Workforce & Industry Incentives, Economic Development Incentives Evaluation Series, JLARC (June 4, 2025)
Summary
Joint Legislative Audit and Review Commission (JLARC) Report 604, Workforce & Industry Incentives, dated June 4, 2025, part of the Economic Development Incentives Evaluation Series. The report examines 10 incentives Virginia provides to encourage workforce development and to support certain industries; spending averaged $18 million annually between FY14 and FY23 and totaled $177 million over this period. It states that Virginia Jobs Investment Program projects have collectively met their job creation goals and that only five businesses were awarded worker training tax credits between FY19 and FY23. Industry tax exemptions are described as having negligible to low economic benefits. A recommendation is to tie the VJIP wage requirement to the prevailing local average wage.
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Commonwealth of Virginia
June 4, 2025
Report to the Governor and the General Assembly of Virginia
Workforce & Industry Incentives
Economic Development Incentives Evaluation Series
JOINT LEGISLATIVE AUDIT
AND REVIEW COMMISSION
Joint Legislative Audit and Review Commission
Chair
Delegate Mark D. Sickles
Vice-Chair
Senator Mamie E. Locke
Delegate Betsy B. Carr
Senator R. Creigh Deeds
Senator Adam P. Ebbin
Delegate Charniele L. Herring
Senator Ryan T. McDougle
Senator Jeremy S. McPike
Delegate Sam Rasoul
Delegate Marcus B. Simon
Delegate Anne Ferrell Tata
Delegate Luke E. Torian
Delegate R. Lee Ware
Delegate Tony O. Wilt
JLARC staff
Hal E. Greer, Director
Kimberly Sarte, Associate Director for Ongoing Oversight and Fiscal Analysis
Ellen Miller, Chief Economic Development and Quantitative Analyst
Information graphics: Nathan Skreslet
Managing editor: Jessica Sabbath
Economic analysis
Terance J. Rephann, Regional Economist
João Ferreira, Regional Economist
Weldon Cooper Center for Public Service
JLARC Report 604
©2025 Joint Legislative Audit and Review Commission
http://jlarc.virginia.gov
Contents
Summary i
Recommendations v
Workforce and Industry Incentives 1
Virginia Jobs Investment Program 4
Virginia Talent Accelerator Program 15
Worker Training Tax Credit 23
Industry Tax Exemptions 31
Appendixes
A. Study mandate 40
B. Research methods and activities 43
C. Economic benefits and return in revenue for all Virginia incentives 54
reviewed to date
D. State workforce training incentives 59
E. Local economic developers rate VJIP as most useful incentive 67
F. Summary of each industry exemption 70
G. Agency responses 82
Appendixes – Online only
H. Economic impact modeling
I. Results of economic and revenue impact analysis
J. References
Summary: Workforce and Industry Incentives
This report examines 10 incentives Virginia provides to encourage workforce devel-
opment and to support certain industries. Spending on these incentives averaged $18
million annually between FY14 and FY23 and totaled $177 million over this period.
Most of the spending was for the Virginia Jobs
Investment Program (VJIP), the Virginia Talent
Accelerator Program, and the sales and use tax WHY WE DID THIS STUDY
exemption for certain printed materials. The 10 Through language in the Appropriation Act, the General
Assembly directed the Joint Legislative Audit and Review
workforce and industry incentives comprised Commission (JLARC) to review and evaluate economic
about 4 percent of total spending on state eco- development initiatives. Topics include spending on incentives
nomic development incentives between FY14 and activity generated by businesses receiving incentives; the
and FY23. economic benefits of incentives; and the effectiveness of
incentives.
JLARC releases two reports each year: a high-level summary
WHAT WE FOUND
report on overall spending and business activity and an in-
VJIP is one of the state’s most widely depth report on the effectiveness of individual incentives. (See
used incentives, and projects met their Appendix A: Study mandate.) JLARC contracts with the Weldon
Cooper Center for Public Service to perform the analysis for
job creation goals
both reports.
VJIP is one of the state’s oldest economic de- This report is the ninth in the series of in-depth reports on the
velopment incentives and is designed to encour- effectiveness of individual incentives and focuses on Virginia’s
age job creation and employee training at new or business workforce and industry incentives.
expanding businesses. The program has the sec-
ond highest number of recipients of Virginia’s incentive grants and is rated the most
useful economic development incentive program by local economic developers. How-
ever, the number of annual awards and the average award per job have both declined.
Declining award amounts per job could reduce the program’s attractiveness and its
ability to sway business decisions, so the VJIP program has been reviewing its appli-
cation scoring used to determine the award per job and anticipates increasing the
amount.
VJIP projects have collectively met their job creation goals, and the program has mod-
erate economic benefits. VJIP also fully or partially meets most (seven out of the nine)
features of effective incentive design, but the program’s wage requirement is not
aligned with the local prevailing average wage, and minimum requirements have no
allowances for economically distressed areas.
Initial projects would have proceeded without the Virginia Talent Ac-
celerator Program, but it is preferred by stakeholders and is generally
well designed
The Virginia Talent Accelerator Program, created in 2019, is a “turnkey” workforce
program designed to attract businesses to the state by providing customized recruit-
ment and training services. Most of the initial program recipients indicated in a 2022
i
0BSummary: Workforce and Industry Incentives
Weldon Cooper Center survey that their projects would have proceeded as planned
without the Virginia Talent Accelerator Program. However, this may not be fully re-
flective of the program’s current impact because it is only based on survey results from
initial projects and does not include more recent ones. Virginia Economic Develop-
ment Partnership (VEDP) staff believe that a higher proportion of recent program
participants would rate the program as having an impact on their firm’s location or
expansion decisions, because the program is now more fully developed. They also in-
dicate the program can be a differentiator or tipping point in a firm’s final decision.
Businesses and site selection consultants prefer this “turnkey” customized incentive
over other workforce grants and tax incentives. Such customized programs may help
ensure that businesses receiving other incentives, such as custom grants, are successful
at meeting and maintaining job creation goals. The Virginia Talent Accelerator Pro-
gram largely meets the criteria of effective incentive design, although it does not have
a capital investment requirement. The program has low economic benefits and a mod-
erate return in state revenue when the value of the program is assessed based on its
costs, but these results are based on only two years of data and may not capture the
full impacts of the program over a longer period.
Use of the worker training tax credit has been low, and it will expire in
July 2025
The purpose of the Worker Training Tax Credit is to encourage businesses to train
workers to improve productivity and retain employees. Only five businesses were
awarded worker training tax credits between FY19 and FY23, and the total award
amount was far below the overall annual cap for the credit. Several factors may lead to
low utilization, including a low credit amount per job. The worker training tax credit
is mostly used for registered apprenticeships, but it likely has a limited influence on
apprenticeship rates. Labor demand, labor supply, and workforce or education policies
tend to have more effect on a state’s apprenticeship rate. The tax credit has negligible
economic benefits and expires on July 1, 2025.
Industry tax exemptions have negligible to low economic benefits but
serve purposes other than economic development
Virginia provides sales and use tax exemptions for multiple industries, seven of which
are evaluated in this report,
• certain printed material for out-of-state distribution exemption,
• contractor temporary storage exemption,
• controlled environment agriculture exemption,
• high-speed electrostatic duplicators exemption,
• out-of-state nuclear facility repair exemption,
ii
0BSummary: Workforce and Industry Incentives
• taxi parts and radios exemption, and
• the uniform rental and laundry business exemption.
Some of these exemptions benefit the industry directly and others are provided to
industry customers.
The industry exemptions meet few criteria for effective incentive design and have neg-
ligible or low economic benefits. However, they were adopted for reasons other than
just economic development, including preserving the competitiveness of an industry
and advancing good tax policy principles, such as not taxing intermediate inputs. These
purposes may warrant their retention even if the economic development benefits are
minimal.
Workforce and industry incentives have economic benefits ranging from
moderate to negligible (FY14-FY23)
Annual
average Incentive Economic benefit
Program spending type per $1M of spending
Virginia Jobs Investment Program (VJIP) $4.9M Grant 4440
Taxi parts exemption 0.1 Exemption 4400
Uniforms exemption 0.8 Exemption 4400
Virginia Talent Accelerator Program 4.0 Grant a 4000
Printed materials exemption 9.9 Exemption 4000
Contractor temporary storage exemption 0.1 Exemption 4000
Electrostatic duplicators exemption <0.1 Exemption 4000
Nuclear repair facilities exemption 0.1 Exemption 4000
Worker Training Tax Credit 0.1 Tax credit 4000
Controlled environment agriculture exemption -- Exemption --
Total $17.7M
Negligible Low Moderate High
SOURCE: Weldon Cooper Center economic impact analysis of incentives.
NOTE: The economic benefits of each incentive are assessed relative to the economic benefits of all other incentives
evaluated in this series to date. Economic benefits can range from negligible to high. There is no economic benefit for
the controlled environment agriculture exemption during this 10-year period because the exemption was adopted in
2023 and was not used.
a
Not technically a grant. Provides in-kind rather than financial assistance to the business and is classified as
a grant for purposes of this evaluation series.
WHAT WE RECOMMEND
Legislative action
• Tie VJIP’s wage requirement to the prevailing local average wage.
• Reduce VJIP’s minimum eligibility requirements for projects in economically
distressed areas.
iii
0BSummary: Workforce and Industry Incentives
• Review the industry exemptions to determine whether they are meeting worth-
while needs other than economic development.
Executive action
• Establish a minimum capital investment threshold for the Virginia Talent Accel-
erator Program.
The complete list of recommendations is available on page v.
iv
Recommendations: Workforce and Industry Incentives
RECOMMENDATION 1
The General Assembly may wish to consider amending § 2.2-2204.3 of the Code of
Virginia to tie the wage threshold eligibility for the Virginia Jobs Investment Program
for newly created jobs to a percentage of the prevailing average annual wage in the
locality. New jobs should pay at least 80 percent of the local prevailing average wage.
RECOMMENDATION 2
The General Assembly may wish to consider amending § 2.2-2204.3 of the Code of
Virginia to allow reductions in minimum eligibility requirements of the Virginia Jobs
Investment Program for projects in economically distressed areas of the state.
RECOMMENDATION 3
The Virginia Economic Development Partnership staff should analyze the capital in-
vestments made by projects that have received assistance from the Virginia Talent Ac-
celerator Program and establish a minimum capital investment threshold for the pro-
gram.
RECOMMENDATION 4
The Joint Subcommittee to Evaluate Tax Preferences may wish to consider reviewing,
under its authority in § 30-338 of the Code of Virginia, the exemptions for 1) certain
printed materials for out-of-state distribution, 2) contractor temporary storage, 3) con-
trolled environment agriculture, 4) high-speed electrostatic duplicators, 5) out-of-state
nuclear facility repair, 6) taxi parts and radios, and 7) uniform rental and laundry busi-
nesses. The review’s purpose should be to determine whether these exemptions are
meeting worthwhile needs other than economic development and whether they should
be maintained, eliminated, or revised.
RECOMMENDATION 5
The General Assembly may wish to consider amending the Code of Virginia to adopt
expiration dates for the exemptions for 1) contractor temporary storage, 2) controlled
environment agriculture, 3) high-speed electrostatic duplicators, 4) out-of-state nuclear
facility repair, 5) taxi parts and radios, and 6) uniform rental and laundry businesses.
RECOMMENDATION 6
The Virginia Department of Taxation should develop new estimates of business tax
savings for the exemptions for 1) contractor temporary storage, 2) certain printed ma-
terials for out-of-state distribution, and 3) out-of-state nuclear repair facilities.
v
Recommendations: Workforce and Industry Incentives
vi
Workforce and Industry Incentives
Economic Development Incentives Evaluation Series
Virginia provides economic development incentives to encourage business growth as
part of its economic development strategy. To better understand the effectiveness of
these incentives in stimulating business activity, the General Assembly directed the
Joint Legislative Audit and Review Commission (JLARC) to conduct, on a continuing
basis, an evaluation of the effectiveness and economic benefits of economic develop-
ment incentives such as grants, tax preferences, and other assistance. (See Appendix A
for the study mandate.) This report is part of a series of annual reports that provide
comprehensive information about the effectiveness and economic benefits of individ-
ual economic development incentives offered by the state. JLARC contracted with the
University of Virginia’s Weldon Cooper Center for Public Service to perform the eval-
uation.
This report examines 10 economic development incentives to encourage workforce
improvement and support certain industries (Table). The Virginia Jobs Investment
Program (VJIP) administered by the Virginia Economic Development Partnership
(VEDP) is the state’s largest workforce-related incentive, with annual spending of
about $5 million during the 10-year period studied (FY14–FY23). VJIP provides funds
to companies for onboarding (i.e., recruitment, screening, and training) of new em-
ployees at new or expanding businesses and funds for retraining existing employees at
businesses that meet employment, capital investment, industrial sector, and other pro-
gram eligibility requirements. Seven industry-specific sales and use tax exemptions are
also included in this report. Most of these exemptions are relatively small, with the
exception being the exemption for certain printed materials for out-of-state distribu-
tion—the largest incentive covered in this report.
Spending on these workforce and industry incentives is a relatively small portion of
Virginia’s total spending on economic development incentives. Spending on these in-
centives is estimated to represent just 4.3 percent of nearly $4.2 billion in total spend-
ing on economic development incentive grants, tax credits, and sales and use tax ex-
emptions between FY14 and FY23. (See Economic Development Incentives 2024, JLARC
2024.)
1
Workforce and Industry Incentives
TABLE: Ten incentives to encourage workforce improvement or support certain
industries are covered in this report
Spending FY14–FY23
Incentive Annual average Total
Workforce improvement
Virginia Jobs Investment Program $4.9 M $49.4 M
Virginia Talent Accelerator Program 4.0 16.0
Worker Training Tax Credit 0.1 0.2
Industry tax exemptions
Certain printed materials for out-of-state
9.9 99.4
distribution exemption
Uniform rental and laundry businesses exemption 0.8 8.2
Out-of-State Nuclear Facility Repair exemption 0.1 1.4
Taxi parts and radios exemption 0.1 1.2
Contractor temporary storage exemption 0.1 1.1
High-speed electrostatic duplicators exemption <0.1 0.1
Controlled environment agriculture exemption -- --
Total, workforce and industry incentives $17.7 M $177.1 M
SOURCE: Weldon Cooper Center review of Code of Virginia and agency documents.
NOTE: Spending on tax credits includes amounts claimed. The controlled environment agriculture exemption was
adopted in 2023, so no spending had occurred during this study’s timeframe. Spending for FY24 is estimated to be
$150,060. Spending for the Virginia Talent Accelerator Program and Worker Training Tax Credit was for FY20–FY23.
Virginia provides other workforce improvement incentives and industry exemptions
that are not included in this report. This report does not include workforce improve-
ment incentives that provide assistance directly to the worker, such as the Workforce
Credential Grant (FastForward program), which covers a portion of the tuition for
certain short-term workforce training programs at Virginia’s community colleges. Sev-
eral industry-related sales tax exemptions are also not included but were addressed in
prior reports in this series, including
• research and development exemption and spaceport users exemption (Science
and Technology Incentives, JLARC 2022);
• airline common carrier exemption, aircraft parts, engines, and supplies exemp-
tion, railroad common carrier exemption, railroad rolling stock exemption, and
ships and vessels exemption (Trade and Transportation Incentives, JLARC 2021);
• data center exemption, pollution control equipment and facilities exemption,
semiconductor manufacturers exemption, and semiconductor wafers exemp-
tion (Data Center and Manufacturing Incentives, JLARC 2019); and
• film, TV, and audio production inputs exemption (Film Incentives, JLARC 2017).
2
Workforce and Industry Incentives
3
Workforce and Industry Incentives
1. Virginia Jobs Investment Program
The Virginia Jobs Investment Program (VJIP) is one of the state’s oldest economic
JLARC previously development incentives and is designed to encourage job creation and employee train-
assessed VJIP in 2018 as
part of its ongoing series
ing at new or expanding businesses. VJIP provides grant funding to eligible businesses
of evaluating the state’s
• to offset the costs for recruiting and training new employees or
economic development
incentives. Several • to offset employee retraining costs of expanding businesses that make techno-
changes were made to
improve the program
logical or equipment upgrades (Table1-1).
based on JLARC’s Almost all states offer some form of job creation or training incentive to encourage
recommendations. The
current assessment is of
business location or expansion. (See Appendix D for more information on these in-
the revised program. centives by state.)
TABLE 1-1
Virginia Jobs Investment Program (VJIP) encourages job creation and worker training
Purpose Incentivize job creation and employee training at new or expanding businesses.
Eligible projects Businesses in tradable industry sectors, such as manufacturing, distribution, corporate headquarters,
IT, and research and development. (Grants for retraining are limited to manufacturers and
distribution centers.)
Must meet minimum requirements for new jobs (or number of retrainings) and capital investment.
Pay employees in new jobs or trainees at least 120 percent of the state or federal minimum wage,
whichever is higher (currently Virginia’s is higher at $12.41 per hour).
Program features Grant is performance based. Businesses must provide recruitment and training plans and costs as
part of the application process and submit reimbursement request forms that include information
concerning each employee hired (or retrained) to receive approved grant funding.
Employees for which reimbursement is requested must have been working for at least 90 days (new
jobs) or after training has been completed (retraining because of upgrades).
Reimbursement is on a per job basis (either per job created or per job retrained) and is designed to
cover only a portion of the cost of recruitment or training specified in recruitment and training plans
and to account for the project’s expected benefit to the state.
Use of grant New jobs programs: offset recruiting and training costs incurred by businesses that create new jobs.
Retraining programs: offset employee retraining costs incurred by businesses that implement
technological or equipment upgrades.
SOURCE: Weldon Cooper Center review of the Code of Virginia and agency documents.
NOTE: Authorized by § 2.2-2204.3.
VJIP, which has been administered by the Virginia Economic Development Partner-
ship (VEDP) since 2014, has four sub-programs that support job creation and worker
training. Two of the sub-programs are for large businesses with 250 or more employ-
ees, and the other two are for smaller businesses (Table 1-2). All four sub-programs
are targeted at businesses in tradable industries. The new jobs programs are targeted
at corporate headquarters, distribution centers, IT, manufacturing, research and devel-
opment, and shared service center companies. The retraining programs are available
4
Workforce and Industry Incentives
only to manufacturers and distribution centers. In addition to grant funding, VJIP also
provides consulting services, such as providing guidance for employee recruitment and
selection, evaluating training needs, and connecting firms with workforce and higher
education and training providers.
TABLE 1-2
Minimum requirements vary by VJIP sub-program
Program requirements
Program Jobs Capital investment a Size of business
Virginia New Jobs 25 new
Business with more than
$1,000,000
250 employees
Workforce Retraining 25 retrained
Small Business New Jobs 5 new
Business with 250 or
$100,000
fewer employees
Small Business Retraining 5 retrained
SOURCE: Weldon Cooper Center review of the Code of Virginia and agency documents; interviews with agency staff.
NOTE: Requirements for jobs and capital investment are minimums. Size of business requirements are company wide.
a
New capital investment. JLARC’S Economic
Development Incentives
reports provide summary
The reimbursement amount per job, which is customized by VEDP for each project,
information on spending
and the number of jobs the business anticipates hiring or retraining, are used to deter- on the state’s economic
mine the maximum VJIP award the business can receive. For example, if the reim- development incentives.
bursement per job is $800 and the business expects to create 100 jobs, the maximum This report has been
issued annually since
award would be $80,000. No funds are distributed until jobs are created or employees
2017.
are retrained; therefore, the total award to a business may be less than the approved https://jlarc.virginia.gov/
maximum if the business creates fewer jobs or retrains fewer employees than expected. econ-development.asp.
VJIP is one of the state’s most widely used incentives
VJIP is one of the largest economic development incentive grants in Virginia in both
the number of recipients and total amount awarded. The program awards around $7
million annually, and only the Real Property Investment Grant awards a greater num- VJIP awards over the 10-
ber of grants annually (approximately 150 compared with VJIP’s 70 grants). (See Eco- year period are higher
than actual spending
nomic Development Incentives 2024, JLARC 2024, and prior reports in the series.) because funding is
In a 2020 survey, local economic developers rated VJIP as the state’s most useful eco- distributed only after
jobs are created or
nomic development incentive program out of 33 incentives, likely because it is a widely
workers have completed
used incentive. Eighty percent of respondents indicated the incentive program was training, and some
“very useful,” and 12 percent said it was “somewhat useful,” giving the program the projects do not create or
highest average rating of all incentives. Nearly all respondents were familiar with the train as many jobs as
expected.
program, with only 5 percent reporting not being familiar with it. (See Appendix E for
results of the local economic developer survey.)
