Chief salesman

Virginia’s chief salesman continues to bring home deals.

And since he’s been hawking Virginia’s assets around the world, new investment and jobs in the state are soaring.

At the beginning of December, the McAuliffe administration had announced 227 economic development projects in Virginia that are projected to create 19,420 jobs and $5.04 billion in capital investment. “I’ve done business all over the globe, so I have a lot of relationships that I’m really trying to utilize to bring businesses here,” says McAuliffe.

McAuliffe’s successes so far have outpaced his predecessors’ business wins during the first year of their governorships. He’s committed a lot of state money to do so (more than $68 million so far), and he plans to ask the General Assembly for additional money in his Governor’s Opportunity Fund — money designed to help governors close deals for investments in Virginia.

To replenish his fund, he’ll need to work with both houses of the Republican-held legislature to find money in tight budget times. A major benefactor of federal dollars, Virginia’s revenues have been declining in the wake of sequestration and reduced defense spending. “[Economic development is] always important; now it’s of critical importance,” McAuliffe says. “We have to diversify this economy.”

Despite intense battles over Medicaid and the federal headwinds, McAuliffe continues to be optimistic about his push for more incentive money, as well as other initiatives, such as workforce initiatives and ethics reform, he’ll push for this year. (For more information on his relationship with the General Assembly.)

Virginia Business sat down with McAuliffe at the end of November to discuss economic development, the upcoming General Assembly session, congressional redistricting, energy development and the Democratic Party’s performance in the recent election.

Virginia Business: I thought I’d start with one of your favorite topics — economic development. You’ve had a lot of big wins lately. How do you think your approach to economic development differs from you predecessors’?

McAuliffe: This is something I’ve done my whole life. I started my first business at 14. I’ve been involved in dozens of startups … I just want to bring that sort of innovative, creative business approach to state government. So I’m very focused on it.

Before I came to this job I traveled the world extensively. I’ve done business all over the globe, so I have a lot of relationships that I’m really trying to utilize to bring businesses here. I ran on economic development. No one should have any questions of what I stood for when I ran in 2013: diversifying the economy, growing the economy. Now that I’m in the job and things have obviously changed dramatically with the headwinds of [federal] sequestration, it’s always important; now it’s of critical importance. We have to diversify this economy …

I deal every day on this phone, calling the White House, Department of Defense, whatever federal agency, trying to protect the assets we have. We’re talking to our congressional delegation, protecting what we have and working to make sure they’re not cutting federal government [spending] — mostly defense-related activity. So I’m passionate about [economic development], but I need to be.

I get out of bed every day competing against 49 governors and 200 nations around the globe. I enjoy that. It’s important. I like to win, and I like Virginia to win. That’s why we’re working hard. We’ve had great success. … We’re bringing in great businesses. This is what we’re focused on. Every governor has faced challenges, let it be transportation or education; my challenge is growing and diversifying the economy. That is my number one issue.

VB: Do you think you can be as effective with the dwindling funds for incentives [such as the Governor’s Opportunity Fund]?

McAuliffe: [House Appropriations Committee Chairman S. Chris Jones, R-Suffolk; Senate Finance Committee Chairman Walter Stosch, R-Glen Allen] and I have a very collegial relationship working on a budget … I told them we’d be going back to them for another big number for the Governor’s Opportunity Fund. We go when we have big deals to close, so it’s not like we’re asking for money to be sitting there.

At the end of the day no one in the General Assembly is going to deny the governor — who can lose a deal — the funds to close a deal to help an economically depressed area. That would be beyond unfathomable to me. Sometimes in politics unfathomable things happen, but we’re all working together … What Virginia needs now is a job creator as governor. If in four years we’ve grown and diversified the economy, we’ll have done what we said we’d do.

VB: You said you had a good relationship right now working with the General Assembly. How do you view that [relationship] going forward after last year’s session ended with the battle over Medicaid as well as controversy surrounding [former state Sen. Phil] Puckett’s resignation?

McAuliffe: I knew from the start that it wasn’t likely they were going to pass closing the coverage gap. [Speaker of the House Bill Howell] told me the first week I was here during the transition that it would never happen. But that doesn’t mean that I don’t try. This is too important morally, socially that we could provide health care for 400,000. They didn’t get this done when Bob McDonnell was governor, so I knew there was not a high likelihood they would ever pass it in the House of Delegates.

