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House Appropriations leader expects fall special session on tax reform

House Appropriations leader expects fall special session on tax reform

Posted by on Feb 15, 2018 in News | 0 comments


The chairman of the House Appropriations Committee said Wednesday that he expects the General Assembly to convene a special session next fall to adjust Virginia’s tax code in response to sweeping federal tax reforms that President Donald Trump signed late last year.

“We would probably want to meet some time after Oct. 1 in special session,” Appropriations Chairman Chris Jones, R-Suffolk, told finance officials for Gov. Ralph Northam on Wednesday afternoon.

Jones made his desire known after a presentation by Secretary of Finance Aubrey Layne and state tax officials who testified to the committee that they won’t have a good idea of how the enactment of the Tax Cuts and Jobs Act will affect Virginia taxpayers and state revenue collections until after the extended filing deadline for 2017 federal income tax returns in mid-September.

“We won’t have the answers while you’re in session,” Layne told the Appropriations Committee in a briefing on state revenues that showed state income tax collections growing by twice the rate projected in the budget for the first seven months of the year.

Northam has not made any decision about whether to seek a special session on tax reform, his finance secretary said in an interview Wednesday.

“Let’s determine what the parameters are,” Layne said. “The governor’s open. There are pros and cons to having a special session on it.”

Senate Majority Leader Tommy Norment, R-James City, who is co-chairman of the Senate Finance Committee, also said it’s too soon to seek a special session on tax reforms as the assembly prepares to introduce competing versions of the budget on Sunday.

“My reaction is it’s a little premature for us to be talking about a special session in October,” Norment said in an interview. “I think we’re going to have to work our way through our budget process a little more.”

He also said circumstances could change between the assembly’s scheduled adjournment on March 10 and its reconvened session on April 18 to consider the governor’s proposed amendments to the budget and other bills and his legislative vetoes.

“We’re watching what’s going on in Washington very carefully,” Norment added.

Total state revenues, also boosted by strong corporate income tax collections, have risen by 5.8 percent for the year to date, compared with a 3.4 percent projected increase.

However, Layne cautioned the House committee, as he had Norment’s committee earlier in the day, that the soaring increases in estimated income tax payments not withheld from paychecks in the past two months had much to do with tax planning by wealthy individuals who want to limit their federal liability by maximizing their early payment of state taxes.

“I would be very careful,” Layne told the Senate committee on Wednesday morning.

Northam also is treading carefully by not proposing to raise the revenue forecasts in light of increased collections, which is consistent with the wishes of leaders of both assembly money committees.

Jones made clear that his committee is not counting on additional revenue for the two-year budget that it will adopt on Sunday afternoon, when the Senate committee also is scheduled to act on its own spending plan.

“We’re not going to spend any extra in what comes out on Sunday,” he told Layne.

Norment said he agreed with the finance secretary that the assembly should “be conservative in our approach.”

Layne, a former certified public accountant who served as transportation secretary under then-Gov. Terry McAuliffe, said individual income tax collections — accounting for 70 percent of state general fund revenues — are running at double the annual forecast for the first seven months and total revenues are more than $400 million ahead of projections.

He warned that much of the money collected in the past two months came from estimated income tax payments that could result in big refunds in May, as savvy taxpayers and their accountants try to make the most of state tax deductions in their federal returns in the face of major changes in federal tax law adopted before Christmas.

“While we don’t have all the answers, it is clear that some of this is tax planning,” he told the House committee.

Non-withholding income tax payments, generally made on capital gains and returns for sole proprietors, soared by almost 145 percent in December after Trump signed a sweeping tax law that will limit taxpayer deductions on their state and local tax payments. The collections grew by 1.4 percent in January, or more than 40 percent for the two-month period.

Layne said those payments include big checks from 400 new filers for a total of $150 million — a statement that drew gasps from members of both committees. A payment of $1 million would signify “a wealth event of $17 million,” he said, adding that one check received in December totaled $20 million.

The bottom line for the budget is what happens in May, as the end of the fiscal year approaches on June 30.

“We won’t know until May 1 what type of refunds we’ll be giving back,” the finance secretary said, although refunds issued by the state this month could give tax officials a clue of what to expect.

