COMMENTARY
Leadership class explores Virginia’s strengths and weaknesses

by Bernie Niemeier
Virginia Business
June 2007

Forty-six people from around Virginia convened in Williamsburg in April to learn about the commonwealth’s assets and liabilities. The gathering represented the first meeting of the 2007 Class of Lead Virginia, a nonpartisan, statewide leadership organization. The organization brings together proven business, government and nonprofit leaders with the intention of creating “social capital” that will positively impact Virginia’s future.

So what was learned in Williamsburg? Virginia has a wealth of economic assets. Its reputation for straight-forward and trustworthy business dealings, as well as its triple-A bond rating make it a relatively risk-free place for companies to invest. Its nationally ranked colleges and universities, as well as a strong and rapidly growing community college system produce a strong talent pool and support work-force development on all levels. The commonwealth has an ideal proximity to other markets; one-half of the population of the U.S. resides within a one-day drive. Its deep-channel port, railroads, airports and highway system attract international trade as well as retail and manufacturing distribution centers.

More recent developments include a strong information technology sector running from Northern Virginia to Blacksburg and cutting-edge manufacturing — semiconductor chips are now the state’s largest export. Despite major changes elsewhere, the commonwealth remains at the heart of the nation’s defense structure, including the Pentagon, the world’s largest naval base and a world-class aircraft carrier construction facility. During the past 15 years, the state government has put very competitive economic development incentives in place, something that was missing in previous generations. We are now making progress in funding the state’s transportation needs.

Along with these assets are some liabilities. Virginia’s growth has been heavily dependent on federal spending in Northern Virginia and Hampton Roads. Recently, much of the state’s revenue gains have come from higher real estate taxes as housing prices increased. These conditions are unlikely to be permanent. Actions to reduce the federal deficit will potentially affect both defense and federal procurement spending. While the state has gained jobs on the whole, the growth has been largely in Northern Virginia and Hampton Roads. None of the other regions have regained their employment levels from prior to the last recession. Energy prices will continue to increase, putting more pressure on sales tax revenues. Health-care costs in the state’s retirement system are also rising. Virginia’s long-term transportation needs are not fully funded.

Lead Virginia’s purpose is to combine the state’s assets with social capital to increase their economic return and to build the consensus needed to address the state’s liabilities. Social capital can be defined as the trust and confidence-based interpersonal relationships needed to get things done in metro areas and rural locations across the commonwealth. By bringing business, government and nonprofit leaders together to gain a better understanding of the state’s economy and our common needs in education and transportation, these relationships are created. The Williamsburg meeting set a strong course and got the Lead Virginia Class of 2007 off to a great start.

Bernie Niemeier, the publisher of Virginia Business, is a member of Lead Virginia’s Class of 2007.