RD147 - Economic Development Incentives 2019: Spending and Performance – December 16, 2019

Executive Summary:

Economic Development Incentives 2019 – Summary

Virginia spent $2.4 billion on 79 economic development incentives from FY10 to FY18. This amounts to 1.4 percent of total general fund spending during this time. Total spending on incentives in FY18 ($285 million) was slightly less than spending in the previous fiscal year, during which a custom incentive grant was awarded.

• Sixty-six percent of the spending on incentives was for tax incentives such as sales and use tax exemptions ($1 billion), tax credits ($438 million), and single sales apportionment for manufacturers ($91 million).

• The remaining 34 percent was spent on grants ($776 million) and other incentives such as loans and gap financing programs ($28 million).

• Overall, the amount spent on incentives increased by 105 percent between FY10 and FY18. This increase is more than twice the increase in the state general fund and total operating budgets during that time.

• Collectively, Virginia economic development incentive grant programs awarded $903 million to 4,461 projects between FY10 and FY18. Actual spending on grant projects was $127 million less than the total amount awarded because of award cancelations, reductions, or recaptures.

• Completed projects receiving grant funds created more than 70,000 jobs and nearly $15 billion in capital investment or other spending. The majority of these projects met their capital investment goals, and only one-quarter met their job creation goals.