Layne also told both committees on Wednesday that Northam plans to propose 34 amendments to legislation pending in both sides of the General Assembly to conform Virginia’s tax code to the federal tax code that existed on Dec. 1, 2017, or three weeks before Trump signed the Tax Cuts and Jobs Act.

The amendments reflected changes made earlier this month in the federal budget act that would affect 2017 returns by Virginia taxpayers.

“We’re simply conforming to make sure our taxpayers are getting those breaks in their 2017 returns,” Layne said.

Layne advocated a cautious approach to any changes in state tax law in response to federal reforms, as state finance officials continue to work with a Northern Virginia consultant on analyzing the interactions between federal and state tax laws in almost a dozen areas that could affect taxpayer behavior and future revenue collections.

The biggest wild card remains non-withholding income taxes, the most volatile source of revenue for the state general fund. Those collections fell precipitously in May 2014 compared with the previous year, when estimated income taxes far exceeded projections as taxpayers cashed out stock at the end of 2012 in anticipation of higher federal taxes on capital gains. The result was a projected $2.4 billion projected revenue shortfall for the biennium, although state revenues recovered the next year.

The rest of the state’s revenue picture appears more stable, especially income taxes withheld from paychecks, accounting for almost two-thirds of state general fund revenues. Withholding payments rose 14 percent in January and 6.3 percent for the last two months, as the state picked up the extra payroll deposit day it had lost in December.

Sales tax collections continue to lag after a disappointing Christmas holiday season for retail receipts, and collections of recordation and insurance taxes also have trailed behind budget forecasts.

“At the end of the day, our revenues are still good,” Layne told the House committee.


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House Appropriations chairman meets with governor, promises ‘nonpartisan’ budget

House Appropriations chairman meets with governor, promises ‘nonpartisan’ budget

Posted by on Jan 19, 2018 in News | 0 comments

January 17, 2018

The Republican budget leader in the House of Delegates promised a “nonpartisan” spending document after an hourlong breakfast meeting with Gov. Ralph Northam on Wednesday, signaling a return to harmony after the Democratic governor’s inaugural speech to legislators sparked a GOP backlash.

House Appropriations Chairman Chris Jones, R-Suffolk, who was among the Republican leaders who expressed disappointment with the partisan tone of Northam’s speech to the General Assembly on Monday night, said he was heartened by his lengthy conversation with the governor on “the budget and other topics.”

“As you know, the budget is the most important thing we do,” Jones said in a speech on the House floor on Wednesday. “It is a nonpartisan document and it is our best opportunity to work together across the aisle.”

Earlier on Wednesday, Del. Luke Torian, D-Prince William, chaired his first meeting of the Appropriations subcommittee on general government and capital outlay since his appointment by Jones as the top ranking Democrat on the powerful money committee despite a 51-49 GOP majority in the House.

In an interview after the House adjourned Wednesday, Jones said he and Northam had “a very productive and good meeting.”

“I’ve worked with the governor on issues in the past,” he said. “I’m confident we will have a very good working relationship during his term.”

Brian Coy, the governor’s communications director, said Northam agreed that he and Jones had “a productive conversation” during the breakfast meeting.

“He thinks they can get a lot of good work done together,” Coy said.

Jones also promised to begin meeting with small groups of delegates to talk about their budget concerns, but on a regional basis instead of by party as the committee has done in the past. He hopes the regional approach “will give us a better feeling what is going on in other parts of the state.”

The broad goals that the chairman outlined Wednesday include: increasing the share of Virginia Lottery revenues to bolster K-12 education, pay increases for state employees, and putting a new cash reserve fund into state code with the aim of setting aside 2 percent of the general fund budget, or $400 million.

Then-Gov. Terry McAuliffe proposed a $115 billion budget last month that included money to increase state employee and teacher pay in the second year of the budget, and to boost the new reserve to $427 million by the end of the biennium. However, those proposals would depend on $421.7 million in savings McAuliffe estimated from accepting more than $3.2 billion in federal funds to expand Medicaid and relying on a new tax on hospital profits to pay the state’s projected $306.9 million share of the costs.

Republicans have refused repeatedly to expand Medicaid since 2013, but their majority in the House has shrunk from two-thirds to two votes. The Virginia Hospital & Healthcare Association said this week that it does not support the provider assessment proposed by McAuliffe as long as it is part of the budget instead of state law, which runs counter to the Appropriations chairman’s position on the issue.

