Scrap Recycling Incentives Study
September 7, 1999, Richmond
The joint subcommittee studying the effects business incentives given to new businesses have on existing businesses, particularly in the scrap recycling industry, held its first meeting in Richmond.
BackgroundIn 1998, economic development incentives were provided to entice a large scrap recycling business to Virginia. Incentives included an expanded recycling tax credit worth millions of dollars, millions of dollars from the Governor's Opportunity Fund, and permitting and infrastructure assistance from the Commonwealth (over $45 million total in incentives). While a similar tax credit was also enacted for other scrap recyclers, the size of the total economic development package alarmed the other similarly situated scrap recycling businesses already in the Commonwealth at the time.
At the close of the 1998 session, a letter was written by Senator Richard Holland to the Secretary of Commerce and Labor, expressing concern about incentives supplied to attract new business to Virginia having the incidental effect of putting similar existing Virginia businesses at a competitive disadvantage. The letter focused on the scrap recycling industry and was supported by 18 senators and 21 delegates, representing both parties.
Later that year, a special subcommittee of the House Finance Committee was appointed to examine these concerns. Representatives from the scrap recycling industry, the Virginia Chamber of Commerce and the Virginia Manufacturers' Association met with the subcommittee twice and made presentations. As a result of those meetings, HJR 668 was introduced and passed during the 1999 session.
Selecting a ConsultantOne of the provisions of the study resolution calls for the hiring of an independent consultant to gather information concerning the scrap recycling industry in order to determine the impact the incentives have on existing business. In an effort to expedite the process, a letter was sent to several university presidents throughout the Commonwealth asking for recommendations of individuals from their universities who might be interested in such a study. Based on their responses, letters were sent to several individuals explaining the study and asking them to submit a plan/proposal for carrying out such a study. Three proposals were submitted for consideration.
The joint subcommittee requested a panel made up of two individuals from the Division of Legislative Services, one from the House Appropriations Committee staff and one from the Senate Finance Committee staff to review the proposals and make a recommendation to the joint subcommittee regarding which one of the proposals seems best and why. At that time, the subcommittee will decide whether to accept the panel's recommendation. The panel will complete its work by the beginning of October, at which time the next meeting of the joint subcommittee will be set.
The Honorable Frank W. Wagner, Chairman
Legislative Services contact: Joan E. Putney