Watchdog says some state tax credits aren’t working

July 9, 2018

RICHMOND, Va. (AP) — Two Virginia tax credit programs meant to retrain workers and promote telecommuting are total busts and need to be scraped, according to a report released Monday by the state’s legislative watchdog agency.

The Joint Legislative Audit and Reviews Commission’s report found the state’s Worker Retraining Tax Credit and the Telework Expenses Tax Credit are producing a negligible impact on the economy.

The retraining credit returned 12 cents to the state’s economy for every dollar spent while the telework credit returned 4 cents.

Republican Senate Majority Leader Tommy Norment said unless there’s a compelling “humanistic” reason to keep those credits around, he doesn’t think they’ll survive much longer.

“If we can do a reallocation of those resources where we’re getting a better return on investment, I don’t understand why we wouldn’t do it,” he said Monday after a presentation by the commission at the Capitol.

The commission found that other efforts at economic development, like small business loan programs, have a much higher economic benefit for the state.

Virginia is the only state to offer tax credits to private companies for establishing and maintaining a telework program, according to the commission. Georgia and Oregon both allowed similar credits to expire.

The commission found that few businesses eligible for telework tax credits are bothering to claim them, and there’s been no indication that the credit has increased teleworking rates since being adopted in 2012.

Virginia first approved the worker retraining credit in 1997 with a goal of helping businesses retrain workers and boost apprenticeships.

Only about seven businesses a year have claimed the credit, which requires that businesses complete significant paperwork to claim relatively small per-worker credits. The commission said the credit is having a “minimal” effect on increasing apprenticeships.

Secretary of Finance Aubrey Layne said Gov. Ralph Northam’s administration is interested in overhauling the state’s economic development efforts. Layne said he’s in the process of reviewing all of the state’s incentives across multiple agencies.

“I want to just look at the whole thing and then act upon these recommendations, but I understand the concerns,” Layne said.