5
Workforce and Industry Incentives
VJIP awards have declined, and declining awards per job could impact
the grant’s attractiveness
Although VJIP has one of the highest number of grant recipients, total VJIP award
amounts, the number of awards, and the award per job have all declined over time.
Total VJIP award amounts and the number of awards have declined for several rea-
sons, including a reduction in annual program appropriations, a suspension of retrain-
ing awards between October 2018 and July 2023 (to revamp the program because of
reduced appropriations), and the creation of the Virginia Talent Accelerator Program,
which larger projects typically choose over VJIP (see the next section of this report
for information about this program.) The number of awards per year averaged just
over 80 during the first five years of the study period, but the average declined to about
half this amount during the last five years. VJIP awarded $967 per job on average in
FY14 (in real dollars adjusted for inflation), but the reimbursement dropped to $785
per job by FY23, a 19 percent decrease (Figure 1-1). In contrast, the average award for
other incentive grants (excluding custom grants) increased 32 percent over the same
time period, from $2,801 per job in FY14 to $3,760 per job in FY23 (in real dollars
adjusted for inflation).
FIGURE 1-1
VJIP awards have declined over time
VJIP is estimated to
have a lower ability to
sway business decisions
than other incentives, in
part, because of its
lower award amount per
job. Higher awards per
job mean that a higher
percentage of expected
project costs are
covered by the grant
and, therefore, are likely
to be more effective in
influencing location or
expansion decisions.
According to a scale
developed by a leading
expert, Tim Bartik (2018),
VJIP is estimated to
influence an average of
0.6 percent of decisions
to locate or expand in SOURCE: Weldon Cooper Center analysis of VEDP data.
Virginia. NOTE: Award amount per job is adjusted for inflation.
6
Workforce and Industry Incentives
Declining award amounts per job over time, in particular, could reduce the program’s
“attractiveness” and further reduce its ability to influence business decisions. VJIP is
estimated to have a lower ability than other incentives to sway business location or
expansion decisions because of its lower award amount. JLARC’s 2018 evaluation of
VJIP found, while the grant was not a decisive factor for many business location or
expansion decisions, it was important in their decision to train workers and resulted in
workforce improvements. At some point, however, the award per job could become
so low that the grant application and compliance costs would outweigh its value, par-
ticularly for small businesses. Some businesses may be less likely to seek the grant to
train and improve their workforce, both of which benefit the state economy, and an
incentive with a low value relative to other states will reduce the state’s competitiveness.
VJIP meets majority of criteria for effective incentive design but has
a low wage threshold and no special provision for distressed areas
VJIP, like other incentive programs administered by VEDP, has many program design
features research literature says are needed for effective economic development incen-
tives. VJIP fully meets five of the criteria of effective design and partially meets two
of the criteria (Table 1-3). VJIP partially meets the return on investment (ROI) criteria
because, while ROI analysis is used to make award decisions, the grant award per job
does not vary much among projects. This finding suggests that other factors, such as
firm recruitment and training costs, play a more significant role in the size of awards
than ROI factors, such as level of capital investment, wages paid, and job creation.
The program does not make upfront payments (it distributes grant funds on a reim-
bursement basis after jobs have been in place for 90 days), but it does have a clawback Incentive research
provision if the minimum capital investment is not achieved. recommends that
projects should pay the
VJIP does not meet two criteria of effective incentive design. The program’s wage local prevailing average
requirement is lower than the local prevailing average wage. Research recommends wage or higher. Higher
using the local prevailing average wage as a minimum requirement so that new projects wage jobs are associated
with higher multiplier
do not erode local wage standards. In addition, VJIP has no allowance for economi- effects: higher wages
cally distressed areas. Preferences for economically disadvantaged areas can improve mitigate the impact of
the social benefits of incentives. Distressed high unemployment areas typically have the indirect and induced
proportionally more immobile, involuntarily unemployed or underemployed workers, employment from new
projects that are often in
and benefit more from employment rate increases than more economically advantaged lower wage retail trade
areas. The employment of existing unemployed and underemployed residents in dis- and service industries.
tressed areas should reduce social service costs while not increasing public infrastruc-
ture costs. In contrast, public infrastructure costs are more likely to increase when new
workers move into an area of relatively high employment to fill jobs. While the pro-
gram does not officially have these criteria, VJIP staff said that both 1) project wages
relative to the local average prevailing wage and 2) the economic conditions of the
locality are factored into their application scorecard for determining the award amount.
7
Workforce and Industry Incentives
TABLE 1-3
VJIP meets majority of features of effective incentive design
Requirement VJIP
Minimum eligibility thresholds 4
Due diligence review 4
ROI-based award 2
Tradable industry 4
Pay average local wage or higher ◯
Competitive projects 4
Project/program cap 4
Special provisions to target distressed area 0
Up front awards with performance clawbacks 2
SOURCE: Weldon Cooper Center review of program documentation and economic development incentive research.
NOTE: Expiration date is not included as a criterion for grant programs because these programs receive annual ap-
propriations and, unlike tax incentives, undergo legislative review during the appropriation process. VJIP allows the
minimum wage threshold to be waived in areas with above average unemployment rates, however this is atypical
because most programs with allowances reduce rather than waive the minimum threshold for distressed areas.
4 Meets criteria 2 Partially meets criteria 0 Does not meet criteria
VJIP projects collectively met job creation goals
VJIP projects have collectively met their job creation goals. Whether a grant program
collectively achieves its job creation goal is a key measure of success because it is not
reasonable (according to incentive research nationally and in Virginia) to expect every
project to meet its goal. Many factors can affect project employment levels, including
factors like a downturn in the economy that are outside of a business’s control. It is
reasonable, however, to expect that some projects will exceed their employment goals
so that overall the program meets its employment goal. VJIP projects collectively met
reported job creation performance within two years of the grant award (Figure 1-2).
The program did not maintain 100 percent employment collectively in years eight and
nine of the study period, but this may have been because of the COVID-19 pandemic,
at least in part, which resulted in a significant downturn in economic activity for many
industry sectors.
8
Workforce and Industry Incentives
FIGURE 1-2
VJIP projects collectively met their job creation goals in year two after the
grant award
Economic impact
analysis of expenditures
by incentive recipients
was conducted using
economic modeling soft-
ware developed by REMI,
Inc.
(See Appendix H [online
only] for the economic
impact analysis used in
this study.)
SOURCE: Weldon Cooper Center analysis of VEDP and VEC data. Net impact is the
NOTE: The program did not maintain 100 percent employment collectively in years eight and nine, in part because increase in economic
of the COVID-19 pandemic, which resulted in a significant downturn in economic activity for many industry sectors. activity induced by the
In addition, not all projects had been in place long enough to have employment data eight or nine years after the incentive, adjusted for
award. For example, year eight for a project approved in FY14 (beginning of the study period) corresponds with FY22. the opportunity cost of
increasing taxes to pay
for the incentive.
VJIP has moderate economic benefits and return in revenue
(See online Appendix I
VJIP is estimated to generate additional economic activity for the state (Table 1-4). for information on the
VJIP is estimated to have increased private employment by 140 jobs, Virginia GDP by total economic impact
$33 million, and personal income by $16 million each year between FY14 and FY23. and the opportunity cost
of increasing taxes.)
This analysis assumes only a portion of the economic activity is attributable to the
grants.
These economic benefits and the grant’s return in state revenue are moderate com- Incentives, on average,
pared with other incentives. When assessed per $1 million spent on the grant program, are estimated to gener-
VJIP has moderate economic benefits compared with the economic benefits across ate an additional 58 jobs,
other incentives. When assessed per $1 million spent, the program generates an addi- $9 million in GDP, and
$5 million on personal
tional 45 private jobs, nearly $10 million in GDP, and $5.1 million in personal income. income per $1 million
These benefits are in line with the economic benefits of the average state incentive. spent and have a return
The return in state revenue for every $1 spent on VJIP is 42¢, which is also similar to in revenue of 41¢ per $1
the return in revenue for the average incentive. (See Appendix C for more detail on spent. (See Economic
Development Incentives
the comparison of economic benefits and return in revenue generated by Virginia in-
2024, JLARC 2024.)
centives.)
9
Workforce and Industry Incentives
Because job creation typically has higher impacts than job training for existing employ-
ees, the economic impacts differ between the job creation and job training components
of the VJIP program. When assessed per $1 million spent, the job creation programs
are estimated to generate an additional 54 private jobs, $12 million in Virginia GDP,
and $6 million in personal income, compared with the retraining programs, which are
estimated to generate only three jobs, $0.6 million in Virginia GDP, and $0.5 million
in personal income.
TABLE 1-4
VJIP has moderate economic impacts and moderate return in revenue
Annual average
FY14–FY23
Net impact to Virginia economy
Private employment 140 jobs
Virginia GDP $32.7 M
Personal income $15.7 M
Impact to Virginia economy per $1 million of incentive
Private employment 45 jobs
Virginia GDP $10.0 M
Personal income $5.1 M
Impact to state revenue
Total revenue $1.6 M
Incentive awards $3.7 M
Revenue net of awards -$2.1 M
Return in revenue 42¢ for every $1 spent
SOURCE: Weldon Cooper Center economic impact analysis of completed projects that received a VJIP award between
FY14 and FY23.
NOTE: Includes direct, indirect, and induced impacts. Assumes that 0.6 percent of the jobs created by VJIP projects
are attributable to the grants. Includes direct, indirect, and induced impacts. The gross impact on Virginia’s economy
is used to calculate the impact per $1 million for incentive awards and the impact to state revenue. This is consistent
with how the economic development research literature typically calculates these impacts. (See Appendix I [online
only] for detailed results on total impact of the grants, impact of raising income taxes by the amount of the grant
[opportunity cost], and revenue generated by source.)
Economic benefits and the return in revenue are moderate even though only a very
small portion of the activity by VJIP-funded projects (0.6 percent) is attributed to the
grants. Results are moderate because projects have characteristics of high impact pro-
jects. Half of the projects are in the manufacturing sector (a tradable industry sector
with high employment multipliers), and some projects pay relatively high wages even
though the wage threshold to qualify for the program is low (46 percent of completed
projects paid the local prevailing average wage or higher).
Several modifications would improve VJIP’s economic benefits to the
state
Several changes were made to VJIP based on JLARC’s 2018 recommendations to im-
prove its effectiveness and economic benefits. VJIP began using a scoring template for
determining the grant award that is similar to the return on investment analysis used
10
Workforce and Industry Incentives
for other VEDP grants, such as the Commonwealth’s Development Opportunity
Fund (COF), instead of the program’s more informal discretionary method that was
previously used. The new scoring template, however, may need additional improve-
ments because the grant award per job has declined over time in real dollars. VEDP
staff reported they are in the process of reviewing and revising their award scorecard
to ensure that the award amount is appropriate and relevant to current economic con-
ditions. Because of these forthcoming revisions, the award per job amount should
increase beginning with projects approved in FY26.
VJIP also began requesting information about new skills, credentials, and wage in-
creases that are expected to result from the retraining activities on the grant application
(Recommendations 2 and 3 in Workforce and Small Business Incentives, JLARC 2018).
VJIP also adopted other changes to improve the program, including
• Increasing the minimum thresholds for the retraining sub-programs.
The jobs trained and the capital investment thresholds for the retraining sub-
programs were increased to the thresholds for the new jobs sub-programs.
• Moving administration of the program. Program administration was
moved to VEDP’s Incentives Division with support from the division on Re- In 2018, the minimum
gional Talent Solutions and Business Outreach in 2022. This placement pro- wage for project eligibil-
ity was 1.35 times the
vides more consistency in compliance and verification practices across VEDP federal minimum wage
grant programs, and the talent solutions and business outreach unit provides ($7.25 per hour) or
targeted outreach to businesses and localities on their specific needs. $9.79.
• Administering a customer satisfaction survey. The survey is used to better The General Assembly
understand program impact and obtain recommendations for program im- increased Virginia’s
minimum wage annu-
provement. ally beginning in 2021.
Several additional changes would further improve VJIP’s effectiveness and economic Currently, the Virginia
minimum wage is
benefits because they would better align the program with effective incentive design $12.41, and the mini-
practices and other VEDP programs like COF. mum wage for VJIP pro-
ject eligibility (1.2 times
Set VJIP’s minimum wage threshold to the local average prevailing wage, or a the state or federal mini-
percentage of it mum wage, whichever is
higher) is $14.40.
The 2018 JLARC evaluation recommended VJIP raise its minimum wage threshold to
better target businesses with characteristics of high economic impact, increasing the
benefits of the grants (Recommendation 1 in Workforce and Small Business Incentives,
JLARC 2018). Raising the wage threshold is also consistent with the goal of maintain-
ing regional wage standards and would bring the program’s wage requirements into
conformity with the job creation incentive programs of other states and other Virginia
job creation programs.
VJIP’s current minimum eligible wage threshold is statutorily tied to the state and fed-
eral minimum wage (1.2 times the state or federal minimum wage, whichever is higher),
which has several potential problems
11
Workforce and Industry Incentives
• the threshold is tied to statutory changes in the minimum wage rather than
market conditions, which may not reflect wage increases attributable to infla-
tion and increased productivity;
• the threshold is not tied to local labor market conditions. A $14.40 eligible wage
is below the local average prevailing wage in every Virginia locality, and is less
than one-third of the average in some high-income localities; and
• even with Virginia’s statutory minimum wage increase in 2026, VJIP’s wage
threshold will likely lag the average minimum wage established by other state
job creation incentive programs, which are often tied to state or local average
wages.
Tying VJIP’s wage threshold to the local prevailing average wage instead of the mini-
mum wage would increase the wage threshold projects must meet. More importantly,
this change would prevent projects that just meet the current VJIP wage threshold
($14.40 per hour, or just under $30,000 per year) from receiving an award if they locate
in regions with above average wages and low unemployment, like Northern Virginia
(average wage of $65,000 or higher depending on locality), and depressing the region’s
wages. Tying the wage threshold to local average wages would also be consistent with
other Virginia incentive programs such as COF, the Virginia Economic Development
Incentive Grant, and the Tobacco Region Opportunity Fund. The standard, however,
does not have to be 100 percent of the prevailing average wage like COF. (Only 43
percent of VJIP projects paid 100 percent of the local prevailing average wage during
the study period.) For example, the threshold could be set at 80 percent of the local
prevailing average wage.
RECOMMENDATION 1
The General Assembly may wish to consider amending § 2.2-2204.3 of the Code of
Virginia to tie the wage threshold eligibility for the Virginia Jobs Investment Program
for newly created jobs to a percentage of the prevailing average annual wage in the
locality. New jobs should pay at least 80 percent of the local prevailing average wage.
Reduce minimum eligibility thresholds for distressed areas
VJIP allows the minimum wage threshold to be waived in areas with above average
unemployment rates, but there are no provisions for reducing other eligibility thresh-
olds in distressed areas. Reducing job creation and capital investment thresholds and
revising the wage provision to reduce (rather than completely waive) the wage thresh-
old, would better align the program with criteria for effective incentive design. Many
other Virginia programs make allowances for economically distressed regions by re-
ducing wage eligibility criteria (e.g., COF requires only 85 percent of local average
prevailing wages), reducing job creation qualifications (e.g., the Major Business Facility
Job Tax credit drops the job creation threshold from 50 to 25 jobs), decreasing capital
investment thresholds, and creating a higher grant amount per eligible job created or
12
Workforce and Industry Incentives
worker trained. The criteria used to designate economically distressed localities for
COF could be used for the program.
RECOMMENDATION 2
The General Assembly may wish to consider amending § 2.2-2204.3 of the Code of
Virginia to allow reductions in minimum eligibility requirements of the Virginia Jobs
Investment Program for projects in economically distressed areas of the state.
13
Workforce and Industry Incentives
14
Workforce and Industry Incentives
2. Virginia Talent Accelerator Program
The Virginia Talent Accelerator Program is a “turnkey” workforce program designed
The program is “turn-
to attract businesses to the state by providing an array of customized recruitment and key” because it provides
training services. Businesses receive no funds from the program, only in-kind services, all-inclusive services to
which are at no cost to the business. The program operates on a fast timeline to help give employers access to
businesses quickly staff their operations with skilled workers by providing customized a “ready-to-work” labor
pool.
services including recruitment assistance, candidate screening and evaluation, worker
onboarding, customized training, and organizational development training (Table 2-1).
The Virginia Economic Development Partnership (VEDP) began receiving appropri-
ations in 2019 to develop and staff the program. Virginia and four other states have
created customized workforce recruitment and training programs, like the Virginia
Talent Accelerator Program, to help address businesses’ concerns about the availability
of a skilled and ready workforce. (See Appendix D for more information about the
customized workforce programs in other states.)
Projects can use the full array of program services or only some services depending
on their needs. VEDP program staff collaborate with businesses to identify and de-
velop the support services that address their specific workforce needs, beginning with
a needs assessment that examines business processes, job roles, tasks, culture, and ex-
isting recruitment and training resources. The Virginia Talent Accelerator Program has
an in-house design and delivery team with private-sector experience that directly pro-
vides recruitment and training services. The program occasionally employs temporary
consultants for specialized needs and to help with peaks in demand.
The newer Virginia Talent Accelerator Program allows the state to offer a broader
array of workforce training services than is available through the older Virginia Jobs
Investment Program (VJIP), which is also administered by VEDP. Both programs
have a common goal of providing workforce recruitment and training assistance to
competitive and tradable sector companies locating and expanding in Virginia. VEDP
staff indicate that projects must choose between the two programs rather than receive
assistance from both. A primary difference between the programs is that the Virginia
Talent Accelerator Program provides customized services directly to businesses, while
VJIP provides grant funding to help businesses cover the cost of recruitment and
training services. So far, the Virginia Talent Accelerator Program has predominantly
served manufacturers and larger businesses, while VJIP recipients are typically smaller
and more service-oriented businesses. Businesses receiving Virginia Talent Accelerator
Program assistance from FY20 through FY23 had 1,475 employees, on average, at the
time of assistance, compared with only 228 for VJIP projects between FY14 and
FY23.
15
Workforce and Industry Incentives
TABLE 2-1
Virginia Talent Accelerator Program provides customized workforce services to attract
businesses to the state
Purpose Attract businesses to the state by providing an array of worker recruitment and training services so
firms can quickly staff their operations with skilled workers.
Eligible Project must be competitive and in a tradable sector industry
projects Project must create at least 50 jobs within the first year (reduced to 25 jobs for manufacturers or
distribution centers).
Jobs must pay at least the prevailing average wage of the locality (reduced to 85 percent of the
prevailing average wage in distressed localities).
Projects must make a “significant” capital investment, but this is not defined.
Company is expected to invest time, pay employees during training, and assist in developing the
training before the project begins.
Services Recruitment assistance: program staff design and execute recruitment campaigns tailored to the
offered company’s needs using strategies that may include digital marketing, advertising, broadcast-quality
videos, and local job fairs to attract a wide pool of candidates.
Candidate screening and evaluation: program staff assist firms in assessing applicants, including
providing skills testing, behavioral interviews, and aptitude evaluations to ensure the right fit for the
company.
Staff onboarding: program staff assist companies in onboarding new hires, ensuring they are familiar
with the company’s operations and workplace culture.
Customized training programs: program staff develop training programs based on job roles,
specialized equipment, company culture, and industry requirements focusing on what new hires need
to learn during the first few days or weeks on the job to ensure both employee and employer success
during the startup or expansion phase. Training is provided for foundational skills (e.g., soft skills,
workplace readiness, basic technical skills, industry-specific knowledge), process-level skills (e.g.,
manufacturing processes, inventory management), and procedural level skills (e.g., equipment
operation, IT systems training). Training content can include hands-on training, simulations,
multimedia modules, and instructor-led classroom sessions. Training materials that are developed
become the exclusive property of the company.
Organizational development programs. The program offers organizational development, operational
excellence, and leadership training, as well as consulting services to help companies establish a
collaborative culture and optimize individual performance.
SOURCE: Weldon Cooper Center review of agency documents.
Virginia Talent Accelerator Program has provided $17 million in
services to 41 projects, most of which are still underway because
program is new
The Virginia Talent Accelerator Program has provided customized workforce services
to 41 projects between FY20 and FY23 at an estimated cost of $17.3 million. Most
projects were still underway in FY23, with nine projects having been completed and
seven having been canceled before services were provided. Most (80 percent) of the
projects involved manufacturers or controlled environment agriculture facilities. Busi-
nesses received customized services from the program valued at an average of
$421,000 per project, equating to approximately $1,520 per job, on average. The cost
of services per job varied widely by project, from $711 to $2,630, depending on the
16
Workforce and Industry Incentives
extent of customized services provided by the program. The program’s cost also varies
based on how many companies the program is serving at the same time (serving sev-
eral companies at a time reduces overhead costs). VEDP staff estimate that the market
value of their service is twice what it costs the state.