Jones repeated his public vow that the House would not consider revising the state revenue forecast upward during the session, based on a surge in estimated income tax payments in December that boosted revenue growth to 5.9 percent for the fiscal year, or 2.5 percentage points ahead of the annual forecast used in the current budget.

He has discussed his position with Senate Finance Co-Chairmen Tommy Norment, R-James City, and Emmett Hanger, R-Augusta, as well as new Secretary of Finance Aubrey Layne.

“I do believe we are on the same page,” Jones said.

“This means there will be less money than the outgoing governor might have led us to believe last week,” he said, referring to McAuliffe’s suggestion that the state could collect an additional $500 million by the end of the fiscal year on June 30.

Jones reminded delegates that in his first year as chairman of the Appropriations Committee, the budget that then-Gov. Bob McDonnell proposed had assumed a big increase in estimated income tax payments, which had risen sharply the previous year after investors cashed in stock in late 2012 to avoid a higher capital gains tax the next year.

“We were doing well until the end of April, but the bottom fell out in the month of May,” he said, leading to a projected $2.4 billion shortfall for that biennium.

This year, Jones and other budget officials are wary of big increases in estimated tax payments, including multimillion-dollar checks from high-income taxpayers, in December and January in response to the Tax Cuts and Jobs Act that President Donald Trump signed on Dec. 22.

“Some very good accountants told their clients, ‘You could advantage yourself by paying taxes in 2017’ ” rather than 2018, the chairman suggested.

Jones said he wants a clearer picture of how federal tax reforms will affect the state and its taxpayers before the General Assembly commits to spending money it may not have.

“While it is a rosy picture as we see it, we want to be conservative and cautious in our approach,” he said.

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Appropriations Chairman Plans to Appoint Ranking Democrat as Subcommittee Chair

Appropriations Chairman Plans to Appoint Ranking Democrat as Subcommittee Chair

Posted by on Jan 11, 2018 in News | 0 comments

By MICHAEL MARTZ Richmond Times-Dispatch January 11, 2018

The Republican chairman of the House Appropriations Committee will name a ranking Democrat as a subcommittee chairman on the powerful budget panel.

Appropriations Chairman Chris Jones, R-Suffolk, said Wednesday that he plans to make Del. Luke E. Torian, D-Prince William, chairman of the Subcommittee on General Government & Capital Outlay, pending committee appointments by new House Speaker Kirk Cox, R-Colonial Heights.

Jones intends to announce subcommittee assignments Thursday after Cox completes appointments under new rules adopted by the House of Delegates that ensure proportional representation on committees and subcommittees despite the GOP’s 51-49 majority in a chamber radically changed by elections in November.

“This further demonstrates the trust and respect we have for one another on the Appropriations Committee, regardless of whether we’re a Republican or Democrat, when doing the people’s business,” Jones said in an interview. “We focus on policy rather than politics.”

House Minority Leader David J. Toscano, D-Charlottesville, praised Jones’ decision as “a very constructive and significant move.”

“Chris has said since Election Day we’re going to have to start doing some things differently, and he’s living up to his word,” Toscano said.

Torian, a five-term delegate who joined the Appropriations Committee in 2014, has been the sole Democrat serving as a budget conferee in negotiations with the Senate for the past two years. “I’m grateful and appreciative to the chairman for giving me this opportunity,” he said.

Earlier, Torian seconded the nomination of Cox as speaker to succeed Del. William J. Howell, R-Stafford, who retired after 30 years in the House and 15 as speaker.

“I’m grateful that he has that confidence in me,” Torian said of Jones’ decision to make him chairman of the subcommittee, replacing Del. Thomas A. “Tag” Greason, R-Loudoun, who was defeated by David A. Reid, a Loudoun County Democrat who joined the House on Wednesday. “He and I have worked well together in the time I’ve been on the Appropriations Committee.”

The Appropriations Committee will have seven members to replace: Cox, elected as speaker Wednesday; retiring Dels. Jimmie Massie, R-Henrico, and Daun Hester, D-Norfolk; and four Republican members defeated in an election that whittled the GOP majority from 32 votes to two.

