McDonnell’s budget amendments

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Virginia Business interviewed Gov. Bob McDonnell shortly before he announced his budget amendments. Among priorities announced since our interview, McDonnell wants to borrow money for transportation, privatize Virginia’s liquor stores and provide incentives to encourage commercialization of emerging technologies. 

Following are some of McDonnell’s proposals on transportation, economic development and government reform:

McDonnell has proposed spending $54 million on economic development incentives. They include:

  • Virginia Research and Technology Innovation Fund.  The governor wants to spend $25 million to create the Virginia Research and Technology Innovation Fund to encourage commercialization of emerging technologies. The VRTIF would include three funds.: 1) Commercialization fund to provide grants to help small businesses to market new products and services. 2) Research matching fund to incentivize collaboration between colleges and universities in companies engaged in high-growth industries. 3) Eminent scholars fund to attract researchers and professors with knowledge of key technologies.
  • Refundable Research and Development Tax Credit. McDonnell wants to create a research and development tax credit for young companies in targeted industries with additional incentives for companies using research and development from Virginia colleges and universities. Virginia is one of only 12 states without a R&D tax credit.
  • Tourism. McDonnell also wants to promote tourism in the state by: 1) spending $2 million to create a Tourism Development Micro Loan Fund for tourism-related projects. 2) expanding the tourism marketing budget by $1 million to encourage localities to advertise 3) spending $2 million for the Governor’s Motion Picture Opportunity Fund to attract films in Virginia.
  • Virginia Port Tax Incentive. McDonnell wants to spend $5 million for this per-shipping container incentive to increase the port’s competitiveness.
  • Virginia Winery and Vineyard Development Tax Credit The governor want to establish this credit, estimated to cost $250,000, to grow Virginia’s wine industry.
  • Worker trainer at community colleges. This amendment would increase by $3 million the amount Virginia provides for non-credit courses that provide job-specific training to Virginia employees. 
  • Industrial Site Revitalization. The governor wants to provide $4 million to help localities renovate abandoned structures into tools to recruit new businesses.
  • Funding for Enterprise Zone Program McDonnell wants to spend $1 million to fully fund the Virginia Enterprise Program, which is used for job creation and investment in distressed communities.


    McDonnell is proposing ways to spend an additional $4 billion over the next three years to help Virginia’s aging transportation system. 
  • Virginia Transportation Infrastructure Bank McDonnell would create this with $150 million from budget surpluses and $250 million of unspent money identified in an audit of VDOT. McDonnell says this would be used to leverage additional money for transportation projects. Local governments would be able to use grants, low-interest loans and loan guarantees to fund projects included in VDOT’s six-year improvement plant.
  • Bonds. McDonnell want to accelerate the sale of bonds approved in 2007 to $600 million a year for highway construction.
  • GARVEE bonds This amendment would allow Virginia to allow the direct sale of GARVEE bonds, which are sold for specific transportation projects and financed through federal highway revenues.


  • McDonnell wants to spend an additional $50 million on higher education. He has a goal to have an additional 100,000 college graduates in Virginia over the next 15 years.


  • VRS: McDonnell wants to help shore up the Virginia Retirement System by requiring state employees to contribute 5 percent of their salary to VRS. State employees have not contributed to their own retirement fund since 1983, when the General Assembly agreed to cover the employee contribution for retirement instead of providing salary raises. McDonnell wants to offset the increase with a 3 percent pay raise. He is also proposing increasing the state’s annual contribution to the fund by 2 percent. A recent study found that the system had more than $17.6 billion in unfunded liabilities.
  • $191 million in cuts McDonnell has proposed a wide range of expense reductions across government spending through savings, such as $92 million in public education, and cuts, such as $2 million for public broadcasting. 


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