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Posted at 11:16 AM ET, 07/14/2010

Why is Virginia 'business friendly'?

By Peter Galuszka

As is usually the case, Virginia scored well in another survey of the best states for business. CNBC.com put the Old Dominion in second place behind Texas, a slight downgrade from grabbing the top spot in 2009.

The state's politicians and business leaders are fond of touting the state's "business friendly" environment, citing such benefits as low corporate taxes, fewer regulations, no taxes on intangible property, "Govenor's Opportunity Fund" financial perks and certain sales tax exemptions. Oh, and one other thing: No states taxes on that corporate jet.

According to CNBC.com, Virginia placed well in most of its 10 review categories, save for cost of business and cost of living. These bad scores can be attributed to Northern Virginia's proximity to the District and Maryland, which came in at a middling No. 27. (The District wasn't included in the survey.) Virginia scored best (No. 2) in "business friendliness," i.e. all of those benefits from low taxes and few regulations.

Maryland, however, did score slightly better than Virginia in "technology & innovation," which probably has something to do with the mass of biotechnology and genetics firms in the Bethesda to Gaithersburg corridor and Johns Hopkins University, one of the nation's leading medical research centers.

In terms of business climate, Virginia has it over the Terrapins. When defense contractor
Northrop Grumman chose Virginia over Maryland for its relocated headquarters this spring, economic development officials in Maryland scratched their heads and wrung their hands. Virginia officials such as Gov. Robert F. McDonnell bragged about cheaper corporate taxes, fewer regulations and anti-union right-to-work laws.

Cheaper real estate probably swung the deal, even though Maryland had put on the table an attractive Rockville office complex.

On the bright side, being 'business-friendly' means that Northern Virginia counties such as Loudoun and Prince William have generally low unemployment rates, which for May were respectively 4.9 percent and 5.8 percent, compared with a U.S. average of 9.3 percent.

On the dark side, Virginia sucks up to business by coming on as anti-union and anti-gay in the sense that it doesn't provide the same level of recognition and protection for gay couples that Maryland and the District do.

Another cloud is education. Decades ago, Gov. Mills Godwin had the foresight to beef up the state's community college system and make public colleges such as the University of Virginia and William & Mary world-class. Doing so gave the Old Dominion a much better training base for company employees. The recession and the stubborn refusal to support education by mostly Republican legislators is putting this golden asset in jeopardy.

Peter Galuszka blogs at Bacon's Rebellion . The Local Blog Network is a group of bloggers from around the D.C. region who have agreed to make regular contributions to All Opinions Are Local.

By Peter Galuszka  | July 14, 2010; 11:16 AM ET
Categories:  Fairfax County, HotTopic, Maryland, Montgomery County, Prince William County, Tysons Corner, Va. Politics, Virginia, development, economy, education, environment, real estate, same-sex marriage, schools, taxes, traffic, transportation  
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