Virginia Talent Accelerator Program meets most criteria of effective
incentive design
The Virginia Talent Accelerator Program meets most of the criteria that research in-
dicates is needed for effective incentive design. Projects must undergo due diligence
reviews, be competitive and in tradable industry sectors, and meet local prevailing wage
standards. In addition, the program has provisions to target projects in distressed areas
(Table 2-2). VEDP staff report that the program is particularly attractive to businesses
locating in distressed areas, because it helps address the difficulty of finding workforce
recruitment and training services, which are often limited in these areas.
TABLE 2-2:
Virginia Talent Accelerator Program meets most features of effective incentive
design
Virginia Talent Accelerator
Requirement Program
Minimum eligibility thresholds 2
Due diligence review 4
ROI-based award 2
Tradable industry 4
Pay average local wage or higher 4
Competitive projects 4
Project/program cap 4
Special provisions to target distressed area 4
Upfront awards with performance clawbacks 4
SOURCE: Weldon Cooper Center review of program documentation and economic development research.
The program only partially meets two criteria for effective incentive design.
• The program has minimum wage and job creation requirements, but it lacks
specific capital investment requirements. The guidelines state that participants
should make “significant” capital investments, but the term “significant” is not
clearly defined.
• The funding amount allotted to a project to cover the cost of services is based
on project recruitment and training needs instead of return on investment
(ROI) considerations. However, because program services are usually com-
bined with other incentive awards, like custom grants, which are based on ROI
17
Workforce and Industry Incentives
criteria, the “award” amount is factored into the overall ROI assessment for
the project’s total incentive package.
Initial projects would have proceeded without the Virginia Talent
Accelerator Program, but stakeholders prefer it to other workforce
training incentives
Responses to a 2022 Weldon Cooper Center survey, which was administered two years
Weldon Cooper Center
staff surveyed compa- after the program began, indicated that the Virginia Talent Accelerator Program was
nies that had received not a critical factor in most recipients’ decisions to locate or expand in Virginia. Seven
incentives from eight out of 10 respondents indicated that they would have proceeded with the project as
programs and 14 cus-
planned without the program (Figure 2-1). This is a higher percentage than reported
tom grants to assess the
importance of incentives by recipients of other location and expansion programs, but it may not fully reflect
on their business perfor- the program’s current impact, because it is only based on survey results from initial
mance. The survey was projects. VEDP staff believe that if more recent recipients of the program’s services
conducted in 2022, and
were surveyed, a higher proportion would rate it as having an impact on their location
the response rate was 30
percent. or expansion decisions because the program is now more fully developed.
Another reason that the program may not have been considered a critical factor is that
many of the respondents received other sizeable incentives, including custom grants
(e.g., LEGO received a custom grant of $75 million), that on a per job basis were larger
than Virginia Talent Accelerator Program “awards” ($7,600 per job for other grants,
including custom grants, compared with $1,520 per job for program awards). How-
ever, VEDP staff indicate they view Virginia Talent Accelerator Program awards as
differentiators or tipping factors in a firm’s final decision to choose Virginia, when
they are combined with other awards.
A majority of recipients reported that the program was important in helping their firm
create new jobs, expand their current facilities, create new facilities in Virginia, and
increase the economic value of the company. Most program recipients indicated they
were very satisfied with the recruitment services, but because the program was new
and projects had not received or were in the process of receiving training services at
the time of the survey, a more comprehensive assessment of the program was not
possible.
Businesses and site selection consultants report that “turnkey” customized workforce
training incentives, like the Virginia Talent Accelerator Program, are favored over
grants and tax incentives for several reasons.
• Cost savings. Turnkey programs provide training services at no cost to the
business, reducing the upfront investment that grants or tax credits often re-
quire that provide funding on a reimbursement basis. VEDP staff also report
the in-kind services they provide projects are half what it would cost if the
project obtained them from a private company.
18
Workforce and Industry Incentives
• Speed and flexibility. These programs can respond more quickly than other
incentives, particularly for firms that are unfamiliar with Virginia or the U.S.
and do not have the human resource capabilities to handle mass trainings at
once. The training is provided in-house so businesses do not have to spend
time finding training resources on their own, and the training can meet the
timeframes businesses need. This training is also more adaptable to changes in
training needs if new technologies or processes are introduced.
• Customization. These programs are designed specifically to meet the recruit-
ment and training needs of the company, which helps ensure quality and the
relevance of the training provided.
• Long-term relationships with state resources. In-kind training programs
often foster closer relationships with the state than grant programs or tax cred-
its that provide mostly financial assistance. These programs help link compa-
nies with a variety of state resources, such as community colleges’ workforce
training.
• Enhanced regional competitiveness. States that have “turnkey” programs
have consistently ranked higher than states without them on state workforce
development rankings by entities such as CNBC’s “Best States for Business”
and Area Development’s “Top States for Doing Business.” VEDP staff indi-
cate the program is also a marketing tool that enables Virginia to differentiate
itself from other states.
FIGURE 2-1
Initial Virginia Talent Accelerator Program awardees reported their firm would
have proceeded with the project as planned without the award at higher rates
than for other grants
SOURCE: Weldon Cooper Center survey of grant award recipients, 2022.
NOTE: AFID=Agriculture and Forestry Industries Development grant; VIP = Virginia Investment Performance grant.
19
Workforce and Industry Incentives
Economic impact Virginia Talent Accelerator Program has low economic benefits and a
analysis of expenditures moderate return in state revenue
by incentive recipients
was conducted using
The Virginia Talent Accelerator Program is estimated to generate minimal additional
economic modeling soft- economic activity for the state, accounting for the offsetting personal income tax rev-
ware developed by REMI, enues required to fund the program (Table 2-3). An estimated 23 jobs, $4 million in
Inc. Virginia GDP, and $2 million in personal income are added to the Virginia economy
(See Appendix H [online per year on average because of the program. The analysis factors in activity for only
only] for the economic
nine completed projects over two years since the program is new. Therefore, it may
impact analysis used in
this study.) not capture the full impacts of the projects over a longer period.
When assessed per $1 million spent on the program, the economic benefits of the
Virginia Talent Accelerator Program are low compared with the economic benefits
across other incentives. (See Appendix C for more detail on the comparison of eco-
Net impact is the
increase in economic nomic benefits generated by Virginia incentives.) The return in state revenue for every
activity induced by the $1 spent on the program is moderate (44¢ per $1 spent). If the program’s service value
incentive, adjusted for is estimated to be twice the cost to the state (as stated by VEDP), the economic ben-
the opportunity cost of
efits are at the high end of the moderate range, and the return in revenue is high (88¢
increasing taxes to pay
for the incentive. per $1 spent).
(See online Appendix I
for information on the TABLE 2-3
total economic impact
Virginia Talent Accelerator Program has low economic benefits to the state and
and the opportunity cost
of increasing taxes.)
a moderate return in state revenue
Annual average
FY22–FY23
Net impact to Virginia economy
Private employment 23 jobs
Virginia GDP $4.5 M
Personal income $2.3 M
Impact to Virginia economy per $1 million of incentive
Incentives, on average,
Private employment 32 jobs
are estimated to gener-
Virginia GDP $6.2 M
ate an additional 58 jobs,
Personal income $3.2 M
$9 million in GDP, and
$5 million on personal Impact to state revenue
income per $1 million Total revenue $320,110
spent and have a return Incentive awards $727,880
in revenue of 41¢ per $1 Revenue net of awards -$159,543
spent. (See Economic Return in revenue 44¢ for every $1 spent
Development Incentives SOURCE: Weldon Cooper Center economic impact analysis of amount of assistance provided FY22–FY23.
2024, JLARC 2024.) NOTE: Includes direct, indirect, and induced impacts. Gross impact on Virginia’s economy is used to calculate impact
per $1 million in incentive awards and impact to state revenue. This is consistent with how the economic development
research literature typically calculates these impacts. (See Appendix I [online only] for detailed results on total impact
of the program, impact of raising income taxes by the amount of the program [opportunity cost], and revenue gen-
erated by source.)
20
Workforce and Industry Incentives
Minor changes could improve the Virginia Talent Accelerator
Program’s effectiveness
The Virginia Talent Accelerator Program is fairly new, and program effectiveness
could not be fully evaluated since most projects are still underway. However, the pro-
gram is estimated to have moderate return in state revenue, and, though recipients
reported it was not a critical factor for location and expansion decisions, it may help
ensure businesses receiving other incentives, such as custom grants, are successful at
meeting and maintaining their job creation goals by having trained workers. Several
minor improvements to the program could be considered to enhance its alignment
with effective incentive design.
Adopt capital investment eligibility requirements
The Virginia Talent Accelerator Program should require that projects meet a minimum
capital investment threshold to better align the program with effective incentive design
and other Virginia incentives. The program does not currently have a minimum capital
investment requirement, though program guidelines suggest that projects must make
a “significant capital investment.” The program’s capital investment thresholds could
be set at a level similar to COF or VJIP. (The program’s minimum job creation require-
ments are already similar to these programs.) The capital investment threshold for
COF is $5 million for 50 or more new jobs or $100 million if the job creation threshold
is reduced to 25 new jobs. VJIP has a minimum capital investment threshold of $1
million. The majority of projects receiving services from the Virginia Talent Acceler-
ator Program would likely meet the COF or VJIP threshold since many received cus-
tom or other large grant awards. VEDP staff could analyze the capital investments
made by projects that have received assistance to set an appropriate minimum capital
investment threshold. Different thresholds could be established depending on whether
the project is a new (higher threshold) or an expanding business (lower threshold).
RECOMMENDATION 3
The Virginia Economic Development Partnership staff should analyze the capital in-
vestments made by projects that have received assistance from the Virginia Talent Ac-
celerator Program and establish a minimum capital investment threshold for the pro-
gram.
Virginia Talent Accelerator Program accountability needs to be strengthened
Unlike nearly all other economic development incentive programs, the Virginia Talent
Accelerator Program is not specifically authorized or established in the Code of Vir-
ginia. The program was initially created with a $2.5 million appropriation to VEDP,
and the amount has increased to $9 million annually for FY23 and FY24, putting the
program on track to be one of the state’s larger grant programs. The budget language
for the program references only the appropriation and does not establish any program
requirements.
21
Workforce and Industry Incentives
If the General Assembly wishes to continue funding the program, it should establish
more formal accountability and transparency. One way to do so would be to establish
it in the Code of Virginia. Statute could more clearly define the program’s mission,
eligibility requirements, and scope. In addition, statute could more formally clarify the
relationship of the program with other workforce programs and agencies (e.g., Virginia
Works, the Virginia Community College System, and local workforce boards). Alter-
natively, accountability and transparency could be strengthened by articulating the mis-
sion and requirements of the program in the appropriation act.
Provide additional information about the program on the VEDP website
VEDP should add more information on its website about the Virginia Talent Accel-
erator Program for interested firms, similar to its other programs. Additional infor-
mation should include local prevailing wages by locality, performance report formats,
a sample performance agreement, and other materials.
22
Workforce and Industry Incentives
3. Worker Training Tax Credit
The purpose of the Worker Training Tax Credit is to encourage businesses to train
workers, with the purpose of improving productivity and employee retention (Table
3-1). The 2019 General Assembly adopted the worker training tax credit to replace a
similar tax credit—the Worker Retraining Tax Credit. JLARC recommended eliminat-
ing the previous retraining tax credit in a 2018 evaluation because it was not effective
at encouraging businesses to retrain workers (Workforce and Small Business Incentives,
2018). Eligibility for the current worker training tax credit is similar to the prior credit,
but the value of the credit was marginally increased to make it more attractive. Specif-
ically
• the percentage of reimbursable eligible training expenses increased from 30
percent to 35 percent, and
• the credit per eligible employee was increased from $200 or $300 to $500 (or
$1,000 for non-highly compensated workers).
TABLE 3-1
Virginia offers a worker training tax credit to encourage businesses to
train workers, which will expire July 2025
Purpose Encourage worker training to improve productivity and employment retention.
Eligible Businesses train workers through
projects - noncredit courses provided by a Virginia college or other public higher education
institution or by other organizations that are on the Eligible Training Provider list
maintained at the Department of Workforce Development and Advancement (Virginia
Works);
- a registered apprenticeship approved by the commissioner of Virginia Works; or
- an orientation, instruction, or training program by a Virginia manufacturer for students
in grades 6 through 12 related to its manufacturing activities.
Program Tax credit amount is equal to 35 percent of the expenses incurred for eligible worker
features training up to (i) $500 per qualified employee or (ii) $1,000 for training for a non-highly
compensated worker (defined as having income below Virginia’s median wage for the
year prior to applying for the credit).
Nonrefundable, nontransferable credit with a three-year carryover period.
Can be claimed against income tax (individual, corporate, or estate and trust), bank
franchise tax, and other utility and insurance company taxes.
Program cap of $1 million per year.
SOURCE: Weldon Cooper Center review of the Code of Virginia and agency documents.
NOTE: Adopted in 2019 and expires July 1, 2025 (§ 58.1-439.6:1).
The rationale for offering job training tax credits is to
• correct for businesses’ tendency to underinvest in training (for fear of newly
trained employees being poached by other businesses paying higher wages),
23
Workforce and Industry Incentives
encourage advancing workers’ skills to improve resilience and job mobility.
24
Workforce and Industry Incentives
• reduce the social costs of underemployment, and
• improve the economic prospects for lower income and less educated work-
ers.
Virginia is one of 19 states that currently offer job training tax credits. (See Appendix
D for more information about training tax credits by state.)
Use of the worker training tax credit has been low—
Only five businesses were awarded worker training tax credits between FY19 and
FY23, and the award amount was far below the annual cap. Only $860,000 was
awarded during the timeframe, and annual awards have never been more than one-
quarter of the annual credit cap of $1 million. The amounts claimed on tax returns have
been far lower, with just over a quarter of the total amount awarded claimed between
FY19 and FY23 ($230,000). Although the current tax credit’s reimbursement amount
per job is higher than the prior tax credit, this has not led to increased use of the credit.
The average amount of the current worker training tax credits awarded per year was
$172,000 between FY19 and FY23, which is only slightly higher than the average
amount awarded per year for the prior tax credit ($162,500 between FY10 and FY17).
The credit’s value may be limited by several factors that contribute to its low award
and claim amounts. Even though the newer credit’s reimbursement rate increased, the
credit amount per job ($500 or $1,000) is still lower than the amount per job offered
in other states (median of $2,000) and makes up only a small portion of apprenticeship
costs (at least $5,300 in the first year). Apprenticeships make up the bulk of the jobs
claimed against the credit. Agency staff suggest low usage may stem from low aware-
ness and businesses preferring cash or in-kind incentives.
The low amounts claimed (even after they are awarded) suggest that businesses may
not have sufficient tax liability to claim the credit. The credit is nonrefundable and
nontransferable and can be carried forward for only three years, which is less than the
typical carryforward for tax credits. Businesses also must go through multiple steps to
use the credit (obtaining authorization from the appropriate agency, completing tax
credit approval forms, providing enrollment and payment documentation, and claim-
ing the credit on tax forms). The administrative costs for small firms likely exceed the
value of the credit.
Worker training tax credit is mostly used for apprenticeships but
likely has limited influence on apprenticeship rates
The worker training tax credit is used primarily for registered apprenticeship training,
with 86 percent of total credit usage supporting 2,678 registered apprentices between
tax years 2019 and 2023 (Figure 3-1).
25
Workforce and Industry Incentives
An apprenticeship is an
organized system of on- FIGURE 3-1
the-job training. Workers Worker training tax credit is mostly used for apprenticeships (FY21–FY23)
earn a salary and receive
training in return for a
contractual commitment
to the employer for a
designated time period.
Training typically is two
to four years and in-
volves both supervised
on-the-job training and
classroom instruction.
Completers receive an
industry-recognized cer-
tificate showing mastery
of certain occupational
skills. Source: Weldon Cooper Center analysis of worker training tax credit information.
Registered apprentices, NOTE: No credits were used for manufacturing-related orientation, instruction, and training programs for middle and
which are eligible for the high school students.
tax credit, are industry-
vetted to ensure they While the worker training tax credit is used mostly for apprenticeships, the credit likely
align with industry
standards and are ap-
has had minimal impact on the state’s apprenticeship rate. The number of registered
proved and validated by apprentices in Virginia has decreased over time and is now less than the 50-state aver-
the U.S. Department of age (Figure 3-2) despite the current and previous worker training tax credits. Virginia
Labor or a state appren- ranked 32nd in the number of registered apprentices in FY24, with approximately 179
ticeship agency.
registered apprentices per 100,000 population 18 or older compared with a national
rate of 208 per 100,000 population 18 or older.
Research indicates other factors are more influential on the state’s apprenticeship rate.
Factors that are likely to affect the state’s apprenticeship rate more than tax credits
include changes in labor demand, labor supply, and workforce or education programs
or policies that affect the number of workers with credentials such as community col-
lege sub-baccalaureate degrees and certificates. The numbers of new apprentices and
the ratio of apprentices to employees also have a cyclical pattern, increasing as business
activity and job openings increase.
The strength and focus of a state’s apprenticeship program also likely affect states’
apprenticeship rates. State workforce agency directors credit outreach to nontradi-
tional industries for higher apprenticeship rates, and a lack of public knowledge about
apprenticeship programs and how to become an apprentice as barriers to apprentice-
ship growth. Virginia has historically had a more limited apprenticeship program than
other states (see JLARC, Review of Workforce Development, 2014), which may help explain
its lower apprenticeship rate compared with the national average. Virginia’s appren-
ticeship program was administered by the Department of Labor and Industry (DOLI)
until recently, and a recent Board of Workforce Development review indicated DOLI
was focused on regulations rather than growing apprenticeships to meet the demand
among nontraditional users of apprenticeship programs. The new Department of
26
Workforce and Industry Incentives
Workforce Development and Advancement (Virginia Works) has assumed administra-
tion of Virginia’s apprenticeship program.
FIGURE 3-2
Number of registered apprentices in Virginia has decreased over time and is
now less than the 50-state average
SOURCE: Weldon Cooper Center analysis of U.S. Department of Labor apprenticeship data.
Worker training tax credit has negligible economic benefit
The worker training tax credit is estimated to generate no additional economic activity
for the state annually, on average, accounting for personal income taxes required to
fund the credit. No jobs were added to the Virginia economy, and there is a small loss
in Virginia GDP and personal income from the tax credits (Table 3-2). This analysis
assumes the credit reduces a firm’s production costs by reducing training costs. How-
ever, the analysis may underestimate the credit’s economic impact because it does not
account for potential wage and productivity increases for workers trained because of Incentives, on average,
are estimated to gener-
a lack of data. Research suggests that training programs have considerable wage ate an additional 58 jobs,
growth potential for trained workers, so the credit’s economic and revenue impact $9 million in GDP, and
could be higher if the credit stimulated additional training. $5 million on personal
income per $1 million
When assessed per $1 million spent on the tax credit, economic benefits are negligible spent and have a return
compared with the economic benefits across other incentives. (See Appendix C for in revenue of 41¢ per $1
more detail on the comparison of economic benefits generated by Virginia incentives.) spent. (See Economic
Development Incentives
These results are similar to other tax incentives in this report and in prior evaluations,
2024, JLARC 2024.)
as tax incentives typically have a very low economic impact. The return in state revenue
for every $1 spent on the tax credit is also negligible (4¢ per $1 spent), which is also
similar to the returns in revenue for other tax incentives.
