors of HB1752 (Bulova/Wright) and SB914 (Ruff) substantially narrowed this legislation from its introduced version in response to concerns from technology businesses about conflicting criminal and civil federal laws that prohibit disclosure of subscriber information in most circumstances.

One Stop Business Registration
The House and Senate each approved bills requiring the State Corporation Commission (SCC) to fully integrate processes and forms into the Business Permitting Center administered by the Department of Business Assistance. The legislation also requires the SCC to process all forms within 48 business hours from the time the applicant submits the form electronically. HB1760 (Ramadan) and SB1137 (McWaters) are now up for consideration in the Senate and House respectively.
Federal Action Contingency Trust (FACT) Fund
In addition, last year, the legislature established a $30 million Federal Action Contingency Trust (FACT) Fund which is intended to provide the governor with resources he can utilize to help Virginia respond to impending federal budget cuts. The FACT Fund, which the governor wants to increase to $50 million this year, is intended to assist localities impacted by Base Realignment and Closure (BRAC) Commission decisions, to continue statutorily required, federally mandated services at the present level if federal budget reductions are imposed, and to address unique economic development opportunities to attract businesses in targeted sectors to help transition industries negatively affected by federal budget reductions or BRAC recommendations.

NVTC is recommending that $5 million from the fund be directed to Virginia's Commonwealth Research Commercialization Fund (CRCF) to stimulate multi-university and industry cooperative cyber research projects focused on developing new cybersecurity solutions to enable new scientific discovery for industry application. These cyber research projects will create a pipeline of graduates with advanced degrees to grow Virginia's competitiveness in attracting federal and commercial cybersecurity business. The Senate budget narrows the use of the fund solely to offset federal spending cuts and forecloses the use of the fund to address unique economic development opportunities to attract businesses in targeted sectors. NVTC is advocating to provide maximum flexibility in how the FACT Fund may be utilized.

Although dozens of bills were introduced this session seeking to address Virginia's transportation funding challenges, very few remain. Sen. Walter Stosch introduced SB1313, a bill that allows localities to adopt a local income tax of up to 1% upon the Virginia taxable income of Virginia residents and corporations without submitting it to public referendum and without a sunset clause. It passed the Senate and is now being considered by the House Finance Committee.

Gov. McDonnell introduced a bill that was sponsored by Speaker Bill Howell and Del. Tim Hugo in the House (HB2313) and Sen. Steve Newman (SB1355) in the Senate, and supported by NVTC. The legislation called for:
  • The elimination of Virginia's 17.5 cents/gallon tax on gasoline. The tax on diesel fuel will remain unchanged.
  • An increase to Virginia's sales and use tax from 5% to 5.8%, with revenue from the 0.8% increase dedicated to transportation.
  • An increase to Virginia's existing sales tax commitment to transportation from 0.5% to 0.75% phased in over the next five years.
  • Establishing a new $100 Alternative Fuel Vehicle Fee for electric and hybrid motor vehicles.
  • An increase in the motor vehicle registration fees by $15.
  • Dedicating a portion of the funds from changes in federal law related to out-of-state Internet sales tax to transportation, Virginia's localities and public education.
The legislation in the Senate failed to make the crossover deadline and advance to the other chamber. In the House, delegates amended the legislation to remove the Alternative Fuel Vehicle Fee, added a prohibition on tolling on I-95 south of Fredericksburg and added language regarding regional transportation initiatives. The Senate Finance Committee will now consider the proposal on Tuesday, February 12th.

Technology-related bills that did not survive crossover:

Computer Search and Seizure
HB2050 (Webert) and SB1030 (Reeves) provide that any search warrant issued for the search and seizure of a computer, computer network, or other device containing electronic or digital information shall be deemed to include the search and seizure of the physical components and the electronic or digital information contained in any such device or network. The bills also provide that the search of the contents of any such device or network may be done in any location and is not limited to the location where such device or network was seized.

NVTC raised constitutional concerns regarding this legislation and also concerns that the legislation could unnecessarily lead to the disruption of mission critical computers and networks of Virginia businesses. The sponsors of this legislation agreed to send them to the General Assembly's Joint Commission on Technology and Science (JCOTS) where they will be studied by a working group once the legislative session ends.

Computer Trespass
SB1173 (Obenshain) was introduced at the request of Attorney General Ken Cuccinelli to remove the malicious intent requirement from Virginia's computer trespass statutes. NVTC shared concerns that this legislation would criminalize legitimate technology business activity and the attorney general and bill sponsor agreed to strike the bill and send it to JCOTS where it will be studied by a working group once the legislative session ends.

In-State Procurement Preferences
HB1951 (Yancey) and SB990 (John Miller) authorized state agencies to award procurement contracts to the lowest in-state bidder, if the bid of a Virginia business is within a certain percentage or dollar amount of the lowest bid of an out-of-state bidder. NVTC met with the bill sponsors and shared concerns that this legislation would trigger "reciprocal treatment from other states/localities, escalate preference "wars" with other states and raise the cost of procurement. The bill sponsors both agreed to strike their bills.

New Intermediary Liability Standards for Virginia Internet Companies
HB2135 (Hugo) was introduced at the request of the attorney general to make the misleading, deceptive, or fraudulent use of a trademark, service mark, or other mark, as defined in Virginia's code, a prohibited practice under the Virginia Consumer Protection Act and to impose liability on third party technology businesses for violations by their advertisers.

While NVTC strongly supports protecting consumers from deceptive or fraudulent advertising, whether it occurs online or offline, NVTC shared concerns that this legislation would harm Virginia Internet-related businesses by going far beyond well-understood standards and remedies imposed under federal intellectual property laws, impose a new vague standard and also subject Virginia businesses to frivolous lawsuits by plaintiffs' lawyers for hefty statutory damages. The sponsor of the bill and the Attorney General agreed to strike it and send it to JCOTS where a working group will study it once the legislative session ends.

Trade Secrets
HB2064 (May) would have removed Virginia from the Uniform Trade Secrets Act provisions shared by more than 45 states and altered the balanced approach most states employ in protecting trade secrets. The sponsor of the bill agreed to strike it and send it to JCOTS where a working group will study it once the legislative session ends.
For a more in-depth look at the aforementioned legislation, and additional bills of interest to NVTC's membership, check out NVTC's bill tracking index.

The General Assembly is scheduled to adjourn on Saturday, February 23. The House will spend the final two weeks of the session deliberating on Senate bills, as the Senate does the same with House bills.

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Stay Connected with NVTC's Advocacy Team in Richmond

NVTC's public policy team is in Richmond for the duration of the session advocating for the needs of the Northern Virginia technology community and we welcome your feedback. Feel free to contact us at any time with questions, ideas or suggestions:

NVTC Vice President of Policy Josh Levi (jlevi@nvtc.org 703-904-7878 x214)

NVTC Public Policy Manager Joe Vidulich (jvidulich@nvtc.org 703-904-7878 x 218)

Weekly legislative conference calls with the NVTC advocacy team will continue for the remainder of the session through February 22. Please send an email to Joe Vidulich (jvidulich@nvtc.org) if you would like to receive notice and call-in information for NVTC's weekly conference calls.

For more information about NVTC's advocacy efforts, please visit us online at www.nvtc.org/advocacy and follow us on Twitter @NVTCTechPolitic. You can also learn more about NVTC TechPAC, the Northern Virginia technology community's state-level PAC at www.nvtctechpac.org.

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