SD18 - Impact of Regulations on Virginia's Manufacturing Sector


Executive Summary:
[The electronic version of the report was replaced by JLARC on 3/21/07.]

Senate Joint Resolution 360 directed JLARC staff to study the comparative burden of Virginia environmental, economic, workplace, and tax regulations on manufacturers.

The study used two approaches to estimate the cost to Virginia manufacturers to comply with federal and State regulations. Approach #1 included direct costs and resulted in estimates of around $1 billion. Approach #2 included direct costs as well as other types of costs and resulted in estimates as high as $3.49 billion.

The study concludes that federal regulations are the primary driver of regulatory costs in Virginia and that Virginia regulations do not add substantial costs. Furthermore, Virginia regulations were not the primary cause of the recent job loss in the manufacturing sector that also occurred in other states, nationwide, and in other industrialized nations.

Virginia manufacturers identified several regulatory issues for further analysis and consideration, including the efficiency of environmental permit processing and the machinery and tools tax. More broadly, efforts to foster a strong manufacturing sector in the State should consider other factors that are important to manufacturers, such as workforce issues.