NVTC's Public Policy News Update

March 17, 2011


In This Issue

General Assembly Adjourned, Veto Session to Convene April 6

Legislation Sent to the Governor for Action

Legislation that Did Not Pass the General Assembly


General Assembly Adjourned, Veto Session to Convene April 6

On Sunday, February 27, the Virginia General Assembly adjourned sine die concluding its 2011 legislative session. During the 47-day session, the General Assembly tackled more than 2,600 bills and resolutions related to a broad array of important issues, including Gov. Bob McDonnell's legislative initiatives addressing job creation and economic development, research and innovation, education, transportation and telework. Although the legislative session ran over by one day, legislators were able to reach consensus on a new, two-year $31 billion General Fund budget, which has been sent to Gov. McDonnell for his review and action.

The General Assembly is scheduled to reconvene for the one-day Veto Session on Wednesday, April 6. In the interim, Gov. McDonnell will be reviewing more than 1,500 bills that were passed by the General Assembly, including amendments to the state's biennial budget. When the Veto Session convenes, legislators will have an opportunity to act on bills that may be vetoed or amended by the Governor.

NVTC maintained a full-time presence in Richmond throughout the legislative session to actively advocate on behalf of Northern Virginia's technology community. NVTC's Public Policy Advocacy Team included NVTC Vice President of Policy Josh Levi, NVTC Public Policy Manager Joe Vidulich, and Myles Louria, director of government affairs of Hunton & Williams LLP.

NVTC's public policy advocacy was supplemented with personal visits to Richmond by technology leaders including NVTC President and CEO Bobbie Kilberg, NVTC Chair Brad Antle of Salient Federal Solutions, NVTC TechPAC Chairman Dendy Young of McLean Capital, Doug Beck of ICF, Matthew Calkins of Appian, Tim Cook of Alion Science and Technology, Kathryn Falk of Cox Communications, Michelle Frank of Orbital Sciences Corporation, Todd House of Micron Technology, Duffy Mazan of Second Venue LLC, Rob Quartel of NTELX, Matt Queen of Northrop Grumman Information Systems, Robert Templin of Northern Virginia Community College and Keith Wine of ACS, A Xerox Company.

In addition, many more NVTC members provided ongoing advice and feedback through NVTC's weekly legislative conference calls and NVTC's online LinkedIn Public Policy Forum.

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Legislation Sent to the Governor for Action

While NVTC's Four Year Vision drives the organization's overall advocacy efforts, NVTC's specific legislative priorities for the 2011 Legislative Session were outlined in a letter to policymakers before this session began. During the 2011 session, the General Assembly approved many of NVTC's specific legislative priorities and several other technology-related bills that have been sent to Gov. Bob McDonnell for action, including:

Job Creation
Research and Innovation
Higher Education
Education Funding
Transportation
Telework
E-Verify
E-Notary

Increased Eligibility for Job Creation Incentives

HB 1982 - Delegates Kilgore, Torian, Miller, and Armstrong
SB 1379 - Sens. Stanley and Barker

The General Assembly passed legislation that increases eligibility for the Governor's Opportunity Fund. The new legislation will allow the Governor more flexibility in providing incentives to businesses seeking to relocate or expand in Virginia and creates special eligibility categories for large data center and critical technology infrastructure businesses and emerging technology projects.

The NVTC-supported legislation allows more business expansion and relocation projects to qualify for state economic development incentives by reducing eligibility thresholds for private investment and new job creation. The previous requirement that a business invest $10 million and create 100 new jobs is now reduced to $5 million and 50 new jobs. Recognizing the tremendous capital investments data centers are, an additional eligibility threshold was created for data center and critical technology infrastructure businesses that intend to invest $100 million and create 25 new jobs.

The Governor can reduce the 50 new job threshold to 25 jobs for "emerging technology projects," where the wage for new jobs is at least double that of the average wage in the locality.


Research and Innovation

The General Assembly approved $15 million in new technology innovation funding proposed by Gov. McDonnell and Lt. Gov. Bill Bolling and strongly supported by NVTC.


NVTC TechPAC trustees met with Lt. Gov. Bill Bolling in
November to discuss innovation funding and other job creation initiatives.


$5 Million Refundable R&D Tax Credit
HB 1447 - Delegate Cline
SB 1326 - Sen. Herring

After five years of advocacy, NVTC was instrumental in achieving passage this year of a $5 million refundable R&D income tax credit.

