HJR 668

Scrap Recycling Incentives Study

November 15, 1999, Richmond

The joint subcommittee examining the impact on the Commonwealth's businesses of incentives offered to attract new businesses, especially scrap recyclers, held its second meeting in Richmond. To assist in the examination, the subcommittee solicited consultant proposals during the summer from several university professors throughout the Commonwealth. The main purpose of the meeting was to hear a presentation regarding one such proposal made by a group of professors from Virginia Tech.

Staff Update

Staff began by updating the subcommittee on the consultant selection process. Once all of the proposals were submitted, a panel of legislative staff (one from House Appropriations Committee staff, one from Senate Finance Committee staff, and two from Legislative Services staff) reviewed and rated each of the proposals based on a set of criteria. Once each panel member completed his or her review, the group met and discussed the evaluations. There was unanimous agreement that the proposal submitted by Virginia Tech would be recommended to the joint subcommittee.

Study Proposal

The original Virginia Tech proposal contains six objectives:
  1. Determine if the incentive package provided an unfair cost advantage to the new entrant;
  2. Determine the impact on input markets of the new entrant;
  3. Determine the impact on output markets of the new entrant;
  4. Determine the impact of the new entrant on profitability of incumbent firms;
  5. Assess the impact of the new entrant on consumers; and
  6. Use the results of objectives one through five to determine the net effect of the new entrant.
An additional objective was suggested and added to the list. Objective 7 requires that guidelines be proposed for use by the Commonwealth and its localities in the future regarding business incentives, taking into account the findings of this study.

Approval of Consultant and Proposal

The Virginia Tech professors were approved as the consultants for this study and their proposal accepted by the joint subcommittee. Because the consultants' work will span a two-year period, the joint subcommittee approved the drafting of a resolution to continue the study. The consultants' final report to the subcommittee will be delivered in December of 2001, and interim reports will be made on an as-needed basis.

The Honorable Frank W. Wagner, Chairman
Legislative Services contact: Joan E. Putney