27
Workforce and Industry Incentives
TABLE 3-2
Worker Training Tax Credit has negligible economic benefits to the state
Annual average
Economic impact
FY21–FY23
analysis of expenditures
by incentive recipients Net impact to Virginia economy
was conducted using Private employment 0 jobs
economic modeling soft- Virginia GDP -$90,200
ware developed by REMI, Personal income -$7,600
Inc. Impact to Virginia economy per $1 million of tax credit
Private employment 7 jobs
(See Appendix H [online
Virginia GDP -$0.1 M
only] for the economic
Personal income $0.7 M
impact analysis used in
this study.) Impact to state revenue
Total revenue $3,168
Credit awards $76,461
Revenue net of awards -$73,293
Return in revenue 4¢ for every $1 spent
Net impact is the
increase in economic SOURCE: Weldon Cooper Center economic impact analysis of amount of credits claimed FY21–FY23.
activity induced by the NOTE: Includes direct, indirect, and induced impacts. Estimates do not consider increases in wages and productivity
that trained employees who qualified for the credit may have generated. Estimates reflect additional economic ac-
incentive, adjusted for
tivity resulting from reducing businesses’ production costs by the amount of the credit and increasing the sales of
the opportunity cost of educational services providers. Gross impact on Virginia’s economy is used to calculate impact per $1 million in in-
increasing taxes to pay centive awards and impact to state revenue. This is consistent with how the economic development research literature
for the incentive. typically calculates these impacts. (See Appendix I [online only] for detailed results on total impact of tax credit, impact
(See online Appendix I of raising income taxes by the amount of the credit [opportunity cost], and revenue generated by source.)
for information on the
total economic impact
Worker training tax credit will expire in 2025 and should not be
and the opportunity cost
of increasing taxes.) reinstated, but a new apprenticeship grant could be considered
The worker training tax credit expires July 1, 2025. The credit had low utilization and
negligible economic benefits; therefore, it is reasonable for the state to have allowed
the tax credit to expire. If Virginia wants to maintain a state-supported workforce
training program, it should not reinstate the credit but instead adopt a grant program
focused on incentivizing apprenticeships. A state-funded apprenticeship incentive
would show businesses the state values workforce development and would keep Vir-
ginia in line with other states that have worker training or apprenticeship incentives.
Adopting an apprenticeship grant could be beneficial for two reasons. A grant is more
usable than a non-refundable, non-transferable tax credit because the business would
not need tax liability to use the grant. In addition, responsibility for administering the
grant could be given to an agency with an apprenticeship focus, such as Virginia Works,
to better market and increase awareness of the program, which would further
strengthen the apprenticeship system in Virginia. Virginia Works was created in 2023
to consolidate workforce development programs into one agency, and the registered
apprenticeship program transitioned from DOLI to Virginia Works. Virginia Works
could incorporate marketing and outreach of the new state-funded apprenticeship
grant with the marketing and outreach of its existing apprenticeship and workforce-
28
Workforce and Industry Incentives
related programs. Virginia Works staff indicate that Virginia apprenticeships have in-
creased since the agency assumed responsibility for the state apprenticeship program.
If the state created an apprenticeship grant program, it should include several features
to overcome the deficiencies of the tax credit. The grant should be targeted to appren-
ticeships in “nontraditional” fields where they are not already well established but
skilled workers are in high demand. The apprenticeship grants could also be targeted
to disadvantaged individuals or underrepresented populations.
Such a grant program would complement two apprenticeship programs created in Vir-
ginia recently, which have received federal grant funding. The state received nearly $1
million in federal funding in 2023 and created the HIRED Apprenticeship Fund ad-
ministered by Virginia Works to expand registered apprenticeship programs to fields
that have not traditionally used apprentices, such as clean energy, early childhood ed-
ucation, teacher education, and other emerging industries. In addition, the Virginia
Manufacturers Association received federal funding to expand the number of regis-
tered apprenticeships, including for underrepresented populations, in target supply
chain sectors within advanced manufacturing.
The reimbursement rate for the apprenticeship grant should be higher than the reim-
bursement for the credit. The base reimbursement for the tax credit ($500 or $1,000
per worker) was a relatively small portion of apprenticeship expenses ($5,300) and is
unlikely to incentivize apprenticeship adoption, particularly for industries and occupa-
tions that typically do not use apprenticeship programs. Virginia could increase its re-
imbursement to that provided by other states, which is 50 percent of eligible training
costs (compared with 35 percent for the tax credit), with a maximum credit of $2,000
per worker trained.
29
Workforce and Industry Incentives
30
Workforce and Industry Incentives
4. Industry Tax Exemptions
Virginia provides tax exemptions to multiple industries or their customers to support
Evaluations of other in-
the industry or achieve other tax purposes, and seven of these exemptions are evalu- dustry sales tax exemp-
ated in this report (Table 4-1). Some of the exemptions are provided to the industry tions can be found in
directly, such as the high-speed electrostatic duplicators exemption for small-scale the following reports:
Science and Technology
printing and photocopying businesses. Other exemptions, like the contractor tempo-
Incentives, Trade and
rary storage exemption, benefit the construction materials industry but are used by Transportation Incen-
specific construction industry customers (contractors that use the materials out of tives, Data Center and
state). Most of these exemptions have been around for decades, though the controlled Manufacturing Incen-
environment agriculture exemption was adopted recently. tives, and Film Incentives.
jlarc.virginia.gov/econ-
development.asp
TABLE 4-1
Virginia offers seven industry exemptions that are reviewed in this report
Exemption Purpose Description
Tax exemption for purchases by direct mail or
Encourage purchases of marketing companies, advertisers, or other firms
Certain printed materials
selected printing materials of printed materials like catalogs, letters,
for out-of-state
from Virginia printers brochures, and reports, and paper furnished to a
distribution
enabling them to be more printer for fabrication into printed materials. To
competitive with out-of-state qualify, the printed materials cannot be stored in
Adopted 1976
printers. Virginia for more than a year and must be
distributed out of state.
Tax exemption for construction materials
purchased by a contractor for use solely in
Contractor temporary Promote competitiveness of
another state or a foreign country when it is
storage exemption Virginia construction material
temporarily stored in Virginia prior to shipment
suppliers with out-of-state
out of state. The exemption applies only if the
Adopted 1989 suppliers.
materials could be purchased tax free in another
state or country.
Tax exemption for controlled environmental
Promote growth of indoor,
agriculture enterprises for purchases of items
Controlled environment closed, controlled-
needed to create, support, and maintain the
agriculture exemption environment commercial
necessary growing environment for plants,
agricultural facilities, such as
including internal, external, and structural
Adopted 2023 indoor vertical farms and
components or materials for growing
greenhouses.
agricultural products.
Tax exemption for printing or copying
Promote small-scale printing companies that purchase or lease high-speed
High-speed electrostatic
and photocopying businesses electrostatic duplicators or any other duplicators
duplicators exemption
by providing exemption with a printing capacity of 4,000 impressions or
comparable to industrial more per hour and are engaged primarily in
Adopted 1986
printers. printing or photocopying products for sale or
resale.
Promote Virginia nuclear
Tax exemption for nuclear maintenance and
Out-of-state nuclear maintenance and repair
repair companies for materials purchased in
facility repair exemption businesses by exempting
Virginia and used or consumed to provide
purchases of supplies used to
services to out-of-state nuclear power plants
Adopted 2000 provide services to facilities
licensed by the Nuclear Regulatory Commission.
outside the state.
31
Workforce and Industry Incentives
Exemption Purpose Description
Taxi parts and radios
Encourage commercial taxi Tax exemption for taxicab operators for parts, tires,
exemption
operations and prevent their meters, and dispatch radios sold or leased and used
further decline. for their services.
Adopted 1984
Tax exemption for commercial uniform rental and
Uniform rental and Promote the commercial uniform laundry companies for purchases of machinery,
laundry business rental industry by providing a tax tools, supplies, and materials like industrial washing
exemption exemption similar to other machines, dryers, and ironing equipment used
industrial manufacturers and directly in laundering, maintaining, and preparing
Adopted 1980 processors. uniforms, towels, and linens that are rented or
leased.
SOURCE: Weldon Cooper Center analysis of Code of Virginia and other documents.
NOTE: See Appendix F for more information about each exemption.
Sales tax exemptions are often adopted to incentivize economic activity (by reducing
costs for businesses to enhance their competitiveness) but also for other reasons. Many
of the industry sales tax exemptions evaluated in this report are not purely economic
development incentives but were created to respond to unique industry characteristics
and challenges (Table 4-2). Some exemptions were created for shrinking industries
facing technological or other competitive challenges, such as the printed materials in-
dustry. Some are provided to bring the tax treatment of the industry in line with the
tax treatment of similar industries, such as the controlled environment agriculture in-
dustry. Other exemptions, like the out-of-state nuclear repair exemption, address gaps
in interstate commerce by not taxing goods that are purchased in Virginia but ulti-
mately used out of state. All of these tax exemptions help rectify economic inefficien-
cies associated with taxing intermediate goods and service purchases, reducing the tax
pyramid effect (i.e., when a good is taxed multiple times through its production pro-
cess).
32
Workforce and Industry Incentives
TABLE 4-2
Virginia’s industry exemptions were adopted for more than just economic
development reasons
Adopted to …
enhance/preserve provide tax parity facilitate
competitiveness of with other interstate prevent taxation of
Exemption for industry industries commerce intermediate inputs
Certain printed materials for
out-of-state distribution
Contractor temporary storage
Controlled environment
agriculture
High-speed electrostatic
duplicators
Out-of-state nuclear repair
facilities
Taxi parts and radios
Uniform rental and laundry
businesses
SOURCE: Weldon Cooper Center analysis of Code of Virginia and other documents.
Nearly all of the $11 million in annual savings from the industry
exemptions is because of the printed materials exemption
Industry exemptions provided $11 million in tax savings to businesses per year, on
average, between FY14 and FY23. Nearly all of the tax savings came from the exemp-
tion for certain printed materials for out-of-state distribution (printed materials ex-
emption) (Figure 4-1). The exemption for uniform rentals and laundry businesses (uni-
forms exemption) is estimated to have generated the next largest amount of savings.
The savings from the other exemptions are relatively minimal because the related in-
dustries are small. For example, only a small number of businesses in Virginia provide
design, repair, and maintenance services for nuclear energy facilities and could poten-
tially claim the out-of-state nuclear facility repair exemption (nuclear repair facilities
exemption), which was estimated to have tax savings of only $178,000 in FY23.
33
Workforce and Industry Incentives
FIGURE 4-1
Nearly all of the annual tax savings from the industry exemptions is from the
printed materials exemption (FY14–FY23)
SOURCE: Weldon Cooper Center estimates.
NOTE: Controlled environment agriculture was not claimed until after FY23 and is not included.
Spending on the industry exemptions is estimated to have declined during the 10-year
study period (Figure 4-2). This decline occurred because most of these exemptions
are for industries that are shrinking because of technological and competitive fac-
tors—particularly the printed materials exemption, which had the largest tax savings
and the largest decline in tax savings during the study period (20 percent or $2 million
decline). Print media have lost their market share with the growth of the internet, e-
marketing, social media, and AI, according to industry market research. Though a
much smaller exemption, the taxicab parts exemption (tax savings of $111,000 in
FY23) has also declined as ride-hailing services, such as Uber and Lyft, which do not
qualify for the exemption, have taken much of their market share.
Only two of the industry exemptions are in growing or potentially growing industries.
The controlled environment agriculture sector is currently small compared with out-
door production, but it is growing rapidly in the U.S. and Virginia. The nuclear industry
had been shrinking because of competition with lower cost fossil fuel and renewable
energy sources, but interest in the industry was rekindled recently because of interna-
tional efforts to lower carbon emissions and to satisfy the rising electricity demands
of data centers, manufacturing industries, and electric vehicles.
34
Workforce and Industry Incentives
FIGURE 4-2
Tax savings from industry tax exemptions declined between FY14 and FY23
SOURCE: Weldon Cooper Center estimates of industry sales tax exemptions.
NOTE: Estimated tax savings are not inflation adjusted.
Industry exemptions meet few criteria for effective incentive design
The industry sales tax exemptions meet few criteria for effective incentive design. Tax exemptions are usu-
However, this may not be problematic for exemptions primarily intended to improve ally “by right” incentives
tax policy rather than encourage economic development. Tax exemptions typically do because businesses can
use them automatically if
not meet some criteria, partially because of the following common sales tax design they meet the eligibility
features: criteria.
• Sales tax exemptions are generally “by-right” rather than discretionary and do
not undergo due diligence reviews prior to being awarded.
• Exempted amount is equal to the amount of sales taxes that would have oth-
erwise been paid rather than based on a return on investment analysis.
• Because they are by-right, they do not require businesses to pay above local
wages, create a minimum number of jobs, or make a minimum amount of
capital investment to be eligible.
In addition, the industry exemptions only somewhat target high impact industries.
Four of the exemptions are targeted to businesses in tradable industry sectors (printed
materials exemption, contractor temporary storage exemption, controlled environ-
ment agriculture exemption, and the nuclear facility repair exemption), while other
industries (such as taxicabs and uniform rental companies) provide primarily local
35
Workforce and Industry Incentives
goods and services. None of the exempted industries are in sectors with high employ-
ment multipliers.
Only one industry exemption—the printed materials exemption—has an expiration
date. All tax exemptions, regardless of purpose, should have an expiration date, which
trigger reviews to help policymakers decide whether to extend or discontinue them.
Industry exemptions have negligible or low economic benefits and
returns in revenue
The industry exemptions generally are estimated to generate minimal additional eco-
Incentives, on average,
are estimated to gener-
nomic activity, and in some cases economic losses, for the state, accounting for the
ate an additional 58 jobs, offsetting personal income taxes required to fund them (Table 4-3). Lowering personal
$9 million in GDP, and income taxes would have similar or more beneficial economic impacts than offering
$5 million in personal in- these industry exemptions. Of six exemptions, the uniforms exemption is estimated
come per $1 million
to generate the highest additional economic activity, with 17 jobs, $0.7 million in Vir-
spent and have a return
in revenue of 41¢ per $1 ginia GDP, and $1 million in personal income added to the Virginia economy per year
spent. on average. The printed materials exemption resulted in the largest economic losses,
Exemptions, on average, with an estimated loss of two jobs and $2 million in personal income per year on
are estimated to gener- average. The controlled environment agriculture exemption was not included in this
ate an additional 20 jobs, analysis because the exemption is too new.
$3 million in GDP, and
$2 million in personal in- When assessed per $1 million spent on the exemptions, the economic benefits of the
come per $1 million industry exemptions are generally negligible compared with the economic benefits
spent and have a return
in revenue of 17¢ per $1
across other incentives. The return in state revenue for every $1 spent on the tax ex-
spent (excluding the emptions is also generally negligible compared with other incentives. (See Appendix C
data center exemption, for more detail on the comparison of economic benefits generated by Virginia incen-
which has a higher eco- tives.) These results are also lower than the impacts from the average sales tax exemp-
nomic impact). (See Eco-
nomic Development In-
tion, which tend to be lower than other types of incentives such as grants. Only two
centives 2024, JLARC industry exemptions—the taxi parts and uniforms exemption—are estimated to have
2024.) both low rather than negligible economic benefits per $1 million spent and returns in
revenue per $1 spent.
36
Workforce and Industry Incentives
TABLE 4-3
Virginia’s industry exemptions have negligible to low economic benefits and
returns in state revenue (annual average, FY14–FY23)
Contractor Nuclear
Printed Electrostatic
temporary repair Taxi parts Uniforms
materials duplicators
storage facilities exemption exemption
exemption exemption
exemption exemption
Net impact to Virginia economy
Private employment -2 jobs 1 job 0 jobs 0 jobs 2 jobs 17 jobs
Virginia GDP $15,910 -$60,552 -$8,645 -$115,649 $34,151 $689,256
Personal income -$1,969,576 $88,870 -$1,353 $193 $112,308 $1,015,329
Impact to Virginia economy per $1 million of spending on incentives
Private employment 8 jobs 17 jobs 7 jobs 9 jobs 29 jobs 28 jobs
Virginia GDP $1,130,131 $599,134 -$16,918 $307,667 $1,402,810 $1,950,813
Personal income $687,746 $1,657,358 $693,249 $876,014 $1,848,028 $2,099,447
Impact on state revenue
Total revenue $489,162 $11,232 $261 $6,919 $12,806 $86,175
Spending on incentives $9,944,726 $113,708 $7,423 $140,055 $116,801 $840,128
Net revenue -$9,698,520 -$102,476 -$7,162 -$133,136 -$103,995 -$753,953
Return in revenue 5¢ 10¢ 4¢ 5¢ 11¢ 10¢
SOURCE: Weldon Cooper Center economic impact analysis of business activity induced by Virginia’s economic devel-
opment incentive programs between FY14 and FY23.
NOTE: Includes only direct, indirect, and induced impacts of completed projects. The gross impact on Virginia’s econ-
omy is used to calculate the impact per $1 million per incentive awards and the impact to state revenue. This is con-
sistent with how the economic development research literature typically calculates these impacts.
Need for Virginia’s industry exemptions should be further assessed,
and several actions could improve the exemptions
The industry exemptions assessed in this report are not adopted exclusively, or in some
cases primarily, to increase economic activity. Many are adopted to address other issues,
such as good tax policy principles. Even though they do not meet many of the criteria
for effective incentive design and have negligible to low economic benefits, they may
still serve other worthwhile purposes.
The Joint Subcommittee to Evaluate Tax Preferences, which focuses on tax policy
rather than economic development, should review the industry exemptions to weigh
the revenue and economic impacts of the exemptions with the other benefits they may
provide, such as tax parity with other industries. In addition to having economic and
tax policy benefits, some exemptions may also have other benefits. For example, a
taxicab industry representative indicated that much of its current ridership is centered
on providing essential services to seniors, people with disabilities, and others with fixed
or low incomes who are not well served by ride-hailing services and public transit.
37
Workforce and Industry Incentives
Ultimately, the purpose of the subcommittee’s review should be to identify exemptions
that should be eliminated or revised. For exemptions that are continued, the subcom-
mittee should establish a policy on the timeframe for extending them. Extending them
for at least five but no more than 10 years may be more reasonable.
RECOMMENDATION 4
The Joint Subcommittee to Evaluate Tax Preferences may wish to consider reviewing,
under its authority in § 30-338 of the Code of Virginia, the exemptions for 1) certain
printed materials for out-of-state distribution, 2) contractor temporary storage, 3) con-
trolled environment agriculture, 4) high-speed electrostatic duplicators, 5) out-of-state
nuclear facility repair, 6) taxi parts and radios, and 7) uniform rental and laundry busi-
nesses. The review’s purpose should be to determine whether these exemptions are
meeting worthwhile needs other than economic development and whether they should
be maintained, eliminated, or revised.
An expiration date should be assigned to each of the industry tax exemptions. The
printed materials exemption is the only one with an expiration date. Incentive evalua-
tors consider expiration dates a best practice because they encourage additional data
collection and frequent impact estimates, which improve transparency about the in-
centive’s impact. Regular reviews increase accountability and ensure that the incentive
is still relevant and meeting its goals. Regular reviews can also identify incentives that
should be updated, redesigned, reduced, or eliminated.
The expiration date for these exemptions should be prior to June 30, 2030, to align
with the policy established in the appropriation act for other Virginia tax incentives
(including exemptions), and it could be set to correspond with the expiration of the
printed materials exemption (July 1, 2028). The appropriation act also requires that
Virginia Tax provide updated revenue estimates no later than November 1, 2025, and
every five years thereafter, for tax incentives set to expire within two years following
the date of the report. These revenue estimates are provided to the General Assembly
and the Joint Subcommittee to Evaluate Tax Preferences.
RECOMMENDATION 5
The General Assembly may wish to consider amending the Code of Virginia to adopt
expiration dates for the exemptions for 1) contractor temporary storage, 2) controlled
environment agriculture, 3) high-speed electrostatic duplicators, 4) out-of-state nuclear
facility repair, 5) taxi parts and radios, and 6) uniform rental and laundry businesses.
Virginia Tax should develop new estimates of business tax savings, especially for the
three exemptions targeted at out-of-state purchasers—the contractor temporary stor-
age exemption, the printed materials exemption, and the nuclear repair facilities ex-
emption. Recent tax estimates for these exemptions are either unavailable (existing
estimates were generated in 2000 or earlier and inflation adjusted) or rely on incom-
plete secondary data. The population using these exemptions is likely fairly small, so a
38
Workforce and Industry Incentives
survey-based approach may be economical and provide more accurate information
than secondary data from associations, for example. This survey could be based on
user information submitted on exemption certificates that have to be filed with Vir-
ginia Tax.
RECOMMENDATION 6
The Virginia Department of Taxation should develop new estimates of business tax
savings for the exemptions for 1) contractor temporary storage, 2) certain printed ma-
terials for out-of-state distribution, and 3) out-of-state nuclear repair facilities.
39
Workforce and Industry Incentives
40
Appendixes
Appendix A: Study mandate
2024–2026 Appropriation Act
Passed as Chapter 725 of the Acts of Assembly, May 2, 2025
§ 1-14 Item 25 E
E.1. The General Assembly hereby designates the Joint Legislative Audit and Review Commission
(JLARC) to conduct, on a continuing basis, a review and evaluation of economic development initia-
tives and policies and to make such special studies and reports as may be requested by the General
Assembly, the House Appropriations Committee, or the Senate Finance Committee.
