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FairfaxBusinessSenator talks business, economy as legislative session looms

Senator talks business, economy as legislative session looms

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Virginia’s economic recovery is slightly lagging the nation’s, but its financial situation and prospects are solid, Sen. Chap Petersen (D-Fairfax-Vienna) said Jan. 6 at his annual Business Leaders Breakfast.

“Virginia tends to be less cyclical than the rest of the country,” Petersen said at Westwood Country Club in Vienna. “There’s a reason for that. A third of our economy is based directly or indirectly on the federal government . . . As a result, our ups and downs tend to be less radical than the rest of the country.”

Petersen, who has held the event since 2001 when he was a freshman in the House of Delegates, delivered mixed economic news, highlighted his legislative priorities for this year and fielded questions from the audience.

The national unemployment rate dropped from 4.6 to 4.2 percent in November, but consumer confidence went down a notch, Petersen said. The Consumer Price Index rose 7.1 percent year-over-year, the highest inflation rate in four decades, he said.


“I think people have been expecting a recession, but it has not yet occurred,” Petersen said.

Virginia’s general-fund revenues in fiscal year 2022 exceeded projections by $1.9 billion, but that seemingly huge amount of money effectively just made up for inflation, Petersen said.

The senator expressed concern that Virginia’s labor-force participation had dropped from nearly 70 percent in 2008 to about 64 percent last year. (Nationally, the respective figures for those years were 66 and 62 percent.)

Petersen pressed to raise state employees’ pay by 5 percent over each of the past two years, but this did not even keep up with inflation, he said. Additional pay increases may consume much of the state’s $1.9 billion budgetary surplus, which is on track to grow to $3.9 billion in fiscal 2024, he said.

Arthur Purves, president of the Fairfax County Taxpayers Alliance, was not happy with the state’s surplus.

“Virginia’s record-breaking budget surpluses are not due to a growing economy but are due to a huge tax hike resulting from Virginia’s failure to increase its standard deduction to match the 2017 increase in the IRS standard deduction,” Purves said after the presentation. “These budget surpluses should be returned to the taxpayers, who are battling inflation from out-of-control federal spending.”

Key features of Virginia’s current biennial budget are elimination of the state’s sales tax on groceries (which occurred Jan. 1), increasing the standard deduction to $16,000 per married couple (which still is below the federal deduction of $25,000) and beginning the phase-out of taxes on military retirement, Petersen said.

Petersen opposes most of Gov. Youngkin’s proposed tax cuts, but agrees with him that the standard deduction should be raised.

Petersen in the upcoming 2023 General Assembly session will propose legislation to:

• Limit political contributions to $20,000 per candidate in an election cycle.

• Prohibit utilities from making campaign contributions.

• Establish limits on prescription-drug costs.

• Put forth a state constitutional amendment regarding in-person schooling from kindergarten through 12th grade.

• Impose limitations on data centers. Petersen expressed consternation at plans to locate a data facility next to the Civil War battlefield in Manassas.

“We’ve got to put some guardrails on this,” he said. Data centers are to Northern Virginia what casinos are to southern parts of the commonwealth: get-rich-quick schemes, he added.

Fairfax County Board of Supervisors Chairman Jeff McKay (D) also addressed the group and said there were many reasons for business owners to feel optimistic, including the county’s efforts to reduce zoning fees. The goal is to make the process “easier, smoother, more predictable, more reliable [and] less bureaucratic,” he said.

McKay said he hoped the county would be able to grow its commercial tax base so as to relieve some of the tax pressure on homeowners.

Business owners and community activists at the breakfast expressed anxiety about the economy and other issues.

Local restaurateur Sarah White said she admires Petersen’s legislative efforts, but worries about the rising cost of living.

“Northern Virginia has never been what I would consider ‘affordable’ for most people,” White said. “The prices don’t seem to be slowing and we, as business owners, can only give so many raises without the costs of eating at our restaurant increasing. I don’t feel that it is being addressed by anyone at the moment, because I don’t feel anyone knows what to do about it.”

A man who runs an auto dealership told Petersen he was concerned because the local commonwealth’s attorney had declined to prosecute crimes committed at his business.

Petersen did not comment on those cases, but said commonwealth’s attorney positions across the state – as well as all General Assembly seats – will be on the ballot this fall.

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