I had a bipartisan agreement in the Senate with three Republican senators, so we could have passed it any day in the Senate. It was the House of Delegates [where it stalled.] But that doesn’t mean you don’t keep trying. I offered five compromises. I looked at avenues if I could do it on my own. I put everything in the playing field, but I didn’t go in not understanding it was not likely to pass …

You’ve got to understand the economic impact of this. Of course it’s $2.5 billion a year [in federal taxes] that we’re not getting …

Now, by us not bringing it back, it gives our neighbors an economic advantage. They [will] have lower health-care premiums, and they [will] have a healthier workforce. These 400,000 Virginians that we have not provided coverage for even though we’ve paid for it … they’re still going to an emergency room today. Who do you think’s paying for that? You are. You unfortunately now have paid twice. As a businessperson, it makes absolutely no sense. I think obviously [Republicans are] concerned about tea-party primaries, and there are issues unrelated, but I gave it my all.
I’m going to have a major ethics package for this general session. I’m going to have major initiatives on workforce development. We’re going to have plenty of bills. All of them economic development-related.

Ethics reform is important. We need full transparency. I came in here, and the first thing I did was put a $100 gift [limit] on myself, my family, every member of my administration and their families. So we have a very strict one, and I’d like to see the General Assembly get close to where I am.  I think it’s important. We need full transparency. There are too many gifts. There’s too much money floating around. We need accountability, but as long as we are looking at it, let’s look at other things. Should you be raising money when you are still in session? … What’s the difference between regular session and special session? Why can you raise money [during a special session]?

I think in fairness we ought to look at everything. I will look at the whole complete ethics package. We’ll get ethics reform done. I’m very confident we’ll get workforce development issues done. We have more education initiatives. We have worked very close with the speaker’s office on the  HB2 transportation bill, [which created a method for prioritizing transportation projects.] … We’re all moving together in the same direction. We disagreed on the issue of closing the coverage gap …

Job creation is what I ran on. Health care was a piece under it; transportation was a piece under it. Higher education is so important. That’s why I formed the Children’s Cabinet to begin early on figuring out what do we need to do when our children are first going to school to get them focused on those STEM [science, technology, engineering and mathematics] courses, and [have them interested] in going to school and learning.

I talk a lot about what we do on credentials. I want to see 50,000 credentials by the time I leave office. Don’t talk to me about degrees. Talk to me about skill sets. Because someone graduating from one of our institutions in Virginia with a degree without a skill set doesn’t help me deal with that employer today who has a job open.  Talk to me about skill sets … My whole workforce development initiative is taking the jobs that exist and the ones we think we’ll bring in, matching those and making sure we have the [right] education, so we’re building a skilled workforce so when they come out [of school] they can come right into the workforce. Ethics [reform], workforce development issues about growing and diversifying the economy will be my big legislative agenda. Voters want us to focus on issues that matter to them.

VB: Are you going to give the legislature much input on redrawing the congressional districts?

McAuliffe: They have to give me a map, right now by April 1. The lines clearly are not fairly drawn … The Democrats only have three out of 11 congressional seats. This clearly tells you that those lines are not drawn fairly, so I want fairly, evenly drawn lines.

I have always been for nonpartisan redistricting. I think what’s happening in our nation, in our commonwealth, when you have this partisan redistricting where folks draw lines to protect themselves, [most members of Congress and the General Assembly] don’t have competitive general elections. So the only way they could possibly lose an election is to get challenged from your own party, and that generally pushes you to the right and pushes you to the left.

The middle is gone. And that’s where I try to operate from. I’m a fiscally conservative, pro-business Democrat. I’m socially progressive. Governments should stay out of people’s personal lives as much as possible. But at the end of the day, I’m just trying to run an innovative, creative entrepreneurial government.  I want Virginia to be viewed as opening and welcoming to everyone. That’s why I had to move very quickly on issues to protect women’s rights. I always said I would be a brick wall to protect women’s rights … To protect gay rights. To move to make sure that Virginia is perceived [as welcoming] on a global basis.

