The Newsletter of TechPAC and NVTC

February 6, 2009

In This Issue
Declining Revenues and Uncertainty of Federal Stimulus Cloud Legislative Budget Process
Multistate Internet Sales Tax Collection Effort Will Not Move Forward This Year
Midway in the General Assembly — Update on Major Bills
Check Out the Action

Declining Revenues and Uncertainty of Federal Stimulus Cloud Legislative Budget Process
This Sunday would typically mark the deadline for the House Appropriations Committee and the Senate Finance Committee to release their competing budget proposals. The process this year, however, is anything but typical, given uncertainty regarding the timing and impact of a federal stimulus package, and anticipation that Governor Kaine within the next 10 days will revise his currently projected $2.9 billion budget shortfall to reflect a larger shortfall.

While discussions among legislative leaders are ongoing, options under discussion include:
  • Releasing contingent budget proposals on Sunday that present alternative plans for declining revenues and federal stimulus money
  • Bifurcating Virginia's 2-year budget so legislators can finalize the FY09 budget during the regular session and than address the FY10 budget in April, when more is known about Virginia revenues and federal stimulus funding
  • Releasing rough placeholder budgets on Sunday with the understanding that budget writers will continue to work on the proposals over the next few weeks
  • Proceeding as normal

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Proposal to Enlist Virginia In Multistate Internet Sales Tax Collection Effort Will Not Move Forward This Year
Following NVTC testimony, the Senate Finance Committee decided this week not to move forward with Senate Bill 1185, the multi-state Streamlined Sales and Use Tax Agreement. NVTC had highlighted concerns about the Agreement in its 2009 legislative agenda.

The Agreement has been ratified by 22 states and would mandate that businesses must collect sales taxes on Internet-based sales for every state in which they have a customer. For example, if an Idaho resident buys a product on the website of a Virginia-based company, the Agreement would make that Virginia company send sales tax for that purchase to the state of Idaho. This Agreement would petition Congress to change existing federal law. Current federal law states that companies must collect sales tax in states in which they have a physical presence, and Virginia law requires that businesses collect taxes for every transaction that occurs in the Commonwealth of Virginia, whether it is a store transaction or e-commerce.

In testifying, NVTC 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 noted that the legislation also invites audits by multiple states and potentially every state in which a business has a customer. Finally, NVTC 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.

Virginia retail businesses and local governments testified in support of the legislation, while Steve DelBianco of NetChoice joined NVTC Vice President for Policy Josh Levi in expressing concerns.

NVTC executives meet with Sen. Emmett Hanger during NVTC's Board Advocacy Day to discuss tech industry concerns with his Internet sales tax legislation.

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Midway in the General Assembly — Update on Major Bills
Next week marks "crossover" in the General Assembly, at which point the House and Senate will have taken final action on the bills that originated in their own chambers. Beginning Wednesday, February 11, the House will deliberate bills that passed the Senate and the Senate will deliberate bills that passed the House.

Among the technology bills continuing to move forward at this point:

House Bill 2539 (Nixon)
Legislation seeking to implement IT governance reforms that more strongly align authority, accountability and responsibility within state government by:
  • Establishing a Division of Enterprise Applications under the Virginia Information Technologies Agency (VITA), headed by a Chief Applications Officer (CAO) reporting to Virginia's CIO.
  • Designating Virginia's Secretary of Technology as Vice Chairman of the IT Investment Board and substituting one of the appointed slots on the Board with the Secretary of Finance.

House Bill 1660 (Scott)
A bill to consolidate telework oversight and responsibility under the Secretary of Technology's Office.

House Bill 2423 (May) and Senate Bill 1336 (Puckett)
Bills that establish a Broadband Advisory Council to advise the Governor on policy and funding priorities to expedite deployment and reduce the cost of broadband access in Virginia.

House Bill 2201 (Vanderhye) and Senate Bill 1456 (Petersen)
Legislation to merge the Innovative Technology Authority (ITA) and the Virginia Research and Technology Advisory Commission into a single entity, named the Innovation and Entrepreneurship Investment Authority (IEIA). The IEIA will continue the work of the ITA, with heightened responsibilities regarding the oversight of research and development efforts in the Commonwealth.

Senate Bill 1338 (Herring) and House Bills 2444 (Sickles) and 2455 (O'Bannon)
Bills to encourage investments in Virginia technology start-ups, by retooling the Angel Investor Tax Credit to apply specifically to technology, biotechnology, and energy-related start-ups; and to revamp the Virginia technology research fund, to provide for matching funds to universities to leverage federal and private dollars for the commercialization of qualified research, and for state SBIR/STTR matches to anchor private sector research in Virginia.

The General Assembly is scheduled to adjourn on Saturday, February 28.

To track the legislation NVTC is monitoring this session, visit:

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Check Out the Action
NVTC's public policy team is in Richmond for the duration of the session advocating for the needs of the Northern Virginia technology community.

Want to check out the action?

The House of Delegates and the Senate of Virginia both offer live streaming video during the daily floor sessions for each chamber. Floor sessions are typically held beginning at noon on each weekday.

House of Delegates video stream

Senate of Virginia video stream

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