The ProcessThe Virginia FREE Evaluations Committee began work soon after the conclusion of the 2016 session of the Virginia General Assembly. The Committee once again followed the well-honed process developed over years of reviewing the work of the legislative session: Virginia FREE members are invited to identify the legislation most important to and with greatest impact on Virginia business. The Committee reviews the member-recommended bills and may add or eliminate bills. The Committee evaluates votes – both recorded and unrecorded (in Committee and subcommittee) – in order to score legislative voting records that support Virginia business interests. Committee observations are synthesized in order to develop reports on overall impressions of the session. The Virginia FREE Board reviews and finalizes draft reports produced by the Evaluations Committee in preparation for publication. In evaluating voting records and in assessing the impact of each session on Virginia business, the Committee considers both successful and unsuccessful legislation. This year, the Committee had two formal meetings and scored eleven bills considered in the House of Delegates and twelve bills considered in the Senate. ____________________________________________________________
The 2016 SessionOverall, members of the General Assembly introduced and acted favorably on legislation that supports the free enterprise system and responsible, pro-business government. This furthers the goal of creating the economic growth that fuels raising the living standards of Virginia’s citizens – Economic Growth is Good! To use a sports metaphor – this year’s Session was a year of good “blocking and tackling.”
Virginia – Still a Good Place for Business, but…In reviewing legislation, members of the Evaluations Committee expressed concern about Virginia’s fall in nationwide business rankings due primarily to Virginia’s score in the areas of tax and regulation. This trend can be stopped and reversed, but only if the Governor and the General Assembly invest in comprehensive reform of the Virginia tax code. While recent attempts at tax reform have not been successful, the simple fact remains that the tax and regulatory framework of the Commonwealth is inconsistent with and, in many ways, incompatible with the 21st Century economy. If Virginia is to realize all of her economic and social potential, her Legislative and Executive Branches must collaborate to address needed reform. The best example of needed reform emerged in Committee discussion during review of the coal tax credit bills (House Bill 298 (Kilgore)) and Senate Bill 44 (Carrico)). The Committee did not include these bills in this year’s scoring. While these bills may be considered “pro-business,” the Committee considers statewide tax reform a far more pressing concern. A comprehensive approach with long term, sustainable economic growth is the preferred method. The current piecemeal approach does little more than create annual legislative battles that pit regions of Virginia against each other and create the impression that the process favors special legislation. A renewed focus on what is best for all Virginia is essential. A return to the Virginia Way is the answer on tax and regulatory reform.
GO VirginiaPerhaps one of the best examples of working together for the common wealth in the 2016 session is passage of the Virginia Growth and Opportunity legislative package, known commonly as GO VIRGINIA. Democrats, Republicans, House and Senate, as well as the Governor worked together to achieve this legislative success. This bold and creative legislative initiative has great potential to serve as a catalyst for the Virginia economy. Those actively involved in developing and promoting the legislation did not let the perfect get in the way of the good. The Governor, the Speaker of the House, Delegates Tim Hugo, Kirk Cox, and Chris Jones as well as Senators Frank Ruff, Dick Saslaw, Janet Howell, and Tommy Norment worked together to ensure passage of this program – the brain child of private business leaders. HOUSE BILL 846 and SENATE BILL 459 were scored by Virginia FREE.
Health CareHealth care is an issue that demands bipartisan, bicameral cooperation. Substantial attention was given to amending the Certificate of Need (COPN) statutes during the 2016 session. As former Governor Baliles observed to members of the Virginia FREE Board at the inaugural Virginia Way Forward meeting, “Remember the context.” Health care policy changes must take into consideration the impact of and societal transition from the Affordable Care Act. Businesses across the Commonwealth, including hospitals, insurance companies, and health care providers, are dramatically affected by the Affordable Care Act and will continue to be affected as law and regulations continue to be implemented. The context of the conditions of health care delivery must be considered. Changes in health care policy must be easily understood by Virginia business, the Virginia work force, and Virginia citizens. Because health care touches every business, every family, every individual, a more incremental approach is preferred. While free market policies are central to successful Virginia businesses, free market principles may not be applicable in all circumstances in the American health care market.
The Sharing EconomyInnovative companies are bringing to market interesting and dynamic business models that are developing exciting changes in several sectors of the Virginia economy. Most evident in businesses that are based on the “sharing economy,” companies like Uber, Lyft, and AirBnB are the catalysts of this change. The change is good, but there must also be correlative statutory and regulatory changes to support these business models. Innovation should be welcomed and encouraged so long as statutory and regulatory policy is in place to sustain market place competition and provide balanced consumer protection and appropriate support for governmental functions. That should not require new companies to adapt to existing statutes, but demands that existing statutes are examined and fine-tuned to make sense in the 21st Century evolving economic model. The AirBnB bills – HB 812 and SB 416 carried by Delegate Chris Peace and Senator Jill Vogel were scored this year as the Uber/Lyft (TNC) were scored last year – even though House Bill 812 and Senate Bill 416 are now under study by the Virginia Housing Commission. These bills, like the GO VIRGINIA initiative, are works in progress. The dialogue that accompanies these changing business models should be welcomed and encouraged.
Labor Day LegislationHistorically, Virginia FREE has negatively scored what is known as the Labor Day Bill (HB 753) carried this year by Delegate Tag Greason; given recent decisions by certain localities to start the school year early, the impact of this legislation may need to be reconsidered. The focus of the debate should turn to general calendar reform, concentrating not only at the start of the school year but also on the end of the school year after the completion of Standards of Learning testing when, in many schools, the academic year has concluded. Keeping students in school when virtually no academic work is offered is not a good use of time and tax payer money. It is important that the school calendar is designed to ensure children are not going to school to fill an arbitrary time requirements based on hours, but to receive an education that prepares them for the future. School calendar reform is necessary, keeping in mind the high standards of Virginia K-12 schools and the economic interests of the Virginia tourism industry. A re-tooled calendar is expected to produce savings in transportation, part-time personnel costs and energy, among others. The potential savings makes consideration of a calendar reform for Virginia schools compelling. House Bill 753 was scored by Virginia FREE.