This legislation was a top priority for NVTC and the Virginia Biotechnology Association. The bill is a recommendation of the Governor's Commission on Economic Development and Jobs Creation, which includes NVTC members James Dyke of McGuireWoods LLP, Anne Gavin of Microsoft, Mark Herzog of Virginia Biotechnology Association, Chris Lloyd of McGuireWoods, Caren Merrick of Bibury Partners, Donna Morea of CGI, Sudhakar Shenoy of IMC and Bob Skunda of Virginia Biotechnology Research Park. It is also a recommendation of the Governor's Commission on Higher Education Reform, Innovation and Investment, which includes NVTC members Raj Narasimhan of Micron Technology, Charles Steger of Virginia Tech and Todd Stottlemyer, formerly of Inova Health System, currently of ITSolutions LLC. Many other business organizations and universities across the state supported its passage as well.

This targeted tax incentive will promote innovation and job creation across Virginia, enhance Virginia's competitiveness as a preferred location for research and boost industry-sponsored research and collaboration with Virginia's universities. More than 18,000 technology firms make R&D investments across the United States, and this legislation encourages them to consider Virginia as a welcoming home for their future investment. As with the federal R&D Tax Credit, there is an expectation that approximately 70 percent or more of the expenses related to the credit are for salaries of researchers. The credit is expected to benefit many targeted technology-related industries including aerospace, agriculture, biotechnology, information technology, health sciences, energy and advanced manufacturing. Thirty-eight states offer a similar R&D tax credit and NVTC is pleased Virginia now has this important tool.

Businesses will be eligible for a 15 percent tax credit for qualified R&D expenses for the first $167,000 in expenses paid or incurred by the taxpayer during a taxable year. The tax credit increases to 20 percent of the first $175,000 in qualified research expenses paid or incurred by the taxpayer during a taxable year if the research is done in conjunction with a Virginia college or university.

The tax credit will be prorated if it is oversubscribed and is also refundable for most businesses, and thus can be utilized by small companies and others that may not have income tax liability in Virginia.

More information:
Washington Post: Virginia legislature approves tech-friendly measures

Washington Business Journal: Virginia's new R&D credit likely stretched thin

$6 Million in Initial Funding for Strengthened and Expanded Virginia Technology Research Fund

HB 2324 - Delegate Lingamfelter
SB 1485 - Sens. Newman and Herring

The General Assembly expanded Virginia's Commonwealth Research Commercialization Fund (CRCF) and approved $6 million in new funding to accelerate entrance of new products and services to the market, incentivize collaboration between research universities and businesses in high-growth, emerging industries, provide matching funds to SBIR grant recipients and provide new resources to attract eminent researchers at Virginia universities.

The legislation directs the Secretary of Technology's 15-member Innovation and Entrepreneurship Investment Authority (IEIA), a public body of entrepreneurs, technology leaders, investors, university presidents and cabinet secretaries, that oversees the Center for Innovative Technology (CIT), to develop a Commonwealth Research and Technology Strategic Roadmap by November 2011. The Roadmap will identify areas of focus for research investment in the Commonwealth. IEIA also will develop guidelines for reviewing applications and making awards from the CRCF. These guidelines will ensure that funds awarded support the Commonwealth Research and Technology Strategic Roadmap and also will place special emphasis on fostering collaboration between institutions of higher education and the business community.

The bill also establishes the Research and Technology Investment Advisory Committee, an advisory group consisting of six citizen members who represent research and technology intensive industries and four vice provosts of research at institutions of higher education. The Committee is charged with assisting the IEIA in making awards from the CRCF by ensuring that applications considered for awards are:

  • Grounded in sound science and research principles.
  • Based in an area of focus identified in the Roadmap.
  • Presenting significant potential for commercialization in the Commonwealth.

Additional $4 Million Investment in CIT Gap Fund for Early-Stage Investments

Legislators also invested an additional $4 million in the CIT seed-stage GAP Fund, which attracts private capital to enable the formation and establishment of new high-growth technology companies and university spin-outs. The CIT GAP Fund has earned national recognition for its efforts in encouraging Virginia entrepreneurs and innovative technology startup companies to locate and grow within the Commonwealth by investing in seed-stage firms and university spin-outs with a high potential for successful commercialization, rapid growth and downstream private equity financing. The $4 million in additional funding will support investment in more than 25 high-growth — or "gazelle" — companies, attracting another $56 million in private equity. The GAP Fund's search areas include software, telecommunications, semiconductors, media and entertainment, e-commerce, networking and equipment, electronics/instrumentation, industrial/energy, computers and peripherals, biomedical and life science applications.