2. The areas of review and evaluation to be conducted by the Commission shall include, but are not
limited to, the following: (i) spending on and performance of individual economic development in-
centives, including grants, tax preferences, and other assistance; (ii) economic benefits to Virginia of
total spending on economic development initiatives at least biennially; (iii) effectiveness, value to tax-
payers, and economic benefits to Virginia of individual economic development initiatives on a cycle
approved by the Commission; and (iv) design, oversight, and accountability of economic development
entities, initiatives, and policies as needed.
3. For the purpose of carrying out its duties under this authority and notwithstanding any contrary
provision of law, JLARC shall have the legal authority to access the facilities, employees, information,
and records, including confidential information, and the public and executive session meetings and
records of the board of VEDP, involved in economic development initiatives and policies for the
purpose of carrying out such duties in accordance with the established standards, processes, and prac-
tices exercised by JLARC pursuant to its statutory authority. Access shall include the right to attend
such meetings for the purpose of carrying out such duties. Any non-disclosure agreement that VEDP
enters into on or after July 1, 2016, for the provision of confidential and proprietary information to
VEDP by a third party shall require that JLARC also be allowed access to such information for the
purposes of carrying out its duties.
4. Notwithstanding the provisions of subsection A or B of § 58.1-3 or any other provision of law,
unless prohibited by federal law, an agreement with a federal entity, or a court decree, the Tax Com-
missioner is authorized to provide to JLARC such tax information as may be necessary to conduct
oversight of economic development initiatives and policies.
5. The following records shall be excluded from the provisions of the Virginia Freedom of Infor-
mation Act (§ 2.2-3700 et seq.), and shall not be disclosed by JLARC:
(a) records provided by a public body as defined in § 2.2-3701, Code of Virginia, to JLARC in con-
nection with its oversight of economic development initiatives and policies, where the records would
not be subject to disclosure by the public body providing the records. The public body providing the
records to JLARC shall identify the specific portion of the records to be protected and the applicable
provision of the Freedom of Information Act or other provision of law that excludes the record or
portions thereof from mandatory disclosure.
41
Appendixes
(b) confidential proprietary records provided by private entities pursuant to a promise of confidenti-
ality from JLARC, used by JLARC in connection with its oversight of economic development initia-
tives and policies where, if such records are made public, the financial interest of the private entity
would be adversely affected.
6. By August 15 of each year, the Secretary of Commerce and Trade shall provide to JLARC all
information collected pursuant to § 2.2-206.2, Code of Virginia, in a format and manner specified by
JLARC to ensure that the final report to be submitted by the Secretary fulfills the intent of the General
Assembly and provides the data and evaluation in a meaningful manner for decision-makers.
7. JLARC shall assist the agencies submitting information to the Secretary of Commerce and Trade
pursuant to the provisions of § 2.2-206.2, Code of Virginia, to ensure that the agencies work together
to effectively develop standard definitions and measures for the data required to be reported and
facilitate the development of appropriate unique project identifiers to be used by the impacted agen-
cies.
8. The Chairman of JLARC may appoint a permanent subcommittee to provide guidance and direc-
tion for ongoing review and evaluation activities, subject to the full Commission's supervision and
such guidelines as the Commission itself may provide.
9. JLARC may employ on a consulting basis such professional or technical experts as may be reason-
ably necessary for the Commission to fulfill its responsibilities under this authority.
10. All agencies of the Commonwealth shall cooperate as requested by JLARC in the performance of
its duties under this authority.
42
Appendixes
Appendix B: Research methods and activities
JLARC contracted with the University of Virginia’s Weldon Cooper Center for Public Service (Weldon
Cooper Center) for this review. Key research activities performed by Weldon Cooper Center for this
study included
• collection and analysis of national- and state-level financial and economic data and state
agency incentive program data;
• analysis of industry characteristics targeted by program;
• program employment performance tracking;
• quantitative analysis of the economic and fiscal impacts of incentives using a dynamic
economic model (see Appendix I [online only]);
• interviews with state and local agencies; and
• review of documents, reports, and literature.
Collection and analysis of national- and state-level financial and economic data
and state agency incentive program data
This report drew on several federal, state, private industry, and other sources of economic data (Table
B-1). Some of this data was used primarily for descriptive purposes, including to highlight trends in
state economic performance measures for employment and training that the economic incentives at-
tempt to influence. Information from state agencies, including the Virginia Economic Development
Partnership, Virginia Tax, and Virginia Department of Agriculture and Consumer Services, was used
for both descriptive and analytical purposes. First, project-level information was aggregated to show
characteristics and features of the various programs, including metrics such as average wage rates.
Second, agency data was used in combination with other data such as confidential Virginia Employ-
ment Commission (VEC) Quarterly Census of Employment and Wages (QCEW) payroll employment
records and IMPLAN data to conduct economic analysis. Third, estimates were made of the state
government tax revenue impacts of each industry tax exemption using federal, state, and private in-
dustry data elements. These analyses are described further below under the rubric of: (a) targeting
analysis, (b) employment performance tracking, (c) revenue impact estimation, and (d) firm survey.
TABLE B-1
Data used for this study
Data source Description of data Analysis
National and state employment and economic data
Characterize employment
trends for controlled en-
Quarterly Census of Employment and
Bureau of Labor Statistics vironment agriculture
Wages (QCEW)
(CEA) and taxi service in-
dustries.
43
Appendixes
Data source Description of data Analysis
Industry employment trends for com-
Characterize employment
mercial printing, direct mail advertising,
LightcastTM trends at the state and
other business services, and industrial
national levels.
laundry and linen supply industries.
Calculate state and na-
U.S. Department of Labor,
Number of active and new apprentices tional registered appren-
Office of Apprenticeship
tice rates.
Virginia incentive programs
Used in estimating state
Department of Motor Ve- tax revenue impact of taxi
Number of taxi plates issued
hicles parts and radio exemp-
tion.
Virginia Department of Used for estimating state
List of Controlled Environment Agricul-
Agriculture and Con- tax revenue impact of
ture (CEA) firms located in the state
sumer Services (VDACS) CEA exemption.
Compare trends in
Virginia Economic Devel-
budget allotments for
opment Partnership Fiscal year budget data
VJIP and Virginia Talent
(VEDP)
Accelerator Program.
Computation of tax credit
Virginia Tax Tax credit utilization usage by fiscal year for
worker training tax credit.
Tabulate use of funding
Information from Workforce Training
Virginia Tax for apprenticeships versus
Tax Credit (WTC) application
other training.
Used in estimating state
Virginia Taxicab Associa- Average spending on eligible taxi parts tax revenue impact of taxi
tion and radio exemption products parts and radio exemp-
tion.
Other
Annual State Tax Reve-
State tax revenue by tax category and Tax revenue impact anal-
nue, Census of Govern-
fiscal year ysis.
ment
Demand by industry, GDP, personal in- Tax revenue impact anal-
REMI PI+
come, and transfer receipts by year ysis.
Computation of export
Regional SAM Balances, institution in-
orientation and multipli-
IMPLAN dustry demand, regional employment
ers for incentive pro-
multipliers, study area industry data
grams.
44
Appendixes
Data source Description of data Analysis
State government tax rev-
enue estimate for Certain
U.S. Census Bureau Economic Census, Industry by product Printed Materials for Out-
of-State Distribution Ex-
emption
Quarterly Census of Employment and
Virginia Employment Track VJIP employment
Wages (QCEW) payroll employment
Commission performance
records
SOURCE: Weldon Cooper Center.
Program industry targeting characteristics
Data on location and industry of awarded projects was joined with industry economic information
(employment multipliers and export information) to identify how well projects were targeted at those
likely to have the greatest economic impact. Project industry codes provided by the program were
matched with economic information from IMPLAN using IMPLAN codes and an NAICS/IMPLAN
code crosswalk to assess the export orientation and industry multiplier magnitude of projects.
The workforce development programs covered in this report benefit tradable and high multiplier in-
dustries (Table B-2). For example, the Virginia Talent Accelerator Program has the highest employ-
ment multiplier at 2.72 and the largest out-of-state sales share (67.4 percent) because it targets com-
petitive, tradable industries that pay relatively high wages (qualifying projects must pay at least 100
percent of local average prevailing wages unless they are located in economically distressed localities).
VJIP and the worker training tax credit also have similar characteristics. However, industry tax exemp-
tions sometimes lack one or both of these properties. Many target industries that provide primarily
local goods or services and/or have relatively low economic multipliers.
TABLE B-2
Workforce incentives tend to target tradable sectors with high employment multipliers
Employment Percentage
Program multiplier exported NAICS Sectors (IMPLAN)
Workforce incentives
Virginia Talent Accelerator Program 2.72 67.4% Industries of grant awards
Virginia Jobs Investment Program 2.27 56.5 Industries of grant awards
Worker Training Tax Credit 2.19 68.6 Industries of tax credit awards
Industry exemptions
NAICS 541810 (Advertising,
Certain printed materials for out-of-sate public relations, and related ser-
1.72 100.0*
distribution exemption vices) and NAICS 323111
(Printing)
45
Appendixes
Employment Percentage
Program multiplier exported NAICS Sectors (IMPLAN)
NAICS 811310 (Commercial and
Out-of-state nuclear facility repair ex-
1.58 100.0* industrial machinery and equip-
emption
ment repair and maintenance)
Contractor temporary storage exemp- NAICS 49314 (Warehousing and
1.54 100.0*
tion storage)
High-speed electrostatic duplicators ex- NAICS 561439 (Business support
1.43 17.5
emption services)
NAICS 11141 (Greenhouse,
Controlled environment agriculture ex-
1.32 78.7 nursery, and floriculture
emption
production)
NAICS 485310 (Transit and
Taxi parts and radios exemption 1.26 50.4
ground transportation)
Uniform rental and laundry businesses NAICS 81331-2 (Personal and
1.34 3.7
exemption laundry services)
SOURCE: IMPLAN and Weldon Cooper Center analysis of economic development incentive records.
* Percentage exported based on exemption targeting.
VJIP employment performance tracking
A before-after analysis of program project performance using employment data from VEC employ-
ment payroll records was done to examine program-level and project-level employment performance
in the year immediately and years after awards were made for the VJIP program. While job creation is
a goal of the Virginia Talent Accelerator Program, employment is not tracked the same way as for
other programs.
Records matching
Program project records for FY14–FY23 were matched with 2007–2023 quarterly VEC QCEW pay-
roll employment data using FEIN (Federal Employer Identification Number), company name, com-
pany location, and NAICS industry information provided by VEDP. The FEIN is a unique nine-
digit number that identifies a firm for federal tax purposes. Since firms often have multiple branch
locations, a firm-level identifier is not adequate to identify a particular plant or establishment that
benefited from an economic development incentive. FEIN information, when available, was used in
conjunction with other available project record information such as firm name, street and P.O. box
address, and industry code to identify the specific facility using unemployment insurance account
(UIACCOUNT) and reporting unit (REPTUNT) identifiers from the QCEW data. If multiple es-
tablishments were co-located, the largest establishment employment record was selected. It cannot
be ruled out that some mismatches occurred because of this procedure. Mismatches were most
likely to occur for large, complex firms, with fragmented tax reporting involving multiple federal tax
and unemployment insurance accounts. The total match rate for VJIP job creation projects (New
46
Appendixes
Jobs and Small Business New Jobs) was approximately 68.1 percent, which was lower than the 96.5
percent rate for the prior evaluation (Workforce and Small Business Incentives, JLARC 2018).
Employment analysis
Employment analysis was performed to show how VJIP’s completed projects performed on an aggre-
gate or portfolio basis in terms of job creation, according to VEC files relative to what was reported
in agency records. Projects were tracked before and after they received notification of award during
the 2011–2023 period. Annual project cohorts were “stacked” by the year of award (-1,
0,+1,+2,+3,+4, etc.). Thus, for a FY14 award cohort, 2012 represents year -1, 2013 year 0, 2014 year
1, etc. Aggregate project employment change over the period (i.e., year i, compared to the baseline
year (-1) value). These employment change estimates were compared to aggregate job creation com-
pletion figures for VJIP, and a percentage was calculated, with 0 percent representing no aggregate
reported job creation relative to the program reported aggregate completion and 100 percent repre-
senting total completion of program reported aggregate completion.
This measure could either undercount or overcount aggregate employment completion rates. First,
failure to correctly match project records and VEC establishment data would introduce one bias
source. Second, the annualized unit used to verify employment goal attainment may not correspond
to program rules and cause bias; for example, VJIP grant rules require firms to maintain jobs creation
for three months. Thus, monthly or quarterly data would be more appropriate for appraising job cre-
ation completion than the annual averages used here.
Estimation of business savings and tax revenue impacts from industry incentives
Sales and use tax exemptions provide relief from sales and use taxes on selected taxable goods and
services for businesses in targeted industries. For most exemptions, eligible businesses obtain an ex-
emption certificate from Virginia Tax (available online) and present it to merchants at the points of
sale to claim the exemption. Neither the merchant nor the purchaser is required to report the tax
savings to Virginia Tax outside of an audit process. Therefore, the amount of these tax savings to
businesses must be estimated by other means.
For quantifying forgone revenue because of sales and use tax exemptions, Weldon Cooper Center
relied on Virginia Tax fiscal impact estimates for only the contractor temporary storage exemption.
Estimates based on IMPLAN and other data sources were used for the other six exemptions (Table
B-3). IMPLAN is a commercial economic impact model produced by IMPLAN Group, LLC. It is
based on input-output analysis, which requires estimates of the value of intermediate input purchase
for each industry. The intermediate input purchase estimates for Virginia formed the basis of the
relevant sales tax base for sales and use tax exemption revenue impact calculations. Spending on du-
rable and leased good inputs is estimated by multiplying industry output by gross absorption coeffi-
cients for relevant IMPLAN commodity sectors, using the most recent data for industries and com-
modities. These coefficients represent the input purchases for various commodities per dollar of
output. For example, the greenhouse, nursey, and floriculture industry spent $0.004 per dollar of out-
put on prefabricated metal buildings and components. This absorption coefficient was multiplied by
the output of the greenhouse, nursery, and floriculture industry for 2023 ($412,076,854) to obtain the
estimated expenditure on this input ($1,648,307). The sectors targeted vary by sales and use tax
47
Appendixes
exemption, as do the categories of purchases that are eligible for exemption. Generally, tangible per-
sonal property purchases and leases are covered though the specific items sometimes differ.
TABLE B-3
Estimates of business savings from sales and use tax exemptions were based on different
methods and sources
Exemption Current sources used to derive estimate
IMPLAN, Economic Census, LightcastTM
Certain printed materials for out-of-state distri-
bution exemption
Information on CEA firms from Virginia De-
partment of Agriculture and Consumer Ser-
vices, employment information from Virginia
Controlled environment agriculture exemption
Employment Commission, and IMPLAN
Contractor temporary storage exemption Virginia Tax (Sales and use tax study 1995)
Electrostatic Duplicators Exemption IMPLAN, LightcastTM
IMPLAN, Virginia Employment Commission,
Out-of-state nuclear facility repair exemption LightcastTM
Information from Virginia Taxicab Associa-
tion, Virginia Department of Motor Vehicles,
Taxi parts and radios exemption and Bureau of Labor Statistics Quarterly
Census of Employment and Wages
Uniform rental and laundry businesses exemp- IMPLAN, LightcastTM
tion
SOURCE: Weldon Cooper Center.
Because the exemptions are sometimes more narrowly targeted than the individual IMPLAN sectors
available, supplemental data from LightcastTM, Virginia Employment Commission, and Bureau of La-
bor Statistics were used to apportion the sector purchases to narrower industry subsets. This process
is detailed further under the heading of each exemption where it was used.
Other adjustments are needed to convert calendar years to fiscal years. IMPLAN purchases are ex-
pressed in calendar years; thus, fiscal year estimates were calculated by averaging two calendar years
(e.g., FY15 is the average of CY14 and CY15).
The estimates provided in this report are the same as reported in the previous annual report in two
instances: high-speed electrostatic duplications exemption and the uniform rental and laundry busi-
nesses exemption (with the exception of the FY23 estimate, which is based on newly released 2023
IMPLAN data instead of inflation-adjusting the FY22 amount to FY23). The estimates in this report
were revised for three other exemptions (certain printed materials for out-of-state distribution exemp-
tion, out-of-state nuclear facility repair exemption, and taxi parts and radios exemption). Revised
48
Appendixes
methods were developed for this report to improve the estimates. In addition, a new exemption, the
controlled environment agriculture exemption, was estimated for the first time.
Taxi parts and radios exemption
This estimation for the taxi parts and radios exemption updates a similar analysis by Virginia Tax for
a fiscal impact statement for proposed legislation that would have eliminated this exemption in 2004.
The value of the exemption relies on an estimate of the average exemption value per licensed taxicab
provided by the Virginia Taxicab Association ($1,200 per taxicab) and the number of licensed taxicabs
for FY23 provided by the Department of Motor Vehicles (2,161). The $1,200 per vehicle estimate is
down slightly from the nominal value of $1,240 based on the 2004 Virginia Tax estimate (this would
be closer to $2,000 per vehicle with a Consumer Price Index inflation adjustment). According to the
Virginia Taxicab Association, this reduction may be due to reduced vehicles mileage attributable to
changes in the taxicab services market and improved dispatch technology, stricter parts inventory
practices, and advances in automotive technology. The association has 14-member taxi companies that
account for approximately 500 taxis of which approximately 350 are company owned. This represents
approximately 23 percent of all licensed taxicabs in the state.
To arrive at the estimate of eligible sales, the number of licensed taxicabs was multiplied by the average
exempt amount. Since the number of taxicabs likely declined over the FY14 to FY23 period, this
figure was adjusted upward for earlier fiscal years using employment figures on Taxi and Ridesharing
Services industry (NAICS 485310) employment from the BLS Quarterly Census of Employment and
Wages and downward to create nominal values using the BLS Consumer Price Index. Eligible sales
were multiplied by the effective state sales tax rate of 4.28 percent (accounts for the dealer discount
and excludes the local option sales tax) to obtain the revenue impact.
Certain printed materials for out-of-state distribution exemption
The value for the printed materials exemption (previously based on Virginia TAX estimates for annual
reports) is based on new estimates using commodity demand data from IMPLAN, LightcastTM em-
ployment data, and information from the Economic Census on the percentage of sales/shipments by
the commercial printing industry on eligible advertising-related printed supplies. To estimate the ex-
emption tax revenue impact, the exemption was divided into two parts: (a) the part of the statute that
describes the exemption used by out-of-state entities that purchase eligible products from Virginia
printers and (b) the part of the statute that describes the exemption for Virginia-based advertising
firms that purchase eligible printing products from Virginia printers for out-of-state distribution.
To estimate part (a), the IMPLAN printing industry (IMPLAN sector 144) was used. The tax revenue
impact was calculated by
• obtaining industry output/sales data for the period 2013–2023 from IMPLAN for the
printing industry,
• determining the percentage of printed materials that are exported outside the state for the
industry (74.82 percent) from IMPLAN commodity trade data,
49
Appendixes
• obtaining the percentage of total commercial printing industry shipments accounted for
by catalogs/eligible printed products according to 2017 Economic Census product by in-
dustry data for the commercial printing industry, and
• computing the percentage of the printing industry employment accounted for by the com-
mercial printing industry over the 2013–2023 period (NAICS 323111) using Lightcast em-
ployment data.
Multiplying these quantities produced estimated eligible sales, which were then converted from calen-
dar years to fiscal years by averaging calendar years (e.g., (CY13+CY14)/2=FY14. Lastly, the eligible
sales were multiplied by the effective tax rate of 4.28 percent to obtain the revenue impact. The reve-
nue impact in FY23 was estimated at $8,867,773.
To estimate part (b), industry output/sales data—for the period 2013–2023 from IMPLAN for the
advertising, public relations, and related services industry (IMPLAN 447)—was multiplied by the per-
centage of outlays for industry printed materials commodity inputs (1.2 percent) (social accounts,
balance sheets, industry commodity demand) and the percentage of advertising, public relations, and
related services industry output that is exported (6.8 percent) from IMPLAN commodity trade data.
This provided the printed inputs that were eligible for the exemption, which was multiplied by the
effective state sales tax rate of 4.28 percent to obtain the revenue impact. The revenue impact in FY23
was estimated at $169,308, by far the smaller of the two exemption components.
In the last two annual reports, estimates from Virginia Tax produced in 2022 and 2017 were used and
extrapolated forwards (FY23) and backwards (FY14–FY21) using the consumer price index. Virginia
Tax estimates were derived from data using the 2022 U.S. commercial printing industry revenue esti-
mate from Statista. Revenues were apportioned to Virginia using firm-level sales data from the 2022
Printing Impressions survey of the top 300 largest printers compiled by the Printing United Alliance.
