Northam's economic development claim largely holds up

In the final days of his term, Gov. Ralph Northam has been stressing that his governorship was about more than coronavirus and racial justice issues that led the news.

"During our four years, we’ve brought in more than $81 billion in economic investment, more than four times any previous administration…" Northam said Wednesday during his valedictory State of the Commonwealth address. 

Northam made the same claim in a Dec. 16, 2021 speech to the General Assembly’s money committees and in a Jan. 9 op-ed in The Virginian-Pilot.  He will leave office on Jan. 15.

Northam’s press secretary, Alena Yarmosky, told us the governor’s claim is based on records kept by the Virginia Economic Development Partnership, a state authority that promotes business location and expansion.

The records identify each economic development project announced by recent governors, the expected investment by the company and the expected number of new jobs the project will bring to Virginia. 

The data tells us that Northam-announced projects are, in total, expected to bring more than four times as much corporate investment to Virginia than those of his six most recent predecessors. Here are the numbers:

• Northam, $81.4 billion;

• Terry McAuliffe, $18.7 billion;

• Bob McDonnell, $13.7 billion;

• Tim Kaine, $11.8 billion;

• Mark Warner, $13 billion;

• Jim Gilmore, $12.3 billion;

• George Allen, $10.7 billion.

Although Northam can claim success in economic development, there are caveats to these numbers.

First, these totals represent only deals that governors publicly announced, which are different from ironclad contracts. Some of the announced deals never come into fruition, others never meet expectations and some exceed them. It’s too early to tell how many of Northam’s projects will succeed.

For example, the largest project announced by McAuliffe never materialized: a deal with 

Tranlin Inc., a Chinese company that promised to build a $2 billion paper plant in Chesterfield County and bring 2,000 jobs to the Richmond area. Although the deal failed, the numbers are still counted in VEDP’s tally of deals announced by McAuliffe, who led the state from 2014 to 2018.

"If we’re saying all $80 billion of investment (under Northam) is going to occur, that’s probably not going to happen," said Robert McNab, director of the Dragas Center for Economic Analysis and Policy at Old Dominion University.

Another issue: Some deals take years to work out, and the governor who began negotiations with a company may not be the one who announces an agreement.

For example, one of the richest deals Northam announced was Amazon’s $2.5 billion plan to build a corporate headquarters in Arlington that will bring an estimated 25,000 new jobs to the region. Although VEDP credits the numbers to Northam, who played a large role in making the deal, the state’s highly competitive recruitment of Amazon began under McAuliffe.

"There’s some luck of timing involved," said Terry Rephann, a regional economist for the Weldon Cooper Center for Public Service at the University of Virginia who is skeptical about the value of the announcement data. Governor’s "love to toot their horns on the announcements," he said.

A more meaningful measure of economic growth, Rephann said, is to look at the number of jobs the projects create. The VEDP lists the estimated new jobs that come with each announcement, but they come with the same caveats we have discussed. Northam ranks third among his six predecessors in this category. 

Here are the total job estimates that came with the projects each governor announced:

• Gilmore, 159,770;

• Warner, 122,883;

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• Northam, 103,568

• Allen, 89,650

• McAuliffe, 77,377;

• McDonnell, 75,563;

• Kaine, 74,444.

McNab said Northam deserves credit for economic expansion and that the state has become increasingly wise in targeting new businesses and creative in offering incentives for them to move to Virginia.

Under Northam, there was a notable increase in construction and expansion of data centers, huge facilities that centralize an organization’s information technology operations. Data centers don’t require many employees, but they pay sizable local real estate taxes. They also bring spin-off companies that help service and replace equipment.

Of the 894 economic development projects announced during Northam’s term, 673 publicized expansion plans by existing companies in Virginia and 221 heralded new companies moving into the state.

In estimated investment under Northam, $69.4 billion comes from the expansion of companies already in Virginia and $12 billion comes from new ones locating in the state. 

Our ruling

Northam said, "We’ve brought in more than $81 billion in economic investment, more than four times any previous administration."

Northam accurately cites figures compiled by the state’s economic development authority. The numbers reflect the total estimated investment of businesses that each of the last seven governors announced were moving to Virginia or expanding their existing facilities in the state.

While the numbers indicate strong economic development during Northam’s term, they come with caveats. Some of the projects governors announce never get off the ground, and others fail to meet expectations. So the actual investment under Northam is likely to shrink from its announced total.

Also, many projects transcend gubernatorial terms. A governor who started negotiations with a company may not be the one who announces a deal.

We rate Northam’s claim Mostly True.