Higher Education

HB 2510 - Delegates Cox and Dance
SB 1459 - Sens. Houck and Norment

Top Jobs of the 21st Century Higher Education Initiative

The General Assembly overwhelmingly passed the Governor's Top Jobs of the 21st Century Higher Education Initiative, which was proposed by the Governor's Commission on Higher Education Reform, Innovation and Investment, which included several NVTC members. The legislation provides a roadmap for achieving an additional 100,000 undergraduate degrees for Virginians over the next 15 years with an emphasis on science, technology, engineering and math (STEM) degrees. This legislation provides for sustained reform-based investment and innovation in delivery of higher education services and provides enrollment-based funding to increase access for qualified Virginia students at public and private colleges and universities. Preparing Virginians for the "Top Jobs of the 21st Century" — the objective of this legislation — is a critical goal of Northern Virginia's technology community whose growth and success will rely on the ability to produce first-class technology professionals in sufficient numbers to support Virginia's statewide technology economy so that we can continue to compete domestically and globally.

NVTC President and CEO Bobbie Kilberg testified in support of the legislation before the Senate Finance Committee's Subcommittee on Education on February 1.

More information:
Governor's Press Release Announcing Top Jobs Initiative

Governor's Press Release Announcing NVTC and Other Business Community Support for Top Jobs Initiative


Education Funding

In conjunction with the Top Jobs of the 21st Century Higher Education Initiative, legislators appropriated more than $97 million in additional general funds to support higher education. The new funding will:

  • Improve affordability for in-state undergraduates.
  • Increase access for in-state students at the University of Virginia, Virginia Tech, James Madison University, and William & Mary.
  • Increase the number of STEM degrees.
  • Improve research and development opportunities.

STEM Education at GMU
Budget Item 157 #2h
- Delegate Scott, 159 #1s - Sen. Colgan

Of the new funding, $12 million was specifically allocated to higher education STEM initiatives, including $3 million to support recruitment of 10 faculty members at George Mason University in STEM-related disciplines to meet enrollment growth in these areas.

Increase Funding for Thomas Jefferson High School
Budget Item 132 #3h - Delegate Keam

The General Assembly approved an amendment to the budget to provide an additional $66,265 in funding for Thomas Jefferson High School for Science and Technology, a Governor's School, to provide state funding for an additional 50 students.

STEM Education Programs
Budget Item 137 #2h - Delegate May, 137 #5s - Sen. J. Miller

The General Assembly provided $350,000 in matching funds for the Virginia Space Grant Consortium program. The money will permit an extra 350 students to participate in STEM programs in partnership with NASA.


Transportation

HB 2527 - Speaker Howell
SB 1446 - Sens. Wampler and Colgan

The General Assembly passed Gov. McDonnell's "Get Virginia Moving Initiative" transportation plan to pump an additional $4 billion into road, transit and rail projects in the Commonwealth over the next three years by reallocating existing revenues and through the prudent uses of bonds. NVTC's Board of Directors unanimously endorsed the legislation as a critical first step in addressing Northern Virginia's transportation crisis in a significant and meaningful way to support the growth of Northern Virginia's technology economy and by extension the long-term economic health of the state. The legislation, which was supported by business groups across the state, will get 900 critically important road, rail and transit projects underway across the Commonwealth by:

  • Modifying the Virginia Code to allow the Commonwealth to issue at least $1.1 billion in direct GARVEE (Grant Anticipation Revenue Vehicles) bonds.
  • Allocating nearly $1 billion in unused federal toll credits.
  • Accelerating the sale of bonds from 2007 transportation legislation, providing Virginia the ability to issue up to $1.8 billion in bonds during the remainder of the Administration.
  • Creating a "Virginia Transportation Infrastructure Bank" (VTIB) to multiply transportation dollars.

While the Governor had sought to transfer $150 million from the state's General Fund as one component to support the transportation plan, the legislation approved by the General Assembly allocated $32.7 million from the General Fund.


Virginia Secretary of Transportation Sean Connaughton briefed the NVTC
Board on the Governor's Transportation Plan in January.