The percentage of printed catalog sales and Virginia’s share of total U.S. sales from the report’s sample
data were applied to U.S. revenues as the means for apportionment. Exemption revenue impacts are
then estimated by applying the Virginia sales and use tax rate distribution to the Virginia sales revenue
estimates. No distinction is made between the out-of-state and in-state users of the exemption in
Virginia Tax estimates. Prior to that, the estimate was based on extrapolating estimates from a Virginia
Tax sales and use report (1991) for FY14 to FY21 and using the Virginia Tax 2022 updated estimate
for FY22 and FY23. The Virginia Tax estimate for the exemption in FY22 ($7.417 million) was 14
percent lower than the corresponding estimate made by the Weldon Cooper Center ($8.643 million).
Contractor temporary storage exemption
The tax revenue impact estimate for the contractor exemption is based on an older estimate made by
Virginia Tax for a 1995 sales and use tax report. This figure was inflation adjusted using the CPI index
to FY14–FY23. In a 2004 Fiscal Impact Statement for HB1488, Virginia Tax reported that 17 con-
tractors had filed a total of 67 exemption certificates over a two-year period. The Virginia Department
of Taxation indicated that the revenue impact of the exemption is likely to be relatively small.
50
Appendixes
High-speed electrostatic duplicators exemption
Estimates for the electrostatic duplicators exemption rely on Virginia IMPLAN data and Virginia
Lightcast 6-digit NAICS employment data. IMPLAN output for Industry Code 455 (Business Support
Services) was obtained and multiplied by the percentage of industry outlays on eligible equipment and
leases, namely IMPLAN Commodities 3261 (commercial and service industry machinery) and 3435
(commercial and industrial machinery and equipment rental and leasing services). Because the Other
business service centers industry (NAICS 561439), which contains copy centers, forms a relatively
small part of the IMPLAN business support services sector, Lightcast employment data at the six-
digit NAICS level was used to apportion the exempted sales to the sector targeted by the exemption.
This total by year represented total purchases eligible for the exemption, which were multiplied by the
effective state sales tax rate of 4.28 percent to obtain the state tax revenue impact.
Out-of-state nuclear facility repair exemption
Estimates for the nuclear facility repair exemption use Virginia IMPLAN data, VEC QCEW confi-
dential employment data, and Virginia Lightcast six-digit NAICS employment data. According to Vir-
ginia Tax, there is primarily one large company that uses this exemption. This company is categorized
in NAICS Code 541330 (Engineering Services), which comprises part of IMPLAN 439 (architectural,
engineering, and related services). Output for this sector was multiplied by the percentage of outlays
on exempt purchases, assumed to consist of spending on inputs that fall within manufactured com-
modity sectors 3104–3375 and rental/leased equipment (3432, 3433, 3435, 3436) sectors. This figure
was then multiplied by the proportion of output for IMPLAN sector 439 that was exported outside
the state (22.6 percent). The total from these calculations was then apportioned to the firm using the
firm’s employment identified from confidential VEC QCEW records as a proportion of total employ-
ment in the engineering services (541330) industry. This proportion was then multiplied by the pro-
portion of IMPLAN sector 439 (which encompasses NAICS codes 541310-541380) that consists of
engineering services (NAICS 541330) using Lightcast six-digit NAICS employment. This total by year
represented total purchases eligible for the exemption, which were multiplied by the effective state
sales tax rate of 4.28 percent to obtain the state tax revenue impact.
Uniform rental and laundry businesses exemption
Data on industry output from IMPLAN for sector 501 (dry-cleaning and laundry services) was the
starting point for estimating the tax revenue impact of the uniform rental exemption. This figure was
multiplied by the percentage of outlays on exempt purchases, assumed to consist of spending on
inputs that fall within manufactured commodity sectors 3104-3375. Because this exemption is not
available for all dry-cleaning and laundry services, particularly those oriented towards consumers ra-
ther than industry, Lightcast employment data for the two industry-serving sectors (812331 linen sup-
ply and 812332 industrial launders) was used to apportion the total sector eligible purchases. This was
then multiplied by the effective state sales tax rate of 4.28 percent to obtain the state tax revenue
estimate.
51
Appendixes
Controlled environment agriculture exemption
The controlled environment agriculture (CEA) exemption became available to eligible CEA firms on
July 1, 2023. Thus, the methodology outlined below provides an estimate for FY24 for illustrative
purposes and a benchmark estimate of the approximate size of the incentive compared with other
economic development incentives in this report. The estimate is based on a list of CEA operations in
Virginia compiled by VDACS. The list consists of 21 establishments, including 19 that were operating
in the second quarter of 2023. Using confidential VEC QCEW data, the establishments are estimated
to have 1,574 wage and salary employees in Virginia in FY23. Although the establishments are classi-
fied in different NAICS industries, the predominant industry is 1114 (greenhouse, nursery, and horti-
culture industry) and the production technology of the associated IMPLAN sector (IMPLAN 6
Greenhouse, nursery, and floriculture production) is assumed to be representative of the entire indus-
try. The number of employees was converted to output using the output-to-employment ratio for the
industry. This figure was then multiplied by the proportion of purchased inputs that were eligible for
the exemption. Exempted manufactured commodity sectors 3132–3135 (various wood products),
3178–3318 (various plastic and rubber products, tools, and machinery), 3369 (gaskets, packings, and
sealing devices), and 3371 (fasteners, buttons, needles ad pins) were assumed to be the eligible input
purchases. These product inputs represented approximately 2.1 percent of outlays. Finally, this was
multiplied by the effective state sales tax rate of 4.28 percent to obtain the revenue impact. Since no
CY24 IMPLAN data was available, this amount was assumed to be the FY24 revenue impact.
Interviews with agencies and stakeholders
Meetings, online conferences, and phone conversations were held with agency staff to discuss pro-
grams evaluated in this report, including staff from
• Virginia Tax (exemptions and worker training tax credit),
• VEDP (Virginia Talent Accelerator Program and VJIP),
• the secretary of agriculture and forestry and VDACS (CEA exemption),
• Virginia Nuclear Energy Consortium Authority, and
• Virginia Works (Department of Workforce Development and Advancement).
Interviews with selected stakeholders, including representatives of the Virginia Taxicab Association,
the Textile Rental Services Association, and two executives from commercial printing firms, were con-
ducted to discuss their awareness, usage, and thoughts about their respective industry exemptions (taxi
parts and radio, uniform rental and laundry businesses, and certain printed materials for out-of-state
distribution exemptions).
Review of other states’ workforce incentives and industry tax exemptions
Weldon Cooper Center staff reviewed several sources of information to obtain data on state work-
force incentives and industry tax exemptions. The principal source of information for the workforce
related grants and tax credits was the Council for Community and Economic Research (C2ER) online
State Business Incentives Database, which reflects incentive programs in place as of 2023 (the last
time the database was updated). Supplemental information was obtained from several other sources
such as Shadewald and Nelson (2025). In addition, internet research of economic development agency,
52
Appendixes
department of taxation, and legislative websites for each state was used to find newer programs and
identify important features of each program.
The purpose of the state comparison analysis was to highlight key features of the other state programs
that were key to the study analysis, such as (1) the existence of a program, (2) whether it was a tax
credit, grant, or other in-kind assistance, (3) the minimum wage eligibility requirements for job creation
incentives, and (4) the average state financial assistance provided for worker training and job creation
per eligible workers. In computing minimum wage requirements by state, the federal minimum wage
or state minimum wage (if higher) were used if no wage eligibility requirement was stated. When states
stipulated that applicants must pay at least the level of the county average wage where the firm is
locating or expanding, this was estimated by selecting the average state wage in the state using QCEW
2023 records. When states had multiple programs, an average wage requirement was estimated by
weighting program minimum wage requirements equally.
Review of documents and literature
During this study, several sources of information, including documents, reports, and published or
unpublished research were examined. The purpose of this literature review was to understand the
purpose and goals of Virginia incentive programs, industry locational factors, role and importance of
economic incentives, market imperfection rationales for programs, and methodological approaches
for quantifying the economic and tax revenue impacts of economic incentives. Sources consulted
included:
• program materials describing the programs, Virginia agency reports describing program
usage, and legislative statutes authorizing the programs;
• evaluations and economic impact studies published by state agencies or their consultants
in other states;
• books, reports, and articles that examine job creation and job retaining incentives and the
performance of individual industries such as the taxicab services and printing industries;
and
• studies that attempt to quantify the economic impact of economic development incentives
using ex-ante and ex-post modeling methods.
53
Appendixes
Appendix C: Economic benefits and return in revenue for all
Virginia incentives reviewed to date
Economic development incentives vary in their economic benefit and return in revenue to the state.
To provide context to the economic benefits and return in revenue generated by each incentive, in-
centives have been categorized as having a negligible, low, moderate, or high economic benefit and
return in revenue. To determine the category, each incentive is scored from 0 to three on four
measures: the amount of jobs, Virginia GDP, and personal income generated per $1 million spent on
the incentive and the return in revenue generated per $1 spent on the incentive. The scoring is based
on the distribution of all 83 incentives reviewed to date for each of the four measures, with a score
of ‘0’ meaning the incentive fell below the 25th percentile (or first quartile) of the distribution for the
measure and a score of ‘three’ meaning the incentive was in the highest quartile (above the 75th per-
centile) for the measure.
The scores for the three measures of economic benefits (jobs, Virginia GDP, and personal income)
were averaged to arrive at an overall average score for economic benefits for each incentive. Incentives
with average scores for the three measures near ‘0’ were categorized as having negligible economic
benefits relative to other incentives. Incentives with average scores near ‘1’, ‘2’, or ‘3’ were categorized
as having low, moderate, or high economic benefits, respectively, relative to other incentives. For return
in revenue, an incentive with a ‘0’ score on that measure was categorized as having a negligible return
in revenue relative to other incentives. An incentive with a score of ‘1’, ‘2’, or ‘3’ was categorized as
having a low, moderate, or high return in revenue, respectively, relative to other incentives.
An incentive’s category may change over time. Of the 83 Virginia economic development incentives
that have been evaluated so far, and because incentives are categorized relative to other incentives
evaluated, incentives may change categories as additional incentives are evaluated each year. Once all
incentives are evaluated, the incentives will be re-evaluated. The category may change for re-evaluated
incentives because of new or improved outcomes data, program changes, and changes to the state
economy and industry mix.
Of the incentives evaluated through the first half of 2025, grants tend to generate moderate or rela-
tively high economic benefits and returns in revenue. Tax incentives tend to generate low or negligible
economic benefits and returns in revenue (Table C-1). Grant programs have higher economic benefits
than other types of incentives because a higher percentage of grant funding is directed to corporate
headquarters or businesses in manufacturing industries, which generally have high economic multipli-
ers and pay higher wages. In addition, businesses that receive grants must agree to create jobs and
make capital investments and usually make above minimum job creation and capital investment levels,
but other incentives may not have similar requirements for businesses to receive an award.
54
Appendixes
TABLE C-1
Grants tend to generate higher economic benefits and returns in revenue than tax incentives
Economic Return in
Incentive Incentive type benefits state revenue
Aircraft parts, engines, and supplies exemption Exemption 4000 4000
Airline common carrier exemption Exemption 4000 4000
Certain printed materials for out-of-state distribu-
Exemption 4000 4000
tion
Coal Employment and Production Incentive Tax
Tax credit 4000 4000
Credit a
Coalfield Employment Enhancement Tax Credit a Tax credit 4000 4000
Farm Wineries and Vineyard Tax Credit Tax credit 4000 4000
Film exemption Exemption 4000 4000
Green Job Tax Credit Tax credit 4000 4000
High-speed electrostatic duplicators exemption Exemption 4000 4000
Major Research and Development Tax Credit Tax Credit 4000 4000
Out-of-state nuclear facility repair exemption Exemption 4000 4000
Qualified Business Long-Term Capital Gains Sub-
Subtraction 4000 4000
traction
Qualified Equity and Subordinated Debt Investment
Tax credit 4000 4000
Tax Credit (angel investment tax credit) a
R&D exemption Exemption 4000 4000
R&D expenses tax credit Tax Credit 4000 4000
Railroad rolling stock exemption Exemption 4000 4000
Recyclable Materials Tax Credit Tax credit 4000 4000
Ships and vessels exemption Exemption 4000 4000
Spaceport users exemption Exemption 4000 4000
Telework Tax Credit a Tax credit 4000 4000
Worker Training Tax Credit Tax credit 4000 4000
Zero G Zero Tax resupply subtraction Subtraction 4000 4000
Transportation Partnership Opportunity Fund Grant 4000 4000
55
Appendixes
Economic Return in
Incentive Incentive type benefits state revenue
Contractor Temporary Storage Exemption Exemption 4000 4400
Biodiesel and Green Diesel Tax Credit Tax credit 4000 4400
Blue Star b Grant 4000 4400
Semiconductor manufacturing exemption Exemption 4400 4000
Pollution control equipment exemption Exemption 4400 4400
Commonwealth Research Commercialization Pro-
Grant 4400 4400
gram
Motion Picture Production Tax Credit Tax credit 4400 4400
Railroad common carrier exemption Exemption 4400 4400
Taxi parts and radios exemption Exemption 4400 4400
Uniform rental and laundry exemption Exemption 4400 4400
Tobacco Commission Megasite Grant Grant 4400 4400
Worker Retraining Tax Credit Tax credit 4400 4400
Barge and Rail Usage Tax Credit Tax credit 4400 4440
Economic Development Access Program Grant 4400 4440
Real Property Investment Grant Grant 4400 4440
International Trade Facility Tax Credit Tax credit 4400 4440
Agriculture and Forestry Industries Development
Grant 4400 4440
Grant
Virginia Talent Accelerator Program Grant c 4400 4440
SRI International Grant 4400 4440
Virginia Investment Partnership Grant Grant 4400 4444
Semiconductor wafer exemption Exemption 4440 4400
Major Business Facility Jobs Tax Credit Tax credit 4440 4400
Rail Industrial Access Program Grant 4440 4440
Governor’s Motion Picture Opportunity Fund Grant 4440 4440
Job Creation Grant Grant 4440 4440
Port of Virginia Economic and Infrastructure Grant Grant 4440 4440
56
Appendixes
Economic Return in
Incentive Incentive type benefits state revenue
Port Volume Increase Tax Credit Tax credit 4440 4440
Qimonda (semiconductor) grant Grant 4440 4440
Tobacco Region Opportunity Fund Grant 4440 4440
CMA CGM Grant 4440 4440
LEGO Group Grant 4440 4440
Huntington Ingalls-Production Grant 4440 4440
Rocket Lab Grant 4440 4440
Microsoft Grant 4440 4440
Rolls-Royce b Grant 4440 4440
CoStar Grant 4440 4440
Virginia Jobs Investment Program Grant 4440 4440
Morgan Olson b Grant 4440 4444
Small Business Investment Grant Grant 4444 4440
Manufacturers SSF apportionment Other 4444 4444
Virginia Economic Development Incentive Grant Grant 4444 4444
Amazon HQ2 Grant 4444 4444
Micron (2018 custom grant) b Grant 4444 4444
Cash Collateral Program Loan 4444 4444
Commonwealth's Development Opportunity Fund
Grant 4444 4444
Grant
Data center exemption Exemption 4444 4444
Economic Development Loan Fund Loan 4444 4444
GAP Funds Program Other 4444 4444
Loan Guaranty Program Loan 4444 4444
Major Eligible Employer Grant Grant 4444 4444
57
Appendixes
Economic Return in
Incentive Incentive type benefits state revenue
Micron (2005 grant) Grant 4444 4444
Small Business Jobs Grant Grant 4444 4444
SWaM Loan Fund Loan 4444 4444
Trade Show Assistance Program Grant c 4444 4444
Virginia Leaders in Export Trade (VALET) Grant c 4444 4444
Merck Grant 4444 4444
Volvo b Grant 4444 4444
Huntington Ingalls-Training Grant 4444 4444
Amazon Web Services Grant 4444 4444
Virginia Business Ready Sites Program Grant n.a. n.a.
Negligible Low Moderate High
SOURCE: JLARC staff analysis of economic impact and return in revenue estimates generated by the Weldon Cooper Center.
NOTE: Includes incentives evaluated as of the first half of 2025. Time period for which incentives are evaluated varies. Estimates are sen-
sitive to the assumptions used to determine the percentage of economic activity that can be attributed to the incentive.
a
Programs have been eliminated. b Grants terminated or are expected to terminate before completing performance. c Not technically
grants but categorized with grants for this analysis.
58
Appendixes
Appendix D: State workforce training incentives
Workforce improvement incentives are designed to attract and retain businesses by helping firms meet
workforce needs during relocation or expansion. States use several different economic incentive mod-
els to encourage business workforce training for economic development purposes. These models in-
clude (1) tax credit, (2) grant/voucher, (3) turnkey (free service), (4) shared-cost, (5) public-private
partnership, and (6) regional or sector-focused models. Like other states, Virginia uses several different
models rather than a “one-size-fits-all” model since firms often have different workforce training
needs. The models differ primarily in terms of mode of training delivery/reimbursement, customiza-
tion, and the extent of state involvement. Virginia offers at least one program that represents each of
these models, but programs in only three of the models are evaluated in this report Table D-1).
TABLE D-1
Virginia utilizes different business incentive models for workforce training
Model Description Strengths Weaknesses Virginia program
Evaluated in this report
Limited to businesses
Greater flexibility for
Firms provided tax with sufficient tax lia- Worker Training Tax
Tax credit firms. Minimal state
credit for training costs. bility. Credit
operational costs.
Greater flexibility for
Grants/vouchers allow
firms. More state dis- Virginia Jobs
Voucher/grant firms to design/procure
cretion and oversight Investment Program
own training programs.
on training quality.
No cost to businesses. More state overhead.
Firms provided custom-
Fast, state-managed Higher cost to the Virginia Talent
Turnkey ized workforce services
implementation. state. Accelerator Program
at no cost.
Highly customized.
Not evaluated in this report or evaluation series
State shares cost of
Encourages mutual
Shared cost workforce services with FastForward
investment.
business or students.
Collaboration between Requires strong insti-
Leverages existing ed- Apprenticeship pro-
state agencies, educa- tutional partnerships.
ucation infrastructure. grams, Virginia Com-
Public-private tional institutions, and Longer setup time
Aligns with long-term munity College Sys-
businesses to deliver compared to turnkey
workforce strategies. tem programs.
workforce training. models.
59
Appendixes
Programs targeting Targets strategic in- Narrow scope may ex-
Regional/sec- specific industries or re- dustries and regions. clude other regions Go Virginia workforce
tor gions to meet strategic Encourages collabora- and industries. grants
workforce needs. tion between firms.
SOURCE: Weldon Cooper Center.
a
These programs have been evaluated by JLARC in the past (community college workforce programs, GO Virginia grants) or are in the
process of being evaluated for a fall 2025 report (community college workforce and FastForward programs).
Almost all states offer some form of job creation or training incentive like VJIP
Almost all states (42) offer some form of job creation or training incentive like VJIP to encourage
business location or expansion (Table D-2). Job creation incentives are among the oldest and most
common economic incentive programs offered by states. These incentives are estimated to make up
45 percent of the value of state incentives in 2015 and grew faster than other economic incentives
over the 26-year period from 1990–2015, accounting for two-thirds of total state economic incentive
growth (Bartik 2017). State job creation incentive features differ along various criteria, including: (a)
average size of award, (b) restrictions on use of award, (c) grant versus tax credit format of award, (d)
minimum wage threshold, (e) minimum job creation threshold, (f) minimum capital investment thresh-
old, (g) industries targeted, (f) geographical targeting (e.g., enterprise zones, rural regions), and (g)
worker targeting (e.g., unemployed or disadvantaged individuals). To provide a purer comparison to
VJIP, Table D-2 excludes highly discretionary “deal closing” funds, geographically targeted job crea-
tion incentives, and job creation incentives that target disadvantaged populations.
VJIP is similar to other state job creation incentives in several respects. It favors traded sector indus-
tries and specifies minimal job creation and capital investment eligibility requirements. It also differs
in some respects. VJIP restricts award use to recruitment and training purposes, while most job crea-
tion incentives do not limit usage to these types of expenditures. The average award amount per job
for VJIP is only $844 over the FY14–FY23 period, compared with an average of $4,250 and median
of $2,500 for 17 state job creation tax credit/grant award programs that compute awards per eligible
employee rather than additional payroll created. Some states tie the incentive value to a percentage of
payroll creation, which ensures that the incentive amount increases in line with inflation and worker
productivity and does not require periodic recalibration, but this makes it difficult to determine the
average award per job. Moreover, some states offer higher incentive awards for projects located in
disadvantaged areas.
