According to recent numbers released by the U.S. Bureau of Economic Analysis, Virginia’s recovery from the Great Recession has been the worst of any state in the region. Between 2010-2013, the commonwealth’s economy grew at a paltry 2 percent. The national economy grew by 6.1 percent over the same time. Other states in the Mid-Atlantic all experienced greater growth during that time. Maryland’s GDP growth was 2.9 percent, North Carolina 5.1 percent, West Virginia 6.2 percent, Kentucky 4 percent, and Tennessee 7 percent.
This analysis does not take into consideration that the U.S. economy shrank by 2.9 percent during 2014’s first quarter, the largest contraction since 2009.
(Picture credit: Washington Examiner)
Virginia politicians have long prided themselves on being from a state ranked as one of the best for doing business by CNBC’s annual rankings. It was ranked number one in three of the eight years since CNBC started the list, in 2007, 2009, and 2011. In 2014, that ranking fell to number 8, due largely in part to budget constraints in Washington. The state’s reliance on federal expenditures, particularly military outlays in Hampton Roads and Northern Virginia have been somewhat of a distraction from the need to diversify the state’s economy with more private investments and business.
A $5.9 billion tax increase signed into law last year certainly didn’t help with any sort of recovery either. Despite the tax increase, the state experienced a $300 million shortfall in state revenue collections for 2013. And ironically, while the tax increase was supposed to go to new construction projects, between 2012 and 2013, construction actually declined by .09 percent as a percentage of real GDP in the state last year. Construction, utilities, and mining all declined over that time.
North Carolina, by contrast jumped from 13th to 5th in CNBC’s rankings thanks to a historic tax reform package signed into law by Republican Governor Pat McCrory. While Virginia politicians were raising taxes, North Carolina Republicans were cutting them. Some of the results speak for themselves.
Going forward, will Democrat Governor Terry McAuliffe acknowledge that higher taxes and more spending don’t contribute much to any sort of economic recovery? If this year’s legislative session in Richmond was any indication, the answer to that question is no.