Under the proportional representation, the speaker will appoint 12 Republicans and 10 Democrats to the budget panel, which would add four Democrats and three Republicans to the existing members, assuming they are reappointed.

Jones, who became chairman in 2014, also plans a shake-up of subcommittee chairs to provide them seasoning in different areas of the state’s two-year budget, now $107 billion. The biennial budget Gov. Terry McAuliffe has proposed would increase to $115 billion, including all sources of revenue.

“We’re going to do some cross-training,” he said. “My goal is to broaden the members’ knowledge of the budget.”

In addition to Torian, Jones will name as subcommittee chairs:

  • Del. Riley Ingram, R-Hopewell, on Commerce, Agriculture, Natural Resources & Technology, replacing Del. John M. O’Bannon, R-Henrico, who was defeated by Democrat Debra H. Rodman;
  • Del. Chris Peace, R-Hanover, on Elementary & Secondary Education, replacing Massie;
  • Del. Nick Rush, R-Montgomery, on Higher Education, replacing Cox;
  • Del. Scott Garrett, R-Lynchburg, on Health & Human Resources, replacing Ingram;
  • Del. Chris Stolle, R-Virginia Beach, on Transportation, replacing Peace;
  • Del. Barry Knight, R-Virginia Beach, on Public Safety, replacing Del. L. Scott Lingamfelter, R-Prince William, who was defeated by Democrat Elizabeth Guzman; and
  • Del. Charles Poindexter, R-Franklin County, who will remain head of Compensation & Retirement.

Control of the House had been in doubt since election night, when Democrats briefly enjoyed a 50-50 balance of power. However, Del. Tim Hugo, R-Fairfax, retained his seat after a post-election canvass reversed the result in his race with Democrat Donte Tanner.

A recount gave Democrat Shelly Simonds a one-vote advantage over Del. David Yancey, R-Newport News, but a three-judge panel ruled a disputed ballot in the Republican’s favor, forcing a drawing that awarded him the 94th District seat.

Had the races resulted in an evenly divided House, Torian likely would have shared the Appropriations chairmanship with Jones, who expressed confidence in the committee’s highest-ranking Democrat.

“Luke is someone with whom I have a very good working relationship,” Jones said. “He’s done a very good job on the committee. He deserves a subcommittee chairmanship, given his body of work.”

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Colleges Urged to Close Gap Between Degrees and Job Skills

Colleges Urged to Close Gap Between Degrees and Job Skills

Posted by on Jan 8, 2018 in News | 0 comments

By DAVE RESS Daily Press November 15, 2017

The warning was polite, but clear: the House Appropriations Committee is looking for Virginia’s state colleges and universities to do a better job offering courses that match what employers want. Tackling that will be a top priority for the budget writing committee in the 2018 session, Chairman Chris Jones, R-Suffolk, said Wednesday.

So will be finding money to kick-start dredging channels for the Port of Virginia, he said. Higher education spending was a key focus in the second day of the committee’s annual retreat in Portsmouth.

“There is a gap between what we have and what we need,” Jones said, after a briefing by committee staff. “We spend a lot of money in higher education … we’ve got to produce results at the end of the day.”

He said he’s concerned that colleges aren’t preparing students for the jobs that employers say they struggle to fill.

The percentage of Virginia college faculty in science, technology, engineering, math and health disciplines is about 5 percentage points below the national average of 37 percent, according to briefing material prepared for the committee.

Vice Chairman Steve Landes, R-Weyers Cave, said he also wants to be sure colleges can help tackle the looming shortage of teachers and health care workers.

“We’ve been having some frank discussions with the colleges for a while,” Landes said.

He said colleges need to play a prominent role in economic development — as he said some already have — and that the committee’s deliberations need to keep that role front and center.

The committee’s briefing said colleges spending proposals for the next two-year budget amounted to an additional $634 million. About 35 percent of that is for initiatives including research, workforce programs and online courses, 29 percent would go for salary increases, 25 percent for technology, operations and maintenance costs, new hires and costs associated with growth in enrollment and 11 percent for financial aid.

Most said their top priority was increasing salaries, although committee analyst Tony Maggio noted that the method colleges use to say their salaries are not competitive is 30 years old. A look at broader samples of comparable colleges show Virginia schools are generally close to national averages, he said. The College of William and Mary has run measurable above similar institutions for the past decade, with average faculty salary nearly $100,000 compared to a national average for similar schools of about $85,000, according to Maggio’s briefing material. He did not have figures for Christopher Newport University salaries.