VJIP’s minimum wage requirements are generally lower than other comparable state job creation in-
centives elsewhere in the U.S. The Virginia minimum wage was $12.00 per hour in FY23, making
the program minimum wage threshold $14.40. This represents a 47 percent increase over the $9.79
minimum eligible wage the program required in 2018. However, this increase has not kept pace with
minimum eligible wages elsewhere in the U.S. because most states benchmark their minimum wage
standard with state or local average prevailing wages. A tally of program minimums in other states
60
Appendixes
indicates that the average state minimum wage is $19.47 and has a median of $18.01. This varies
from a high of $48.66 in Oregon to a low of $7.25 (the federal minimum wage) in Indiana.
Some states offer job training tax credits
Nineteen states (including Virginia) currently offer job training tax credits; four of these states offer
two (Table D-1). Most of the state credits fund apprenticeship training; sometimes, the tax credit is
available only for apprenticeship training. A handful of states also help with apprentice wages. This
tally does not include programs that reimburse firms for college tuition reimbursement or fund reme-
diation/basic skills training. However, it does include programs that fund pre-apprenticeships, intern-
ships, and mentorship programs.
State training tax credit programs differ in many different respects, including the types of skills that
are supported and the candidates for training. Reimbursement formulas also vary widely but typically
reimburse up to 50 percent of training costs, with per employee caps in the $500 to $6,000 range. The
average incentive value for training tax credit and grant programs is $2,557 per employee, and the
median value is $2,000. With a tax credit reimbursement value from $500–$1,000, Virginia’s worker
training tax credit offers a substantially lower reimbursement rate than most state programs.
Spaulding and Petrov (2023) indicate that more states have introduced incentives for apprenticeship
training in recent years. Rosenberg and Dunn (2020) indicate that 80 percent of states reported using
workforce training and education incentives, and 67 percent funded apprenticeship training. Twenty-
one percent of states offered subsidies for apprentice wages. Some states have recently enhanced their
training tax credits. During the 2024 legislative session, South Carolina amended its Apprenticeship
Income Tax Credit to increase its reimbursement from $1,000 to $4,000–$6,000 for a youth apprentice.
Also, the $1,000 tax credit rollover period was expanded to three years (Wall and Allen 2024).
61
Appendixes
TABLE D-2
State workforce improvement incentives
Estimated aver-
Average training
Job creation Job creation tax age wage mini- Training Training - Job training tax
State assistance per
grant credit mum for job cre- grant direct delivery credit
employee
ation incentives
Alabama X (2) $8.63 X X $900
Alaska --
Arizona X (2) $43.89
Arkansas X (2) $20.02 X X X $2,000
California X (2) $23.25 X
Colorado X $37.65 X $2,500
Connecticut X $18.02 X (4) X (2) $3,675
Delaware X (2) $20.45 X $2,000
District of Colum-
--
bia
Florida -- X (2) $2,000
Georgia X (3) $24.40 X X (2) $1,250
Hawaii --
Idaho X X $23.26 X
Illinois X $13.00 X $3,500
Indiana X $7.25 X $2,000
Iowa X (2) $20.80 X (2) X $3,422
Kansas X (2) $17.99 X (3) X $2,050
Kentucky X (3) $9.67 X $2,000
62
Appendixes
Estimated aver-
Average training
Job creation Job creation tax age wage mini- Training Training - Job training tax
State assistance per
grant credit mum for job cre- grant direct delivery credit
employee
ation incentives
Louisiana X $18.00 X X X $1,000
Maine X $29.30 X (3) $1,250
Maryland X X $15.46 X (4) X $3,667
Massachusetts X $15.00 X (2) X $3,960
Michigan X $10.10 X (2) $2,000
Minnesota X $14.68 X $6,000
Mississippi X (2) $16.41 X X $2,500
Missouri X $27.07 X $1,500
Montana X $17.51 X X $2,785
Nebraska X $19.27 X (3) $7,500
Nevada X $15.00 X Not specified
New Hampshire -- X $750
New Jersey X $21.53 X (3) $2,000
New Mexico X $19.23 X X Not specified
New York X (2) $15.00 X X (2) $9,000
North Carolina X $31.78 X (2) X Not specified
North Dakota -- X (2) X $3,500
63
Appendixes
Estimated aver-
Average training
Job creation Job creation tax age wage mini- Training Training - Job training tax
State assistance per
grant credit mum for job cre- grant direct delivery credit
employee
ation incentives
Ohio X X $10.88 X (2) X $2,000
Oklahoma X (3) X $21.27 X X Not specified
Oregon X $48.46
Pennsylvania X $10.88 X (2) $2,500
Rhode Island X (2) $26.83 X (3) X (2) $2,720
South Carolina X (3) $14.08 X (3) X X $1,000
South Dakota X $10.80 X $1,000
Tennessee X X $7.25 X
Texas -- X (2) $1,675
Utah X (2) $30.76 X (2) Not specified
Vermont X $18.45 X $2,000
Virginia X X $14.40 X X X $1,000
Washington -- X X $2,000
West Virginia X $19.06 X X $2,000
Wisconsin X $10.88 X Not specified
Wyoming -- X (4) $2,000
64
Appendixes
Estimated aver-
Average training
Job creation Job creation tax age wage mini- Training Training - Job training tax
State assistance per
grant credit mum for job cre- grant direct delivery credit
employee
ation incentives
Total/Average
and median
17 31 $19.47 42 11 19 $2,557
(wage and train-
ing assistance)
SOURCE: Weldon Cooper Center.
NOTE: Some states have multiple incentives, denoted as (#).
65
Appendixes
Five states offer turnkey workforce development programs
State turnkey workforce development incentive programs are designed to attract businesses to specific
states by addressing firm concerns about the availability of a skilled and ready workforce. The term
“turnkey” reflects the all-inclusive nature of these programs—they handle workforce recruitment,
training, and onboarding, providing employers with a “ready-to-work” labor pool. The earliest pro-
grams were ReadySC and the Georgia Quick Start program in the 1960s. Since that time, customized
programs in three other states were created, including Louisiana FastStart, Alabama Industrial Devel-
opment Training, and Virginia’s program.
While many other states offer workforce development assistance programs as part of their economic
incentive offerings, they often differ from the turnkey approach. The hallmark of the turnkey ap-
proach is the fast deployment of resources by state-designated agencies at no cost. For example, North
Carolina NCWorks offers training through the North Carolina Community College System to support
new, expanding, and existing industries, but it differs from a comprehensive one-stop economic de-
velopment agency approach. Community colleges receive funding and determine how to serve the
company. Missouri’s QuickStart program is a hybrid program—it provides some in-kind customized
recruitment services and reimburses companies for qualified training expenses. Some state programs,
similar to VJIP, provide primarily grant assistance to firms to reimburse some of the costs of onboard-
ing and training (e.g., Florida Quick Response Training program, JobsOhio Talent Acquisition Services
program).
According to VEDP staff, the Virginia Talent Accelerator Program also differs from other state turn-
key programs in its selectivity and program scope. The program restricts participants to new and
expanding firms and on production jobs where it can obtain economies of scale in service delivery.
Some states, such as Alabama and South Carolina, accommodate other types of firms. The Virginia
Talent Accelerator Program also provides wrap-around services, while other states typically offer fewer
choices. For example, Louisiana’s training services are more limited; Alabama focuses on training be-
fore hiring; and Georgia does not provide recruitment services for every project.
Virginia’s program has been ranked at or near the top by major site selection magazines, such as Area
Development (#2) and Business Facilities (#1). The magazines use different methodologies for rating state
programs. Business Facilities’ ranking is based on editor experience and visits. They use a qualitative
approach and meet with each of the programs. Area Development’s rankings take longer to adjust over
time because they are based on a survey of site developers, many of whom may not have direct expe-
rience with the Virginia Talent Accelerator Program because it is newer than other state turnkey pro-
grams.
66
Appendixes
Appendix E: Local economic developers rate VJIP as most
useful incentive
Weldon Cooper Center staff surveyed local economic development staff for each of Virginia’s 133
counties and independent cities to assess the importance of incentives to attract businesses, estimate
the supply and demand for business ready sites, and assess the importance of various industrial loca-
tion and expansion factors in 2022. The response rate was slightly over 50 percent.
In this survey, VJIP was rated as the state’s most useful incentive program. Eighty percent of respond-
ents indicated that the incentive program was “very useful,” and 12 percent as “somewhat useful.”
The average weighted rating for the program was 3.84 on a four-point scale. The program also had a
very high familiarity, with only 5 percent of the respondents indicating they were not familiar with the
program. The only other incentive examined in this report, the Worker Retraining/Training Tax
Credit, was rated 10th highest in terms of average rating, though 25 percent of local economic devel-
opers were not familiar with it.
TABLE E-1:
VJIP is rated as the most useful Virginia incentive program by local economic developers
(2) (3) Not
(1) Not Some- (4) familiar Otherwise
Not use- very what Very with the cannot Average
State incentive ful at all useful useful useful program assess rating
Virginia Jobs Investment
0.0% 1.5% 12.1% 80.3% 4.6% 1.5% 3.84
Program
Agriculture and Forestry In-
dustries Development 1.5 3.0 13.4 73.1 7.5 1.5 3.74
Grant
Commonwealth’s Develop-
4.6 3.0 16.7 69.7 6.1 0.0 3.61
ment Opportunity Fund
Virginia Business Ready
1.5 13.4 26.9 55.2 0.0 3.0 3.40
Sites Program
Job Creation Grant 7.5 1.5 25.4 47.8 11.9 6.0 3.38
Virginia Investment Perfor-
4.5 6.0 26.9 41.8 17.9 3.0 3.34
mance Grant
Economic Development
4.5 7.5 29.9 44.8 10.5 3.0 3.33
Access Program
Transportation Partnership
4.6 6.1 19.7 31.8 31.8 6.1 3.27
Opportunity Fund
Tourism Development Fi-
6.1 6.1 28.8 39.4 13.6 6.1 3.26
nancing Program
67
Appendixes
(2) (3) Not
(1) Not Some- (4) familiar Otherwise
Not use- very what Very with the cannot Average
State incentive ful at all useful useful useful program assess rating
Worker Training Tax
Credit/Worker Retraining 7.5 6.0 20.9 40.3 25.4 0.0 3.26
Tax Credit
Real Property Improve-
7.6 7.6 19.7 42.4 15.2 7.6 3.25
ment Grant
Virginia Economic Devel-
6.3 6.3 32.8 39.1 10.9 4.7 3.24
opment Incentive Grant
Data Center Exemption 6.1 9.1 18.2 34.9 21.2 10.6 3.20
Major Eligible Employer
10.5 3.0 26.9 32.8 22.4 4.5 3.12
Grant
GO Virginia 7.5 11.9 40.3 38.8 0.0 1.5 3.12
Small Business Investment
6.0 4.5 29.9 23.8 29.9 6.0 3.12
Grant Fund
Major Eligible Employer
9.4 9.4 26.6 37.5 14.1 3.1 3.11
Grant
Small Business Jobs Grant
6.1 7.6 25.8 24.2 30.3 6.1 3.07
Fund Program
Port of Virginia Economic
12.1 9.1 24.2 34.9 15.2 4.6 3.02
and Infrastructure Grant
Commonwealth Research
6.0 11.9 20.9 23.9 31.3 6.0 3.00
Commercialization Fund
Major Research and Devel-
10.6 1.5 25.8 22.7 33.3 6.1 3.00
opment Tax Credit
CIT GAP (Growth Accelera-
4.6 10.6 24.2 19.7 33.3 7.6 3.00
tor Program) Fund
Rail Industrial Access Pro-
12.1 6.1 30.3 27.3 19.7 4.6 2.96
gram
Research and Development
9.0 7.5 17.9 20.9 41.8 3.0 2.92
Expenses Tax Credit
Virginia Port Volume In-
13.4 3.0 19.4 22.4 37.3 4.5 2.87
crease Tax Credit
International Trade Facility
9.0 7.5 20.9 17.9 40.3 4.5 2.86
Tax Credit
68
Appendixes
(2) (3) Not
(1) Not Some- (4) familiar Otherwise
Not use- very what Very with the cannot Average
State incentive ful at all useful useful useful program assess rating
Farm Wineries and Vine-
9.0 9.0 22.4 16.4 34.4 9.0 2.82
yards Tax Credit
Manufacturing Single Sales
7.6 9.1 13.6 12.1 50.0 7.6 2.71
Factor Apportionment
Recyclable Materials Pro-
cessing Equipment Tax 13.4 6.0 28.4 7.5 38.8 6.0 2.54
Credit
Qualified Equity and Sub-
ordinated Debt Investment 11.9 4.5 11.9 9.0 56.7 6.0 2.48
Tax Credit
Barge and Rail Usage Tax
13.6 7.6 16.7 7.6 43.9 10.6 2.40
Credit
Virginia Coal Production
and Employment Incentive 22.4 3.0 6.0 11.9 40.3 16.4 2.17
Tax Credit
Coalfield Employment En-
19.4 6.0 9.0 7.5 37.3 20.9 2.11
hancement Tax Credit
SOURCE: Weldon Cooper Center survey of local economic developers.
NOTE: N=67. See Infrastructure and Regional Incentives (JLARC 2020) for more information about the local economic developer survey.
69
Appendixes
Appendix F: Summary of each industry exemption
Exemption for certain printed materials for out-of-state distribution
(§ 58.1-609.6(4)(i)(ii))
Virginia’s exemption for certain printed materials for out-of-state distribution exempts certain printed
materials from sales and use taxes when those materials are intended for out-of-state distribution. The
exemption was adopted in 1976 after unsuccessful litigation by a Virginia printer (Stuart McGuire v
Commonwealth) challenging Virginia Tax’s policy of taxing printing materials delivered to out-of-state
customers. At the time, Virginia Tax’s policy considered a taxable “delivery” to occur when printed
materials were placed in the mail by a Virginia-based printer on behalf of the customer. This “con-
structive delivery” approach meant the materials were deemed delivered to the customer in Virginia,
even if the materials were ultimately destined for out-of-state recipients. This exemption is currently
set to expire July 1, 2028.
Exempted items. The exemption applies to printed materials like catalogs, brochures, or other pro-
motional items that are produced in Virginia but are intended for distribution primarily outside the
state. The exemption also covers the envelopes, containers and labels used for packaging and mailing,
and paper furnished to a printer for fabrication into such printed materials if the materials are stored
for 12 months or less in the Commonwealth and distributed for use outside the Commonwealth. The
exemption does not apply to “administrative supplies” such as letterhead, envelopes, and other sta-
tionery, invoices, billing forms, payroll forms, price lists, timecards, computer cards, and similar sup-
plies. Users of the exemption are required to provide a completed Certificate of Exemption (Form
ST-10A) to the vendor.
Purpose. The exemption appears to have multiple purposes according to Virginia Tax (1991 sales and
use tax report). The exemption was enacted to
• encourage direct marketers, especially those located outside the state, to purchase catalogs
and other advertising printed material from Virginia printers;
• make Virginia printers more competitive with out-of-state printers by benefiting Virginia-
based commercial printers and encouraging Virginia-based advertising firms to purchase
printed materials from them tax free if the materials are intended for out-of-state distribu-
tion; and
• not taxing items that are part of interstate commerce, as the primary use of the materials
is outside the state’s jurisdiction.
Beneficiaries. Users of the exemption include direct mail printers and print advertisers, particularly
direct mail advertisers and advertising materials distributors.
Industry trends. These sectors are in decline both in Virginia and nationwide for technological and
competitive reasons, with the commercial printing sector declining faster than the U.S. (Figure 5-1)
and the advertising sector decreasing slower than the U.S. benchmark (Figure 5-2). As digital technol-
ogies such as the internet, e-marketing, social media, and AI have grown, print media have lost market
share (IBIS 2024b). Digital media advertising is often less expensive, can reach larger audiences, can
70
Appendixes
be more narrowly targeted to granular customer market segments, and can be used to more accurately
measure audience response than print media (IBIS 2024c; IBIS 2025). Industry demand for print
catalogs has also plummeted as consumers increasingly browse and purchase online. Digital media is
also sometimes more highly valued by businesses and consumers because it is more environmentally
friendly, generating less solid waste that is often disposed of in landfills. Print advertising is increasingly
focused on a shrinking market of rural areas and older generations.
Industry representatives indicated that a significant amount of consolidation in the printing industry
has occurred because of cost and competitive pressures. Commercial printers have also struggled with
finding employees and the high costs ($4 million–$7 million) of investments in printing presses. They
indicated that the exemption amount can often make a difference in bidding for some out-of-state
contracts ($20,000–$50,000), because bids often differ by a few hundred dollars.
FIGURE F-1
Virginia commercial printing employment has declined faster than the U.S.
SOURCE: LightcastTM.
71
Appendixes
FIGURE F-2
Direct mail advertising/advertising materials distribution employment has declined slower in
Virginia than the U.S.
SOURCE: LightcastTM.
States with similar exemptions. Virginia Tax reported that 17 states provided catalog exemptions
similar to Virginia, and five states exempted catalogs with various exemptions in 1990. Information
provided by the Print and Graphic Communications Association indicates that most states provide
some sales tax exemptions to the printing industry, but only 11 offer an exemption similar to Vir-
ginia’s exemptions on products for out-of-state use. Not all specify, as Virginia does, that the ex-
emption applies only to products sold for advertising purposes.
Contractor temporary storage exemption
(§ 58.1-609.3(1))
The contractor temporary storage exemption allows tax free purchases of construction materials that
are temporarily stored in Virginia and then incorporated into exempt construction projects outside
the state. Exempt construction projects are typically projects for nonprofit or governmental entities
that would be exempt from tax in the jurisdiction where the construction project occurs. This exemp-
tion was adopted in 1989. Prior to this, contractors paid the sales tax upon purchasing the construction
materials and applied for a rebate. This rebate was adopted in 1973.
Purpose. The rationale for the exemption was to make Virginia construction suppliers more compet-
itive with out-of-state suppliers as well as other purposes such as not hindering interstate commerce
and preventing the taxation of intermediate inputs.
Beneficiaries. Direct beneficiaries of the exemption are construction contractors in Virginia that per-
form tax exempt construction outside of the state. Construction material suppliers in Virginia who
sell materials for these projects also benefit.
72
Appendixes
Exempted items. Exempt purchases include construction materials that are to be incorporated into
exempt real property construction and could be purchased tax free by the contractor in another state
or country. The exemption does not apply to equipment, tools, supplies, etc. used in performance of
the construction project that are not incorporated into the construction. Users of the exemption are
required to provide a completed Certificate of Exemption (Form ST-11A) to the vendor.
Other states. Virginia Tax reported in 1995 that 14 states provided an exemption similar to Virginia’s,
including border states, Maryland and West Virginia. Some states provide an exemption for temporary
storage to a broader range of industries. According to the Sales Tax Institute (2020), states usually
exclude temporarily stored personal property from their definition of property use rather than list it
separately in statute as an exemption. An analysis of current state tax codes by Schadewald and Nelson
(2025) indicates that 19 states provide a temporary storage exemption for materials purchased outside
the state and temporarily stored in the state prior to transport/use outside the state.
Controlled environment agriculture exemption
(§ 58.1-609.2)
The controlled environment agriculture (CEA) exemption reduces the costs for purchases of equip-
ment and materials to grow crops (and sometimes seafood) in controlled environments such as green-
houses, vertical farms, or indoor farming facilities with hydroponics and aquaponics, often incorpo-
rating advanced technologies for climate control, lighting, and resource management. The exemption
was adopted in 2023 after it was determined that the agricultural exemption did not apply to CEA
because they are not located on farms and have a high-tech industrial production process similar to
manufacturing.
Purpose. The CEA exemption expanded the agricultural exemption to include certain tangible per-
sonal property used directly by indoor, closed, controlled environment agricultural facilities to produce
agricultural products. It also helped to promote the growth of the industry in the state and prevent
the taxation of intermediate inputs.
The state’s desire to support and grow the CEA industry because of Virginia’s proximity to the
growing eastern seaboard consumer markets was also a factor for establishing the exemption, ac-
cording to the secretary of agriculture and forestry. The incentive also promotes advanced agricul-
tural technologies and infrastructure, positioning the state as a hub for agricultural innovation.
Exempt items. Items used directly in agricultural production for market in an indoor, closed, con-
trolled-environment commercial agricultural facilities and greenhouses are exempt from the sales tax.
These items can include internal and external components or materials such as automation equipment,
lighting systems, water and water treatment equipment, etc., that are used to grow horticulture, flori-
culture, viticulture, or other farm crops or products in controlled environments. Users must submit
an exemption certificate (Form ST-18) to suppliers at the time of purchase.