More information:
Governor's Press Release Announcing $4 Billion for Transportation

Governor's Press Release Announcing NVTC Support


Telework

HB 2197 - Delegate Comstock
SB 1335 - Sen. Herring

NVTC was pleased to see another multi-year policy priority enacted into law this session when the General Assembly approved a telework tax credit to assist companies in defraying costs associated with establishing or expanding a telework program. The legislation was a recommendation of the Governor's Commission on Government Reform & Restructuring, which included NVTC President and CEO Bobbie Kilberg, and NVTC members Heather Carroll Cox of Capital One, William Eggers of Deloitte Public Leadership Institute and Maurice McTigue of George Mason University.

The bill will provide a tax credit to employers for expenses incurred in allowing employees to take advantage of modern technology to telework, expanding a telework program or conducting a telework assessment. An employer would be eligible for a credit of up to $1,200 per teleworking employee, with a maximum of $50,000 per employer.

NVTC has been a long-time proponent of telework, recognizing that Virginia and Virginia taxpayers are beneficiaries of new and expanded private sector telework programs. Telework programs help take cars off Virginia's already overused roads and thus reduce the Commonwealth's terrible traffic congestion. Telework also helps Virginia's businesses attract a talented workforce in a competitive market because of the added flexibility. Telework programs help save businesses money by reducing overhead, space requirements and other related expenses, and provide operational continuity for public and private sector organizations in the event of an emergency.


E-Verify

SB 1049 - Sen. Barker

The General Assembly approved legislation this year that would require any business with more than 50 employees that is entering into a contract in excess of $50,000 with any agency of the Commonwealth to register with and utilize the E-Verify employment system to verify information and work authorization of newly hired employees performing work pursuant to such public contract.

The legislation also mandates that agencies of the Commonwealth debar, for a period up to one year, any contractor who fails to register and participate in E-Verify.

NVTC did not take a position on this legislation, which goes into effect in December 2013.


E-Notary

HB 2318 - Delagate Byron
SB 827 - Sen. Edwards

The General Assembly passed legislation supported by NVTC that would facilitate e-commerce by allowing notaries to notarize documents when the signer is not in a notary's presence if satisfactory evidence of the identity is established. The bill allows satisfactory evidence to be based on video or audio conference technology that permits the notary to communicate with and identify the principal at the time of the notarial act.

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Legislation that Did Not Pass the General Assembly

Several issues of specific interest to NVTC members did not pass the General Assembly this session. Those include:
New Internet Sales Tax Collection Obligations: NVTC-Opposed
The General Assembly saw no legislation this year attempting to establish new sales tax collection obligations that would require small Virginia businesses to collect and remit sales taxes for every state in which they have a customer but no other presence. In testifying against Virginia's adoption of the multi-state "Streamlined Sales and Use Tax Agreement" in years past, NVTC has shared concerns that businesses, especially small companies, lack the staff and resources to collect and disburse such taxes, and that the costs could be prohibitive to doing business.

Also, the Agreement goes beyond tangible goods, into areas of business that Virginia companies have never taxed before, for example, digital downloads and technology services. NVTC has noted that this legislation invites audits by multiple states and potentially every state in which a business has a customer. Finally, NVTC has cautioned legislators that the legislation could have an adverse impact on Virginia's competitive advantage in attracting technology businesses by leveling tax competition among the states.

Transportation Funding Based on Congestion Reduction: NVTC-Supported
HB 1998/ HB 1999 - Delegate LeMunyon
The General Assembly failed to approve legislation supported by NVTC and other Northern Virginia business organizations that would have required the Virginia Department of Transportation to use modeling technology to rate (and fund) planned transportation projects in Northern Virginia based on congestion reduction achieved per dollar spent on each project. This legislation was passed in the House of Delegates, however it did not pass the Senate Commerce and Labor Committee.

Right to Vote by Secret Ballot in Labor Organizations: NVTC-Supported
HB 2052 - Delegate Hugo
SB 1125 - Sen. Stosch
The General Assembly failed to approve NVTC-supported legislation that would have required a secret-ballot in designation, selection, or authorization of a labor organization to represent employees. This legislation passed the House of Delegates; however it did not pass the Senate.

Data Center Sales Tax Exemption: NVTC-Supported
HB 2122 - Delegate Greason
NVTC was unsuccessful in winning approval of legislation that would have allowed data centers to qualify for Virginia's sales tax exemption on equipment purchases if the tenants of the data center collectively meet the 50-job-creation threshold rather than requiring that the data center itself directly hire 50 new employees to qualify. The Virginia Economic Development Partnership did not support the legislation.

More information:
Department of Taxation Fiscal Impact Statement

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For more information about NVTC's advocacy efforts, please visit us online at http://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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