On the port, Jones said deepening the channels to 55 feet and ensuring that deeper pathway is 1,400 feet wide is vital.

“We want to be the the first stop and the last stop” for the deeper vessels that now ply the world’s main trade routes, he said.

Generally, shipping lines try to limit port stops to only two or three at the most on the Atlantic, and port officials here are concerned that ports to the south are aiming to be either the first stop for inbound traffic or last for outbound, which could lead lines to decide they don’t need to bother with Virginia’s ports.

The port authority is asking Congress to fund dredging but Jones said he’d like the state to pay for preliminary design and engineering work.

That would get the project off to a fast start, he said.

“This is important for the whole state,” he added.

Ress can be reached by phone at 757-247-4535.

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Va. budget deal includes raises for teachers, faculty, Capitol Police

Va. budget deal includes raises for teachers, faculty, Capitol Police

Posted by on Feb 26, 2017 in News | 0 comments


Teachers, college faculty and the Virginia Capitol Police would get pay raises under a budget deal negotiators for the House of Delegates and Senate reached Wednesday.

The agreement would give a 2 percent raise to teachers and college and university faculty.

The deal provides the state’s share of an additional 1 percent raise for faculty at eight higher education institutions that did not give raises or bonuses last year, after a revenue shortfall forced the cancellation of a scheduled 3 percent raise for state employees and faculty last summer. The others could give the additional raise with their own money.

The budget compromise also would include $1.75 million to raise salaries for the Division of Capitol Police to make them competitive with other law enforcement agencies in the region. Additionally, it would allow the agency to fill vacant positions and add at least six more as it prepares security plans for the General Assembly’s move to the Pocahontas Building later this year.

The pay increases for teachers, faculty and Capitol Police would come on top of the 3 percent raise that the House and Senate had restored for state employees in their versions of the budget, which also would provide a nearly $7,000 increase in starting salary for Virginia State Police and an equal pay hike for current troopers.

“Our No. 1 goal was to evaluate and redirect funds to provide the pay raise that was promised last year to our state employees and faculty, state-supported local employees and teachers,” House Appropriations Chairman S. Chris Jones, R-Suffolk, said in an interview.

The House and Senate could vote on the proposed budget deal as early as Friday night. Legislative rules require that lawmakers get at least 48 hours to review the decisions by the conference committee that has been working for two weeks to reconcile the two budgets.

“Budget negotiators have completed their work ahead of schedule for the third consecutive year,” said Senate Majority Leader Thomas K. Norment Jr., R-James City, who also is co-chairman of the Senate Finance Committee.

Under the proposed compromise, the House moved closer to the Senate’s position on a teacher pay raise, while adding about $34 million in lottery money that would be freed to send to local school divisions without requiring them to match the state money or with restrictions on how they spend it.

The proposal would send about 35 percent of lottery revenues to school divisions with no strings — up from 29 percent — while the rest would be allocated to programs for K-12 education.

The deal includes $32 million for the state’s share of a 2 percent raise for teachers effective Feb. 15, 2018, for the last 4½ months of the fiscal year. However, school divisions would be able to receive their share of that money as early as July for pay hikes that most of them gave last year anyway.

The budget also would include $7.3 million in additional funding for small school divisions, such as Petersburg’s, that have been losing enrollment and the state per-pupil funding that goes with it. The allocation would be based on a five-year look-back on division enrollment in small school divisions.

The proposed deal also would restore about $17 million of the $76 million in funding for higher education institutions that Gov. Terry McAuliffe had cut to address the revenue shortfall in the fiscal year that will begin July 1. Under the plan, no institution would lose more than 1.5 percent of its education and general funding.

The Senate prevailed in securing $3.3 million for a career development program for employees of state-supported local constitutional offices, such as sheriff’s departments, commonwealth’s attorneys, treasurers and commissioners of revenue.

Both budgets already included money for a 2 percent raise for state-supported local employees, such as sheriff’s deputies. They also included money to ease salary compression for deputies and state police that had been eliminated because of the revenue shortfall and then restored by McAuliffe in his proposed budget.

