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Virginia laws attract high tech

Virginia is giving Silicon Valley a run for its money--and its name.

Virginia is giving Silicon Valley a run for its money--and its name.

To fatten up its allure to high-tech companies, the state legislature of the "Silicon Dominion" has introduced a slew of pro-Net bills since it convened on January 8. The bills make plans to wire libraries to the Internet, create a high-tech workforce, and turn out computer-literate students.

If passed, they will sweeten the state's existing deals for technology companies such as tax incentives, and lower costs of living. Virginia hopes the efforts will give America Online more high-profile neighbors.

Historically the state has been home to tobacco farmers and coal miners. Now Virginia is undergoing an information-age revolution, and the government is paving the way.

The northern part of the state is rich with technology companies: Virginia is home to 2,450 technology firms and those firms account for 11.5 percent of the state's total employment, according to report released last week at the Virginia Technology Summit by the Center of Regional Analysis and Virginia's Center for Innovative Technology.

"Virginia has the highest concentration of technology firms in the United States outside of Silicon Valley, " Gov. George Allen said in his speech at the Summit. "Over 50 percent of Internet traffic passes through Virginia on a daily basis, and 27 of the nation's 50 fastest-growing information-technology companies are found in Virginia.

"The bottom line is that all Virginians should be proud of our new reputation as the "Silicon Dominion," he added.

In an effort to see that those Virginians also feel the gains of the new influx of technology companies, bipartisan legislatures have introduced House Bill 586 to require that all high school graduates in the state be computer literate. House Bill 603 calls for the Center for Innovative Technology and State Council of Higher Education to determine how to develop a technology-literate workforce.

"We need a workforce for this growing population of employers. Right now high-tech employers are facing workforce shortages," said Democratic Delegate James Scott who just introduced a bill to wire Virginia's libraries to the Net over the next five years.

"This whole effort to give public schools and libraries Net access is aimed at bringing our kids into the 21st Century. To prepare them to work in the high-tech industry," he said.

And the high-tech, online, and telecommunications industries are expected to keep arriving in droves

For example, IBM, Toshiba, Motorola, Oracle, LCI International, and Gateway 2000 Computer are all committed to building facilities or expanding their current presence in the state, Gov. Allen said last week.

The state will be ready for them, flashing huge tax incentives. Last year, Virginia enacted a law that allows cities to set up technology zones and offer tax exemptions for up to ten years to companies in several high-tech fields, including telecommunications, electronics, computer hardware and software, electronic information, multimedia, and Internet access.

In December, Winchester, Virginia, became the first city to take advantage of a law when the City Council created a "technology zone" in its downtown area. Qualified technology companies who have offices in the 125-acre zone are eligible for sizable tax exemptions and rebates on public utilities over a five-year period.

Technology companies also will receive a quarterly 100 percent exemption during the first year on the state Business Professional Operation Licensing tax, a tax based on gross business profits. For each of the next four years, the exemption will be reduced. These businesses will also receive rebates based on the same sliding scale for telephone, energy, and cable utilities.

A bill to increase technology zones reach has also been introduced this session. Senate Bill 880 would amend the tax law by removing the 125-acre limit, so that zones can be larger.

But "Silicon Dominion" has its problems.

Small business complain that the state's strict securities laws make it hard to raise capital to go public. Lobbyists are working right now to loosen the restrictions that require, for example, high-priced audits that small companies can't afford.

Also the state faces blemishes on its pro-Net reputation if the American Civil Liberties Union files a lawsuit against it this month as planned. The suite will challenge a state law that prohibits state-owned computers from downloading sexually explicit material for the Net.

Nevertheless, people such as Pat Clawson are glad that Virginia is welcoming them with open arms. Clawson moved his small Huntington Beach, California, multimedia company Telegrafix to Virginia last April. He is stationed in Winchester's technology zone.

"The cost of operating in Virginia is far less than it is in California," he said. "We love it here."