Zip, zip… The Senate Finance Committee had no trouble deciding that the loss of $600,000 in taxes was small price to pay for a $100 million capital investment for a new VW plant in Northern Virginia. That plant will create 400 new jobs along with a huge payroll. The average salary? $150,000.
There were no questions and no debate as Sen. Mark Herring’s SB291 slid right through the committee. Thus Assembly Anonymous, like some House Appropriations Committee members such as Del. Joe May, couldn’t believe the reaction of House Appropriations Committee members.
You’d have thought the VW folks were being given the Houdoun statue of George Washington, THE centerpiece of THE Capitol!
Here’s the deal: Gov. Kaine announced in September that Volkswagen of America Inc. headquarters was moving from Michigan to Fairfax, VIRGINIA! It will also be the headquarters of Audi of America Inc.
Even AA had read all the news stories about that. But, apparently, a few Appropriations Committee members had not.
So some of them were just plain dumbfounded to learn that the Virginia Economic Development Partnership had told Volkswagen it would be OK for VW to give cars to their employees. There was a caveat. The General Assembly would have to approve the tax loss. As gifts, of course, the cars don’t bring in sales taxes. Thus, the loss of the $600,000. BUT the cars are sold in a year and then taxes are collected so the net loss was estimated at $66,000.
With employees driving the new Volkswagens around Northern Virginia, the idea is that the spiffy cars will serve as sales tools. Seeing all 800 (spouses get them too) employees’ cars sitting in NOVA’s congested traffic will be better than a car show, so VW thinks. (This company policy must do wonders to attract job applicants.)
Well, the Senate Finance Committee agreed. BUT THE HOUSE APPROPRIATIONS COMMITTEE acted like the Houdoun statue was being given away to the Germans.
Del. Johnny Joannou admitted, “I’m having trouble with this.” He wasn’t alone.
Del. Wat Abbit was just short of outraged at the VW car tax break. Del. Phil Hamilton wanted to know if Ford employees (in Norfolk) had been given the same opportunity to get free trucks with no taxes.
No, Gary McLaren of the Virginia Economic Development Partnership said, but Ford’s headquarters wasn’t in Norfolk. “Maybe that’s why they left,” Hamilton mused.
Joannou wanted to know if car dealers get the same deal. No, Appropriations staff explained, only manufacturers. Abbitt worried about whether Virginia would get the taxes when the cars are sold if they’re sold out of state. Probably not, he was told.
Del. Harvey Morgan asked, “Has this already been negotiated?” Did the Senate hear the bill? Why would the Economic Development Partnership negotiate such a deal?
McLaren pointed out, if VW doesn’t come, there won’t be any cars to give away.
Del. Clarke Hogan, “Shouldn’t we just cut the taxes for every house in Northern Virginia? Wouldn’t that be the same philosophy?”
“VW will just vote with their feet and go somewhere else where people want them,” McLaren responded to the flurry of complaints.
Other committee members grew impatient with the giveaway indignation.
“We’re not talking about Ma and Pat Kettle back on the farm seeing a strange license plate,” said Del. Bob Tata. “This is a huge bonus for Virginia.”
“I don’t believe a legislative committee is the best place to negotiate an agreement. It would give a very bad image and damage our economic development efforts,” said Del. Jim Scott.
The car tax relief (not THAT car tax relief) is modest for a company that is bringing so much to Virginia, May said. “We’re giving a little and getting a lot.”
Finally, Del. Lacy Putney, the committee chair, looked hopefully at the crowd of onlookers. Were there opponents, he wanted to know.
Aha! Don Hall, the well-known Automobile Dealers Association lobbyist was spied… surely he’d be opposed to this outrage.
Nope. “This is a rare day that we’re here to support the manufacturers,” Hall said. The cars are sold back to the dealers and they get to sell them. This is good when business is down as it is now. “We’ve been doing this for the last 100 years,” Hall said. “We hope you’ll support it.”
Putney grumbled, “I personally don’t think this is good policy but with our economic picture, I’m going to vote for it.” The bill passed.
Voting “no” were Dels. Abbitt, Hogan, Steve Landes and Chris Jones.
Del. Tom Rust, the patron of HB833 with Del. Ken Plum, was seen shaking his head as he left the committee room. In disbelief? AA suspects so.