Proffer BillAfter years of concern about the impact of requirements placed upon and agreed to by residential real estate developers in the zoning process, the General Assembly enacted legislation aimed at limiting proffers. The “Proffer Bill” SENATE BILL 549 carried by Senator Mark Obenshain in some ways restates the obvious – a locality cannot require a developer to pay for unreasonable proffers as a condition of rezoning a piece of property. Unreasonable proffers are defined to include offsite improvements that do not address an impact that is specifically attributable to the proposed new residential development. Senate Bill 549 was scored by Virginia FREE.
Right to WorkThe General Assembly considered legislation proposing a constitutional amendment to incorporate in the Constitution, Virginia’s Right To Work statute. Virginia FREE scored this legislation. SENATE RESOLUTION 70 and HOUSE RESOLUTION 2 were carried by Senator Mark Obenshain and Delegate Dickie Bell respectively.
Punitive Damages CapA proposal (SENATE BILL 111- Petersen) to raise the cap on punitive damages from $350,000 to $500,000. The current cap on punitive damages is attractive to new and existing businesses. The bill passed the Senate on a bipartisan 26-14 vote. The Civil Subcommittee of the House Courts of Justice Committee considered the bill and voted to lay the bill on the table. Virginia FREE applauds House Civil Subcommittee Chairman Delegate Greg Habeeb and the subcommittee for stopping this legislation that is unfriendly to business.
Other Scored LegislationThe remaining bills scored by the Evaluations Committee fall into the “good blocking and tackling” category: HOUSE BILL 58 introduced by Delegate Kathy Byron for the purpose of health benefit plans defines employers who have between 50 and 100 employees as large employers; HOUSE BILL 18 introduced by Delegate Chris Head clarifies that employees of franchisees are not employees of the franchisor; HOUSE BILL 145 introduced by Delegate Michael Webert and HOUSE BILL 264 by Delegate Glenn Davis – both sought to curb state and local government requirements for certain labor provisions in contracting; HOUSE BILL 1371 by Delegate Jackson Miller which prevented localities from forcing contractors to pay wages or benefits above state or federal law; HOUSE BILL 378 introduced by Delegate Peter Farrell and SENATE BILL 631 introduced by Senator Frank Wagner make meaningful changes to Virginia Worker’s Compensation system. House Bill 18, House Bill 145, House Bill 264, and House Bill 1371 were vetoed by Governor McAuliffe; the vetoes were sustained because votes were insufficient to overturn. Virginia FREE supports passage of these pro-business measures again and hopes vetoes will not occur in 2017. Bills NOT Scored The Evaluations Committee discussed legislation that addressed Charter Schools (Senate Bill 734 introduced by Senator Obenshain) and the Clean Power Plan (Senate Bill 21 introduced by Senator Ben Chafin and House Bill 2 introduced by Delegate Israel O’Quinn.) While these bills are considered “pro-business”, we did not score them. Similar bills that Virginia business supports but were not scored include: Senate Bill 748 introduced by Senator Wagner addresses utility right of way acquisition; House Bill 858 introduced by Delegate Steve Landes established the Virginia International Trade Corporation; House Joint Resolution 7 introduced by Delegate Kathy Byron, HJR7 has the Joint Legislative Audit Review Commission (JLARC) review Virginia Economic Development Partnership (VEDP); and House Bill 66 introduced by Delegate Kathy Byron and Senate Bill 576 introduced by Senator Frank Ruff establish a New Economy Workforce Credential Grant Program. Concluding Thoughts Issues of importance to the Virginia business community include the Commonwealth’s policies related to the Dillon Rule, Minimum Wage, Collective Bargaining of Public Employees, and Right to Work. Recent turn over in the General Assembly has yielded growing indifference to the efficacy of these bedrock principles that have been essential to growing and sustaining the Virginia economy. The common response when concerns are expressed about the weakening of these policies is “those will never change.” This is intended to assuage concerns of business leaders, but those words are not being reflected in legislative behavior. The message from Virginia business on these policies cannot be clear enough – these policies must not change except due to federal pre-emption. Legislation should be developed, promoted, and passed to ensure that these policies survive and thrive. The growing incidence of partisan political activism by those seeking or holding state wide or federal office has an impact. The personal and professional sacrifices of those who seek public office is greatly admired, but the public is not well-served by political engagement that does not have as its central focus the best interest of the Commonwealth. Next week, Virginia FREE will be sending out its Performance Rankings of the House of Delegates and the State Senate for 2016. Please keep in mind that we rank our legislators based upon a formula that is 75% of their overall support for business and 25% is the performance on the legislation we score. We think of it in terms like school grading – the 75% is the daily grade and the 25% is the exam grade from the selected bills. If the daily grade was given by just one person, that would be too subjective. Legislators are graded by our Evaluations Committee and many other well informed, qualified observers of Virginia’s government. This method is called differentiation and the rankings are only for the term to which legislators are elected. Old votes and performance is not a part of our deliberations. We seek continual performance improvement and constructive dialogue is key to that. Virginia FREE believes strongly that the process is fair, accurate, and helpful in strengthening Virginia’s free enterprise system and the development of a responsible, pro-business government. List of bills scored House Legislation: HB846 HB812 HB75 HJ2 HB58 HB18 HB145 HB264 HB378 HB1371 Senate Legislation: SB549 SB416 SJ70 SB111 SB631 SB459