The protections that I want to see out of Virginia, most Fortune 500 companies have in their own charters for their own business. So clearly you can’t convince a Fortune 50 or a Fortune 100 [company] to come to our state if we have onerous legislation … I presided over a gay marriage myself as governor. First governor of the South, trying to send a signal to everyone: Virginia is open and welcome to everyone.

VB: You’ve talked about an all-of-the-above approach for energy. What do you think are the most important steps to ensure that we have enough energy going forward and also that it’s reasonably priced?

McAuliffe: I did just come out with a 460-page energy plan. I talk about guiding a new Virginia economy. I’m a huge advocate of nuclear. There’s no carbon emission to nuclear …The gas revolution has totally transformed our nation. It will totally transform Virginia. I’m a very public supporter for the new natural gas pipeline [Dominion’s Atlantic Coast Pipeline]. This pipeline will allow us to have a re-emergence of advanced manufacturing and manufacturing facilities in the Commonwealth of Virginia.

I can now compete with anybody. These natural gas pipelines, which we bury underground, are like super highways, and you can take an exit and entrance ramp off anywhere you want. If you want to take a spur to create economic activity in some rural community, you can do that.

And what’s great, and it’s happening in our country today, is that CEOs of major companies are insourcing. They’re bringing their manufacturing back because the cost differential on a manufacturing job today between America and China or Vietnam, or many of these other countries in Asia, has dwindled down dramatically. It’s now cost competitive to do that here.

I’m a big believer that Americans, as much as they can, should buy American. Virginians should do as much as they can and buy Virginian, and so we will have tactical advantage to bring those manufacturing jobs back, do it and build it here in Virginia. And guess what, we have the deepest port on the East Coast … My dream is these ships come around, drop off their containers and their cargo, and we refill them up with goods manufactured in Virginia …

[We need to] up our game in renewables. Dominion’s got two, six-megawatt wind turbines they’re doing out on the coast. We ought to increase our wind capacity. If we’re going to do that, the poles, blades and turbines should be manufactured in Virginia. We have the port. These blades are gigantic. We ought to manufacture that so you’ll not only get the renewable energy, you get the manufacturing that comes with that.
I also say that the best energy you can use is the energy that you don’t use. And that means more energy efficiencies. And we need to step up our game on energy efficiencies.

VB: [As you reflect on the 2014 election], what do you think the Democratic Party needs to do going forward?

McAuliffe: The most dismaying thing for me and for every American is that it was the lowest turnout in our nation in 72 years. I always say people fought and died for the right to vote in this country, and the idea that Americans don’t think it’s worth their time to go vote is very disheartening to me. So getting civic involvement up, getting folks to vote is important. So that’s the biggest thing that came off the election.

The other thing I would say is that — obviously the Democrats did very poorly — I don’t think they had a message. If you listen to me and you travel with me, I talk about the economy morning, noon and night. I’m passionate about it. But you can’t expect people to come out and vote for it if you don’t tell them what you want to do, and this is what happens when you get elected … The Dow Jones was at an all-time high, unemployment was one of the lowest levels we’ve had in 12 years. President Obama came in, and people forgot. Our economy was on the verge of a cliff. If people go back and look at where we were in 2009, [we were] on the verge of a total economic Armageddon. On the brink.

The economy’s back. It’s picking up steam. But nobody knew it. I just think people need to do a better job of advocating and talking about the things they’ve done. You got to tell people what you’ve done for them. But what was more disconcerting — forget about the Democratic Party for a second — is the low voter turnout we had all over America. That’s disheartening; you look at other countries around the globe and the number of people who turn out and vote. Then you come to America, and you see we had 37 percent turnout in Virginia. One out of three eligible voters voted. What does that tell you? It’s sad. It’s disheartening.

There was no competition and so people say, “Why come out and vote? They’re going to get re-elected. They don’t have an opponent.” … This whole partisan gerrymandering redistricting is something we need to do the best we can to end to get people believing in America, believing in our system of government again.

I always say competition is good … One thing about being governor is you don’t kick the can down the road. You don’t have an option. I’ve got to make decisions every time I sit at this desk. You don’t have the option of, “We’ll filibuster it, or we’ll come back to it later.” I make decisions every day. And competition is good. Right now there’s some governor on the phone trying to take a deal from us.  That’s how I feel, so I gotta get back on the phone.