Beneficiaries. Indoor and vertical farm facilities or greenhouses. VDACS maintains an inventory of
CEA firms operating in the Commonwealth. It currently lists 21 CEA establishments. (Two establish-
ments have not yet opened.) Collectively, these firms employ 1,574 workers, according to 2023 QCEW
data. Most (80 percent) of the employment in these establishments is identified within the broader
73
Appendixes
greenhouse (515), nursery (435), and floriculture (302) industry (NAICS 1114). Other firms are iden-
tified as “other vegetable farming” (NAICS 111219), finfish farming and fish hatcheries, support ac-
tivities for crop production (NAICS 1115), and wholesale ag-related industries. It is not known to
what extent these companies are using or are planning to use the exemption.
Other states. According to the secretary of agriculture and forestry and VDACS staff, a similar CEA
sales and tax exemption is not available from other states. Florida, however, provides a machinery and
equipment exemption for aquacultural activities conducted under controlled conditions. Unlike Vir-
ginia, some states may classify CEA as agriculture, making it eligible for the same exemptions as out-
door farms or may classify CEA as an industrial process, making it eligible for a manufacturing/in-
dustrial exemption.
Industry trends. Crops grown in environmentally controlled settings offer several advantages over
outdoor soil-based crop production, including the ability to improve yields and crop quality, reduce
the risk of crop failure due to severe weather conditions, provide year-long production of what have
traditionally been seasonably available crops, produce close to major population centers to ensure
freshness and reduce transportation costs, and use fewer pesticides and herbicides than outdoor ag-
riculture (Dohlman 2024; IBIS 2023). The sector is currently small compared with outdoor produc-
tion but is growing rapidly both in the U.S. and Virginia, though at a slower rate in Virginia (Figure
F-3).
FIGURE F-3
The food crops grown under cover sector has grown faster in the U.S. than in Virginia
SOURCE: Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW).
74
Appendixes
High-speed electrostatic duplicators exemption
(§ 58.1-609.3(11)
The high-speed electrostatic duplicators exemption applies to firms primarily engaged in printing or
photocopying products for sale or resale. High-speed duplicators are copying and printing machines
that use electrostatic or digital printing technology that offer quick setup and production compared to
traditional offset printing. The exemption was adopted in 1986.
Purpose. According to a 1995 Virginia Tax report, the exemption was created in 1986 to extend to
nonindustrial, service-oriented photocopy businesses the same treatment provided to traditional print-
ers that are classified as manufacturers and may utilize the manufacturing exemption to purchase the
equipment. A secondary purpose of this exemption may be to support the printing and photocopying
industry by reducing the cost of purchasing or leasing high-capacity duplicating equipment and pre-
venting the taxation of intermediate inputs.
Exempt items. The exemption allows the purchase or lease of copy machines that have the capacity
to print 4,000 or more impressions per hour tax free. Users of the exemption are required to provide
a completed Certificate of Exemption (Form ST-11) to the vendor.
Other states. According to a 1995 Virginia Tax report, 10 states provided exemptions similar to Vir-
ginia’s at one time. A dozen other states allow the exemption if they can qualify as a manufacturing
business or a printing manufacturer only. More updated information about states with a similar ex-
emption was not available.
Industry trends. Like the demand for printed advertising materials, demand for copying and printing
has decreased with the rise of digital communication and electric publications alternatives. Businesses
increasingly transfer documents digitally via email, websites, and social media. The sector most closely
associated with the high-speed electronic duplicator exemption is ‘other business services, including
copy centers’ (NAICS 561439). Employment in this industry has declined faster in Virginia than in
the U.S. (Figure F-4).
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Appendixes
FIGURE F-4:
Other business services sector, which includes copy centers, has lost employment faster in
Virginia than U.S.
SOURCE: LightcastTM
Out-of-state nuclear facility repair exemption
(§ 58.1-609.10(6))
The out-of-state nuclear facility repair exemption allows for the tax-free purchase of tangible personal
property used to repair or replace equipment at nuclear facilities licensed by the Nuclear Regulatory
Commission that are located outside Virginia. The exemption was adopted in 2000.
Purpose. The exemption can be seen as supporting a strategic industry in Virginia and helping to
maintain its interstate competitiveness. By exempting such purchases from sales and use tax, Virginia
may encourage companies that specialize in nuclear facility repairs to establish operations in Virginia
or to use Virginia as a hub for their procurement and logistical activities. It also helps to prevent the
taxation of intermediate inputs.
Exempt items. Equipment and materials used for maintenance and repair of nuclear facilities, such as
reactor services, maintenance and cleaning, valve maintenance and repair, steam turbine maintenance,
and piping maintenance to ensure safe and efficient operation.
Beneficiaries. Companies that provide maintenance and repair on nuclear facilities. There is not a
dedicated NAICS sector for these specialized services; they generally reside in the commercial and
industrial (except automotive and electronic) repair and maintenance (NAICS 811310) industry.
Other states. Virginia is the only state with this exemption, according to Virginia Tax.
Industry trends. The nuclear energy industry has been shrinking in because of competing lower cost
fossil fuel and renewable energy sources, the high costs of nuclear power plant construction, and
76
Appendixes
consumer safety concerns arising from nuclear energy plant accidents at Three Mile Island, Chernobyl,
and Fukushima. Interest in nuclear energy has been rekindled recently because of international efforts
to lower global carbon emissions and to satisfy the rising electricity demands of data centers, industry,
and electric vehicles. Georgia built the first nuclear reactor in over three decades at Plant Vogte in
Waynesboro, with two reactors becoming operational in 2023 and 2024. South Carolina’s Santee
Cooper electric utility has proposed reviving two mothballed nuclear products to provide electricity
for new data centers, and Michigan officials have proposed restarting the Palisades Nuclear Power
Plant. Microsoft has made a deal with Constellation Energy to reopen a reactor closed after the Three
Mile Island accident to supply electricity to a new data center. In addition, some data center companies
such as Google, Facebook, and Amazon have proposed designing and constructing small modular
nuclear reactors on site to satisfy their planned expansions and energy needs.
Factors for joint subcommittee to evaluate tax preferences to consider. Virginia supports several
initiatives that benefit the nuclear energy industry and may have more impact on fostering the industry
than the exemption. The General Assembly established the Virginia Nuclear Energy Consortium
(VNEC) in 2013 to foster collaboration among industry, higher education, and the public sector to
establish Virginia as a hub for the nuclear energy industry. The VNEC seeks to promote growth in
the industry by supporting R&D projects in nuclear technologies, workforce development, and indus-
try engagement. The General Assembly established the Virginia Power Innovation Fund in 2023 with
an introductory budget of $10 million to be administered by Virginia Energy. It was established in
part to help create a Virginia nuclear innovation hub by providing competitive grants for R&D, work-
force development programming, and site selection. The incentive could also be used to support the
development of small modular reactor projects in the state. The General Assembly established the
Virginia Clean Energy Innovation Bank in 2024 to incentivize through grants, loans, credit enhance-
ments and other financing methods, qualified clean energy projects (including nuclear energy), with a
first-year budget of $10 million. At the end of 2024, Virginia Energy and VEDP announced that
Commonwealth Fusion Systems (CFS) was awarded a $1 million grant from the fund to locate the
nation’s first commercial nuclear fusion plant in Chesterfield County.
At least one other state has staked significant resources on developing a nuclear energy development
and manufacturing hub. In 2024, Tennessee established a $50 million nuclear energy supply chain
investment fund to fund projects that (a) manufacture components for nuclear energy testing and
power generation, (b) design, develop, and build small modular reactors and advance reactors, (c) re-
search and test new technology in nuclear fission and fusion, and (d) store and transport elements of
the nuclear life cycle.
Taxi parts and radios exemption
(§ 58.1-609. 3(10))
The taxi parts and radios exemption allows taxi service companies to purchase certain essential items
like vehicle parts and radios tax free. The exemption was adopted in 1984.
Exempt items. The exemption allows tax free purchases of automobile parts such as brakes, tires,
meters, and dispatch radios. Users of the exemption are required to provide a completed Certificate
of Exemption (Form ST-20) to the vendor.
77
Appendixes
Beneficiaries. The exemption applies only to taxicab operators and does not include limousine oper-
ators or contractors providing rideshare services like Uber or Lyft.
Purpose. The tax exemption reduces operational costs for taxi service providers. A 1995 Virginia Tax
report stated the exemption was partially enacted to reduce attrition in state taxicab operations. Since
some portion of taxicab company savings may be passed onto consumers in the form of lower fares,
it might have a small effect on reducing fare costs for customers, some of whom may have fewer local
public transportation options and/or be economically disadvantaged or physically disabled. Taxi ser-
vices are also treated in a manner similar to common carriers, which includes sectors such as airlines
and railroads that receive special tax exemptions and may not discriminate in terms of who they serve.
In many metropolitan areas, taxicab services are regulated for service and affordability. Taxicab ser-
vices generally serve the local market. Some taxi services offer travel for tourists, including trips to
and from airports.
Industry trends. According to an industry representative, the taxi services industry was at its peak two
decades ago when new technologies such as new dispatch technologies enhanced service quality and
productivity. However, the industry has suffered significant attrition since then because of several
factors. First and foremost, ride-sharing services such as Uber and Lyft have grabbed an increasing
share of the taxi services market. Consumers have access to smart phone apps that offer greater ease,
lower costs, and limited wait times for local transportation services. Drivers from these companies
also face more limited regulations and government oversight and experience lower startup costs. Ride
hailing services began to penetrate the Virginia market in 2014, moving from the U.S. West Coast to
the East Coast initially without legal authority before laws permitting them were passed in 2015–2016.
Taxi companies began to struggle shortly thereafter, resulting in early retirements and some operators
liquidating their assets. An analysis of ride-hailing services’ disruption to the taxi industry, found that
taxi company exit rates increased and earnings dropped for taxi drivers, particularly low-earning ones,
after ridesharing was introduced to a city (Abraham et al, 2024). Exit rate impacts, however, were less
severe for cities that regulated the number of taxis, such as New York City. The COVID-19 pandemic
was the second major shock to the industry because of the drop in travel. In addition, increased tele-
commuting that started during the pandemic and continued for many businesses has reduced office
activity and decreased demand for taxi services. An industry representative indicated that they were
able to make adjustments to services and continue to operate, but ridership was significantly impaired
and slow to come back. The industry experienced an additional exodus of workers, particularly as the
industry competed with other service industries for labor. Consequently, the industry has shrunk to a
fraction of its size two decades ago.
An industry representative indicated that much of its current ridership is centered on essential services
to seniors, people with disabilities, and others with fixed or low incomes that are not well served by
ride-hailing and public transit because of technological, financial, or physical limitations. Following
the enactment of the federal Americans with Disabilities Act in the early 1990s, the taxi services in-
dustry placed more emphasis on providing transportation services for individuals with disabilities, and
this consumer segment now constitutes a more important portion of its ridership.
The industry is likely to encounter additional technological and competitive challenges. First, autono-
mous vehicles, air taxis, and artificial intelligence are set to disrupt transportation services in the future.
78
Appendixes
Expansion in public transit, such as plans for Virginia Railway Express and Amtrak services due to
the Transforming Rail in Virginia initiative, could also have an impact on the industry since comple-
mentary public transit services such as buses and subways tend to benefit from shorter travel (IBIS
2024a).
Gauging the impact of ride hailing and the pandemic on taxi services activity is also difficult because
of the reclassification of ride-hailing contractors in employment statistics. Figure 5-1 shows employ-
ment for wage and salary employees (a small portion of industry employment because much employ-
ment consists of self-employed independent contractors) and was not initially affected by the inclusion
of ride-hailing contractors in federal employment statistics, though an adjustment in collection meth-
ods by BLS in 2023 began to affect this data source, too. Department of Motor Vehicle (DMV) reg-
istrations are a better indicator of industry activity changes. DMV records show 4,951 licensed taxicabs
in Virginia in 2014. At the end of 2023, DMV reported 2,161 licensed taxicabs, a drop of 56 percent.
Given the caveats about changes in data measurement methods, the drop in Virginia employment
appears to be more severe than in the U.S., where taxicab and ride-hailing services employment was
less volatile until the COVID-19 pandemic (Figure F-5). The relatively steady employment figures in
the U.S. may be due to the failure of ride-hailing services to penetrate taxicab service markets in smaller
metropolitan and rural areas.
FIGURE F-5:
Virginia taxi service wage and salary employment has declined rapidly, while the U.S. average
has not
SOURCE: Bureau of Labor Statistics Quarterly Census of Employment and Wages (Wage and salary employees)
Other states. According to a 1995 Virginia Tax report, several other states also offer taxicab exemp-
tions for purchases of taxicab operators, including Indiana, Kansas, Massachusetts, Missouri, Ne-
braska, Ohio, Pennsylvania, and West Virginia. It could not be determined whether these states still
provided exemptions, or whether additional states do. Instead of stand-alone exemption statutes, some
79
Appendixes
states may introduce the exemption by classifying taxicabs as common carriers, which are accorded
certain parts or supply exemptions.
Factors for joint subcommittee to evaluate tax preferences to consider. Economic incentives are
uncommon for the industry since it provides primarily local services, has relatively low entry barriers,
and does not typically pay high wages and benefits. Due to the COVID-19 pandemic and its disruption
to transit services, including taxi services, some states and localities provided temporary economic
assistance for taxi services firms. For example, Massachusetts established the Taxicab, Livery, and
Hackney Transportation Partnership Grants Program, which provided grants of up to $40,000 to
eligible taxi, livery, and hackney operators to purchase products or services (e.g., dispatch systems,
ride-hailing systems, safety enhancements such as PPE, and other equipment) that would increase
their competitiveness or improve their safety.
Uniform rental and laundry businesses exemption
(§ 58.1-609. 3(8))
The uniform rental and laundry businesses exemption applies to certain purchases by an industrial
processor engaged in the commercial leasing of laundered products (e.g., uniforms, towels, linens).
This exemption was adopted in 1980.
Exempt items. The exemption applies to machinery and equipment (e.g., industrial washing machines,
dryers, and ironing equipment), repair parts or replacements, and supplies and materials (e.g., uni-
forms, linens, detergents, solvents) used directly in maintaining and preparing textile products for rent
or lease. It does not include tangible personal property used indirectly, such as office furniture and
administrative supplies. Users must submit an exemption certificate (Form ST-10) to suppliers at the
time of purchase.
Purpose. The exemption was established to provide uniform rental and laundry businesses an exemp-
tion on their purchases of machinery, parts, and supplies similar to that provided to the manufacturing
industry. Before the exemption was enacted in 1980, uniform rental and laundry businesses were
treated as non-manufacturing businesses and required to pay sales and use tax on inputs used in pro-
duction. The primary purpose of this exemption is to reduce the cost burden on these businesses,
thereby helping maintain competitive pricing, support operational efficiency, and contribute to local
employment.
Other states. According to a 1995 Virginia Tax report, only three states (Colorado, Maryland, and
Ohio) offered a similar exemption. Some states recognize industrial launderers as part of the manu-
facturing sector, which makes them eligible for the standard manufacturing input exemption.
An industry representative indicated that they typically request the exemption from states since their
products compete directly with textile and apparel single disposable manufacturers, many of whom
are located outside the U.S. They also employ similar industrial processes to those required to finish
those goods. Offering the exemption helps support businesses that utilize a local supply chain and
promotes import substitution. Industry products also contribute to environmental sustainability be-
cause they are reusable and reduce solid waste. Industrially laundered products are also more efficient
and use less water than locally laundered textile products.
80
Appendixes
Beneficiaries. Companies that benefit from the exemption are mainly located in the linen supply
(NAICS 812331) and industrial launderers (NAICS 812332) industries. These companies supply laun-
dered items, such as uniforms, gowns, linens, and towels to different industries on a rental or contract
basis.
Industry trends. Major industry customers include healthcare, hospitality and food services, and in-
dustrial establishments. Demand for industrial laundered products has generally grown in the recent
decade (IBIS 2024e). The COVID-19 pandemic had a detrimental impact on industry operations and
demand but quickly subsided. As the industry has become more efficient with the introduction of
more capital and greater automation, employment in the sector has decreased (Figure F-6). Virginia
employment in the sector decreased 19 percent from 2001 to 2023, more than twice the national rate
of decline (7.9 percent decrease).
FIGURE F-6:
Industrial launders and linen supply employment has decreased faster in Virginia than in the
U.S.
SOURCE: LightcastTM
Passed as Chapter 725 of the Acts Assembly
81
Appendix G: Agency responses
As part of an extensive validation process, the state agencies and other entities that are subject to a
JLARC assessment are given the opportunity to comment on an exposure draft of the report. JLARC
staff sent an exposure draft of this report to the Virginia Economic Development Partnership,
Virginia Department of Taxation, the secretary of commerce and trade, and the secretary of finance.
Appropriate corrections resulting from technical and substantive comments are incorporated in this
version of the report. This appendix includes a response letter from the Virginia Economic
Development Partnership and Virginia Department of Taxation.
82
May 27, 2025
Mr. Hal E. Greer, Director
Joint Legislative Audit & Review Commission
919 East Main Street, Suite 2101
Richmond, VA 23219
Re: VEDP response to the draft JLARC report, Workforce and Industry Incentives,
Economic Development Incentive Evaluation Series
Dear Mr. Greer:
Thank you for providing an opportunity for us to comment on the Joint Legislative Audit &
Review Commission’s (JLARC’s) draft report, Workforce and Industry Incentives, Economic
Development Incentive Evaluation Series.
The report provides a helpful overview of economic development incentives used by the
Commonwealth to encourage workforce improvement and to support certain industries. Among
other things, the report demonstrates the impact of two of VEDP’s most important economic
development incentive programs: the Virginia Jobs Investment Program (VJIP) and the Virginia
Talent Accelerator Program.
A prior JLARC report entitled Economic Development Incentives 2024: Spending and
Performance noted that VJIP is one of the state’s most widely used incentives and that the
program accounted for the largest share of jobs (39,304) and capital investment and other
spending ($6.1 billion) associated with Virginia’s economic development grant programs during
the time of that study. One of the state’s oldest incentive programs, VJIP encourages job
creation and training through a post-performance incentive after new jobs are created.
To further improve VJIP’s design while maintaining the relevance and competitiveness of the
program for Virginia’s diverse range of communities, we concur with JLARC’s
recommendations that call for considering the prevailing average annual wage as well as the
economic distress level of the locality when determining whether to support economic
development projects with VJIP.
The second VEDP-administered workforce incentive evaluated in the report is the Virginia
Talent Accelerator Program, a world-class service-based incentive that provides workforce
recruitment and training solutions that are fully customized to a company’s unique operations,
equipment, standards, and culture (as a service-based incentive, no funds are exchanged with
the company). Ranked as the best (No. 1) state workforce training program in nation by
Business Facilities magazine, the Talent Accelerator’s “turnkey” solutions give Virginia a
distinct advantage over rival states in the competition for job creation projects. Steve Oberfield,
Vice President at Cambridge Pavers, Inc., which recently selected Danville for a new $47
million manufacturing facility that is projected to create 55 new, direct jobs, stated, “In
901 E. Cary Street, Suite 900
Richmond, Virginia 23219
VEDP.org
Mr. Hal E. Greer
May 27, 2025
Page 2 of 2
comparing Virginia to multiple states and multiple regions, the Talent Accelerator Program truly
set Virginia apart at the top of the list.” After choosing Virginia for another project, site selection
consultant Brian Corde, Managing Partner at Atlas Insights, said, “We were looking at several
states—Georgia, North Carolina, and Virginia. The deciding factor was Virginia’s ability to
deliver ready-trained workers. Their Talent Accelerator wasn’t just filling seats; they were
actively preparing people to succeed in our client’s facility.”
We concur with JLARC’s recommendation for VEDP to establish a minimum capital investment
threshold for the Talent Accelerator based on an analysis of the capital investments made by
projects that have received assistance from the program.
While VEDP supports the use of advanced research and modeling techniques to evaluate the
effectiveness of incentive programs, it is important to recognize potential limitations in these
methodologies. In particular, the data set examined in the report for the Talent Accelerator was
quite limited since the Talent Accelerator is a relatively new program. As a result, we believe
the study likely underestimates the Talent Accelerator’s competitive impact on securing
economic development projects in Virginia as well as the program’s corresponding economic
benefits. We look forward to working with JLARC in future studies to determine the full value of
the Talent Accelerator.
As always, we greatly appreciated the professionalism and engagement of the JLARC staff
throughout the project and commend your team for its thoughtful analysis and reporting.
Sincerely,
Jason El Koubi
President & CEO
JLARC.VIRGINIA.GOV
919 East Main St. Suite 2101
Richmond, VA 23219
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