Salary compression is when pay for veteran employees does not keep pace with that of more recent hires.

The House prevailed in restoring more than $3 million of the nearly $4 million that the governor had proposed — and the Senate had eliminated — to improve the state’s balky voter registration system and replace federal election funds that are set to disappear.

The budget deal includes $5 million for supportive housing for people with serious mental illness, as well as $100,000 to enable the State Board of Corrections to investigate suspicious deaths in regional and local jails. The Senate had included the money in its budget, but the House had proposed $2 million for supportive housing and none for the corrections initiative.

The compromise also would include an additional $1.5 million proposed by the House for helping victims of domestic violence. The money would allow the state to receive an additional $6 million in federal funds for the initiative.

In economic development, the budget negotiators restored all of the $4 million that the governor cut from the Inova Global Genomics and Bioinformatics Research Institute in Northern Virginia.

They kept to their plan to restore half of the $15 million that McAuliffe had cut from the GO Virginia economic development initiative.

They also did not back down from restoring $5 million the governor had cut from the $10.2 million appropriation for the Jamestown-Yorktown Foundation’s 2019 commemoration of the 400th anniversary of the founding of the first legislative body in the new world, as well as the arrival of women and Africans to the Jamestown Colony.

The deal did not relieve the Department of Alcoholic Beverage Control from having to provide more than $20 million in additional revenue to support spending in the two-year budget.

Nor did it allow the money-producing agency to move ahead with a $104.7 million proposal to build a new warehouse and headquarters.

ABC, poised to become a semi-independent authority next year, wants to replace the aging, crowded complex it occupies now on 21½ acres on Hermitage Road that the Richmond Flying Squirrels and Virginia Commonwealth University are eying for a new baseball stadium.

Instead, ABC would have to produce a plan by Nov. 1 that covers a wide range of options for expanding warehouse capacity that is crucial for generating more sales to support the budget in the future. Those options must include potentially remaining at the same site.

The budget also includes language allowing the state to temporarily close a short section of Bank Street — between North Ninth and North 10th streets — for a pedestrian mall between the Pocahontas Building and the Capitol. The section of the street would close only when the General Assembly is in session while the state razes and replaces the legislature’s current building.

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Deal reached on state economic development reform

Deal reached on state economic development reform

Posted by on Feb 26, 2017 in News | 0 comments

Compromise legislation to reform the Virginia Economic Development Partnership will come before the General Assembly today as one of the last and most substantial decisions of the session.

Negotiators for the House of Delegates and Senate, working closely with Gov. Terry McAuliffe’s administration, hammered out a final deal Friday night. It ensures that some members of the partnership’s current board of directors will remain on the reconstituted body, which will shrink in size while ensuring that all regions of Virginia have representation.

“It could have been a disaster if we didn’t keep the leadership of the current board involved,” said Sen. Frank M. Ruff Jr., R-Mecklenburg. “There has to be a period of transition.”

But the heart of the legislation, proposed by Ruff and House Appropriations Chairman S. Chris Jones, R-Suffolk, is the establishment of mechanisms to ensure accountability by the VEDP board and staff, as well as the businesses that receive public financial incentives to locate or expand operations in Virginia.

“I think this compromise will certainly put VEDP back on track,” Jones said Friday night.

The partnership was the target of a withering critique last fall by the Joint Legislative Audit and Review Commission, the legislature’s watchdog agency. It found that the multimillion-dollar operation had been poorly operated and supervised, with little oversight of the financial incentives granted to business prospects or assurance they would live up to their commitments.

The legislation will establish a new division within the partnership to oversee financial incentives and assure that companies comply with their terms. It also will create an internal auditing arm to monitor the organization.

International trade will remain a division of VEDP under the legislation, rather than splitting off as an independent corporation as required under legislation adopted a year ago.

The new board will shrink from 24 to 17 members under the compromise, with the governor’s office represented by the secretaries of finance and commerce and trade and the legislature represented by the staff directors of the Senate Finance and House Appropriations committees.

The chairman of GO Virginia, a new regional economic development initiative, also will serve on the VEDP board, as will the director of the Port of Virginia. The governor will have seven citizen appointments and the legislature will have four, but the board must include a representative of each of the nine regions for GO Virginia.

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