RD37 - Annual Executive Summary of the Manufacturing Development Commission


    Executive Summary:
    EXECUTIVE SUMMARY
    MANUFACTURING DEVELOPMENT COMMISSION
    January 2007

    The Manufacturing Development Commission was established pursuant to Senate Bill 261 of the 2006 Session. The Commission is the successor to the Joint Subcommittee Studying Manufacturing Needs and the Future of Manufacturing in Virginia, which was established by Senate Joint Resolution 64 of the 2004 Session and continued by Senate Joint Resolution 361 of the 2005 Session.

    The purposes of the Commission are to assess manufacturing needs and to formulate legislative and regulatory remedies to ensure the future of the manufacturing sector in Virginia. Its powers and duties include:

    • Assessing the direct and indirect economic impact of the manufacturing sector on Virginia's economy;
    • Determining the needs of the manufacturing sector and the most efficient, and cost-effective manner in which such needs may be addressed;
    • Considering the effect of local and state tax policies; regulatory compliance costs; research and development investment, energy, transportation, and workforce training policies and costs on the
    manufacturing sector; and recommend the appropriate role for state and local governments in ensuring the future of the manufacturing sector in the Commonwealth;
    • Developing a comprehensive energy plan for the Commonwealth, which evaluates the Commonwealth's current and future energy supply and demand;
    • Evaluating the effectiveness of state and local economic development programs and incentives on the research and development of technology-intensive manufacturing;
    • Consulting and coordinating with the Joint Commission on Technology and Science, the Joint Legislative Audit and Review Commission, the Joint Commission on Administrative Rules, and other legislative commissions, committees, and councils to minimize fragmentation and duplication relative to the respective powers and duties of such groups; and
    • Providing manufacturers and advocates with a forum to address their concerns.

    Senator Frank Wagner chairs the Commission. The legislative members are Delegate Harry R. "Bob" Purkey, Senator Martin Williams, Senator John Watkins, Senator Roscoe Reynolds, Delegate Samuel Nixon, Delegate Daniel Marshall, Delegate David Poisson, and Delegate Watkins Abbitt. Dr. John Sygielski, Brett Vassey, Joyce Waugh, and Robert Williams have been appointed as non-legislative members, and Secretary of Commerce and Trade Patrick Gottschalk is an ex officio member. Information about the activities of the Commission is available at its website: http://dls.state.va.us/manufacturing.htm.

    The Commission met four times in the 2006-2007 interim. The first meeting was convened on September 7, 2006, at the Virginia Tech Advanced Research Institute in Arlington. Issues addressed at the meeting included (i) the machinery and tools tax, (ii) JLARC's study pursuant to SJR 350 of the 2005 Session of the cost of compliance by the manufacturing sector with state environmental, economic, workplace, and tax laws and regulations, (iii) offshore wind energy projects, and (iv) offshore drilling for oil and gas.

    The second meeting was convened on October 19, 2006, at the Institute for Advanced Learning and Research in Danville. Issues examined by the Commission during the course of the meeting included (i) the Governor's working group on issues pertaining to the machinery and tools tax, including the taxing of idle equipment and the use of independent appraisals in valuing taxable machinery and tools; (ii) the Virginia Economic Development Partnership's plan, prepared pursuant to Senate Bill 417 (2006), to assist localities in diversifying local economies that are dependent upon manufacturing facilities; and (iii) manufacturers' concerns with the prospect of deregulation leading to higher electricity prices. Members also received a briefing on the Governor's third annual Summit on Manufacturing.

    On November 30, 2006, the joint subcommittee held its third meeting at the Kingsmill Resort in Williamsburg. Much of the testimony focused on the role of the Commonwealth's community colleges in helping manufacturers meet the need for a qualified workforce. The Virginia Employment Commission has projected that 40,000 to 50,000 skilled workers will be needed over the next 10 years, and access to a qualified workforce has been identified as a leading concern of manufacturers. Other issues addressed at the meeting included (i) the status of efforts to facilitate a consensus on the taxation of machinery and tools by local governments, including the use of bona fide independent appraisals and the definition of idle machinery and tools; (ii) the status of the Virginia Energy Plan; and (iii) the results of JLARC's analysis of the impact of regulations on Virginia's manufacturing sector.

    The Commission's final meeting was held in Richmond on January 9, 2007, for the review of possible legislative initiatives for the 2007 Session. In addition to receiving reports on the Department of Education's career and technical education programs and the importance of freight transportation infrastructure to the manufacturing sector, the joint subcommittee received information on following proposals:

    • Environmental agency permit issuance: In the absence of a bill, action was deferred.
    • Machinery and tools taxation: The Commission unanimously endorsed a proposal, presented by Mark Rubin of the Governor's Office, addressing the issue of local taxation of idle machinery and tools.
    • Manufacturing Technology Investment Act: The Commission endorsed a proposal that exempts pollution control equipment and machinery and tools placed in service on or after January 1, 2009, from local property taxation. The proposal is intended to be a "placeholder" for further discussions, including addressing replacing the revenue that would be lost to local governments.
    • House Bill 2148: Because the full text of the bill was not available, the Commission held off on endorsing the measure, which exempts railroad rolling stock from the sales and use tax when sold by the manufacturer.

    The Commission does not plan to submit a formal report.